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Innovation in treasury management

IBS Intelligence held its second FinTech Roundtable at the CedarIBSI FinTech Lab in Dubai Media City on 28 November 2019. Here’s what was discussed

Representatives from FinTech Lab members including i-Xceed Solutions, Fournxt, Clayfin, Expleo (formerly Thinksoft) and Clari5 came together with a clutch of banks based in United Arab Emirates (UAE); among them National Bank of Fujairah, Mashreq, Emirates NBD and Dubai Islamic Bank. The roundtable event was staged to discuss the need for innovation in treasury management systems and regulatory technologies in the banking ecosystem.

Banks represented at the roundtable included both conventional and Islamic banks, among them National Bank of Fujairah, Mashreq, Emirates NBD and Dubai Islamic Bank

Rivi Varghese, CEO and founder of Clari5 (CustomerXPS), speaking of the need to develop solutions around fraud, risk management, treasury management and compliance, noted that cyberattacks are more coordinated than ever and come in short duration bursts. He said the need was yet more pressing for banks to adopt solutions that could insulate them from any risks resulting in financial loss. His company is planning to launch a federated network of banks that would enable member banks to receive fraud-related information and intelligence on a real-time basis.

On the need for regulatory technologies (RegTech), Chetan Parekh, partner at CedarIBSI said that regulators around the world are bringing out more new regulations for banking and financial institutions on the back of increasing numbers of corporate data breaches, consumer privacy concerns and a wave of GDPR-like regulations among other risks. “It is leading to a massive demand for RegTech tools that could help enterprises meet compliance challenges,” he added. Parekh noted that investment into the RegTech space is likely to reach $76 billion globally but he also pointed out that spending in this sector in the Middle East at the same time would account for a mere $1.4 billion.

More and more complex obligations 

However, in the coming months, more and more start-ups are likely to emerge in the Middle East market even as banks’ annual spends on compliance and regulatory obligations are going up. In addition, the evolution of regulatory sandboxes in the market to promote innovations in RegTech and risk management space is increasing. There is now a total of nine such sandboxes in the Middle East market.

“Financial regulators across the globe are forcing financial institutions and banks to comply with stricter and more complex regulations on tight timelines,” said Pankaj Chawla, head of research at IBS Intelligence. “This is not just impacting local banks in their respective markets, but also global banks. For example, Middle East banks with operations in Europe must meet the regulatory compliance requirements related to PSD2 and GDPR. Current solutions adopted by banks are not able to meet the requirement of regulatory bodies, thus banks are now looking towards RegTech solutions to meet the complex reporting requirements by the regulator.”

Governments across the Middle East region are pushing for greater use of technology to enhance regulatory processes. In 2018, the UAE Government launched an initiative led by the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) to develop a blockchain-based e-KYC solution that would provide financial institutions with a single location where customer identification and verification can be performed once for a customer. Elsewhere in UAE, the Dubai International Financial Centre (DIFC), a financial freezone in Dubai, launched an accelerator called FinTech Hive in 2017 with two RegTech companies. FinTech Hive also offers access to an investor network, including the DIFC’S own $100 million FinTech Fund.

Among the leading RegTech start-ups active in the Middle East region are:

  • Card Switch: a Lebanese start-up that works to eliminate card fraud and combat cash transactions.
  • Azakaw: a UAE-based RegTech platform that provides complete compliance lifecycle support from client acquisition to regulatory reporting.
  • Fenergo: Dublin-headquartered firm that provides software solutions for financial institutions to streamline the end-to-end client lifecycle management processes.

Speaking about the roundtable, Murtaza Shaikhally, senior director at CedarIBSI and director-in-residence of CedarIBSI FinTech Lab, said: “The roundtable provides an excellent and regular opportunity for the banking and FinTech communities to regularly get together and discuss mutually relevant and critical issues and ideas affecting the broader industry; and also provide a platform to present and test innovative solutions to address these issues.”

Lab membership benefits

The FinTech Lab was created about a year ago to assist global FinTech start-ups and companies in tapping the opportunities in the burgeoning financial services technology market in the Middle East. There are currently about 16 rapidly growing FinTechs that are cohort members of the Lab. Located in the Dubai Internet City, the Lab aims to help provide suppliers with access to the Middle East banking technology market. The cohort member benefits include:

  • Market access: Providing start-up, emerging and recognized suppliers an opportunity to access banking opportunities within the region, leveraging CedarIBSI’s 20-year presence and market connections, assisting banks in developing and executing technology transformation.
  • Virtual sandbox: The Lab offers a virtual sandbox to banks and suppliers to allow for rapid product showcasing but more importantly, quick POCs supported by existing project management capabilities.
  • Investor access: Lab membership leverages existing connections with family offices, private investment offices, VC and PE funds, encouraging them to evaluate and potentially invest in FinTech firms seeking capital.
  • Growth enablers: CedarIBSI strategy consulting teams can assist cohort members with regional and global corporate growth strategies leveraging decades of expertise in this area.
  • Lab facilities: State-of-the-art Lab facilities include private cloud, hot desks and conference room facilities, sanitized data sets of bank customer data that can be used in a POC and a range of other standard workspace conveniences.

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