The New Frontier: The Rise Of Fintech Brings With It New Opportunities

Any new technology brings disruption to the established order. But can it also bring new opportunities? Fintech, for example, is big business. In 2016, according to KPMG, US$24.7 billion was invested in fintech companies globally. Even though this represented a reduction on 2015, after what KPMG called ‘a challenging year’ for fintech, it is still a significant figure.

A survey from Innovate Finance showed that in China last year fintech swallowed up US$7.7bn of investment, while in the US and the UK the figures were US$6.2 billionn and US$783 million respectively. And while fintech investment in the UAE has lagged behind those levels, it is set to be transformed over the next few years. According to a report by Wamda Research Lab, the UAE leads the way in the MENA region, with US$50 million in growth expected next year alone, adding to the US$100 million already invested in fintech over the last ten years. Wamda predicts that by 2020 the number of UAE fintech companies will more than double from 2015 levels, to around 250 firms.

Defining fintech 

When we talk about fintech, we mean financial technology, but in particular we mean new, disruptive and non-traditional ways of operating. Examples are crowdfunding platforms, peer-to-peer (P2P) payment services, and new approaches to lending and raising capital, as well as payment solutions like the standard bearer PayPal.

In fact, payments and lending businesses represent 84% of all MENA fintech startups today. According to Wamda, two-thirds of the 250 predicted fintech companies operating by 2020 will be payment, lending and capital raising platforms. A good example from the UAE is Payfort, a Dubai-based online payment system, which processed more than AED3bn in payments during its first year of operation. 

Firms like this are the new kids on the block, and bring tech-enabled products and services that improve on traditional ways of working, often where nobody else has seen an opportunity or need for improvement. They’re normally startups, so while they’re seeking big growth as rapidly as possible, they’re often as keen on collaboration as they are on competition. We’ll see why that’s important later.

What’s been the fintech impact so far? 

Although fintech has had a slower start in the region than elsewhere, the UAE is a potentially lucrative breeding ground. Currently 86% of the country’s population does not have a bank account. While that can mean no financial record and no credit score –which can be an obstacle to providing financial services– one thing the UAE does have is very high smartphone penetration. In a country where e-commerce is set to quadruple over the next five years, this is where the ‘tech’ part of fintech comes into its own. Startups can serve sections of the market that traditional providers can’t. They’re smaller, more flexible and more responsive to change than larger corporations and, even among those customers who do have bank accounts, many are keen to explore new ways of working. A recent survey from YouGov and Payfort found that, of 1,429 banking customers in the MENA region, almost half were interested in exploring working with new companies that offer payment, lending and investment services.

While the early movers in UAE fintech investment were mainly focused on making and receiving payments, the second wave of new fintech firms in our region includes firms working in areas, such as wealth management, reflecting the trend in other markets, such as the US. For example, there have been new fintech startups in the region providing both robo-advice and tailored investment solutions built around a client’s risk appetite, income and investment time horizons. Platforms such as Finerd didn’t even necessarily require Gulf Cooperation Council (GCC) residents to open an account, and attracted significant interest particularly from expats.

How does it affect brokers?

Technology generally makes things happen more quickly. For a broker, that can be good and bad. On the one hand, it gives clients more opportunity to do their own research, and robo-advice can give people means to manage their own wealth without involving a broker. These automated services can provide unrelenting, real-time insight on the move. It’s a proposition that chimes with an audience of investors, many of them millennials who are already well versed in social media and concepts like P2P. And while the UAE isn’t quite there yet, online solutions don’t fear national borders. 

On the other hand, not all clients have the time or the confidence to go it alone, or to wade through the profusion of information on offer. So, while cutting out the middleman can seem appealing, conversely it can draw attention to the middleman’s value and expertise, which can be a beacon of sense in a sea of numbers. Meanwhile, as automation gives back more of a broker’s working hours, there’s extra time to conduct research and hone that professional insight.

Another area where fintech has contributed positively is risk. Risk management in banking has changed dramatically in the years since the global financial crisis, and one of the ways new technology has contributed is in machine learning– the ability of automated systems to improve the accuracy of data models. While still in its infancy in wealth management, the potential of automated systems that can incrementally improve risk models -while saving both time and money– is compelling.

Fintech isn’t going away, and people are increasingly receptive to it. Brokers who embrace it and find a way to combine its speed, accuracy and convenience with their professional knowledge, hard-won experience and real customer service can reposition themselves as the forward-thinking ‘best in breed’ in the market. They can absorb the advantages of fintech and automation, while at the same time offering expertise and experience that the newcomers can’t. Collaboration can give savvy brokers a way to market themselves as innovative and groundbreaking, leading clients through the cacophony of fintech noise.

The power of collaboration

Fintech firms themselves are well aware of the value of this kind of collaboration. According to Wamda, almost nine in 10 UAE fintechs seek an established collaborator, while a report from Accenture shows that those who choose to collaborate, rather than compete directly with the establishment, are getting the lion’s share of the available investment.

Fintech startups can also use collaboration with established players to help navigate regulatory hurdles. As fintech specialist David Martínez de Lecea noted, this is one of the biggest challenges faced by new fintechs in the investment space, which can require a complex and time-consuming set of licenses. He also pointed out the idiosyncrasies of the UAE ‘know-your-customer’ (KYC) laws, which apply extra due diligence requirements, particularly to politically exposed persons. This kind of work is something that doesn’t come naturally to robots, and is another potential advantage for real brokers.

So, fintech startups as well as established financial institutions have clear opportunities to help one another. Where established firms may lack innovation, fintechs often face issues around regulation, reputation, trust and security which collaboration with an established firm can help mitigate. 

Digital Darwinism

However, while many firms are grasping the opportunity (or need) to embrace fintech, many are yet to open up. PwC research found that, globally, 67% of established businesses surveyed saw pressure on margins as the biggest threat from fintech, while 59% believe the biggest danger was loss of market share. Yet, when asked whether their organisations had put fintech at the heart of their strategy, 24% either didn’t know or actively disagreed.

In a recent interview, author Ray Wang put it succinctly, saying ‘Digital Darwinism is unkind to those who wait’. The march of fintech in the UAE has begun and isn’t going away. In their recent survey, Wamda found that 98% of fintech startups in the UAE plan to expand their activities. The key international financial centres and their regulators are starting to get behind it too. To demonstrate this, Dubai International Finance Centre (DIFC) recently launched its FinTech Hive accelerator, hot on the heels of Abu Dhabi Global Market (ADGM) unveiling its new fintech sandbox.

From the days of the machine-smashing Luddites in the early nineteenth century, there have been three general responses to new technology. You can resist it and be overwhelmed. You can ignore it and risk being blindsided along the way. Or you can embrace it and learn not only to live with it, but to harness its power. Those who are successful will see the future not so much as the rise of the machines, but rather as the coming together of natural ability and new technology. So maybe the future of a successful broker in the new fintech world will be a blend of old-fashioned skill and brand new efficiency, able to unleash real expertise more quickly and accurately than ever before. 

Article written by Marco Saviozzi and published in appMedia on 23 August 2017.


IT staff recruitment poses major challenge in UAE and wider region

Organisations in the Middle East must create competitive IT recruitment strategies if they are to attract the right people

Organisations in the UAE face a challenge to attract and retain top-quality CIOs and other key IT staff as the region seeks to tackle a technology skills gap.

As the UAE pushes ahead with its digitisation agenda, the ability to attract and retain IT talent is critical for local enterprises – and salary levels are no longer the be-all and end-all for IT professionals.

The Middle East as a whole is suffering a shortage of IT professionals with the right skills and experience. For example, figures from Cisco show that the Middle East was short of 48,000 skilled networking staff in 2012, and that number had grown to over 100,000 by 2015.

“This gap is a direct result of the positive news that the UAE is embarking on a period of intense digitisation,” said Mike Weston, vice-president at Cisco in the Middle East. “But the flipside of this is that the country faces a shortage in the number of skilled IT workers required to turn these digital dreams into reality.”

However, the UAE has put itself in a good position by creating a culturally tolerant business environment designed to attract a growing number of overseas workers, said Weston. The country also maintains the advantage of acting as a hub for the broader Middle East region, with many multinational IT organisations using it as their regional headquarters, he added.

“This dynamic means that skills, particularly advanced technical skills, are more readily available than in some other Middle Eastern countries,” he said. “The UAE is also one of the more mature in terms of technology adoption in the region, which is one of the reasons for the high growth in demand for emerging technology solutions.”

But as the UAE continues to drive its digitisation and economic diversification efforts, it is experiencing a particularly acute skills gap with new IT positions. According to recruitment firm Robert Half UAE, professionals with skills in IT security, virtualisation, mobility, ITIL and Cobit, the internet of things (IoT) and convergent technologies are currently in great demand and will continue to be sought after for the next few years.

Gareth El Mettouri, associate director at Robert Half UAE, said other key technology positions to fill included enterprise resource planning (ERP) application and functional experts, project managers, business partners and IT security managers.

“The technology sector within the UAE is growing rapidly as firms update their systems and adopt emerging technology to compete more effectively on a global scale,” he said. “Firms are seeking professionals who not only have technical expertise to execute these projects, but also have a collaborative nature and cultural fit.”

El Mettouri added that the local technology sector was progressing to meet international best practice standards in cyber security, cloud integration and business transformation.

“As multinational corporations in the region review their operational standards on a global level, the implications are having an effect within the region,” he said. “These businesses are eager to hire the specialist talent within Dubai to drive these changes.”

Nelly Boustany, regional head of human resources at SAP, agreed that technology was changing rapidly, and senior executives in the UAE needed to drive organisation-wide skills development to bridge the talent gap.

“With 100 million young people entering the Middle East and North Africa workforce by 2020, more than half of UAE organisations (54%) said millennials are impacting workforce strategies,” she said. “It is vital for UAE organisations to develop a talent pipeline starting from university, with key differentiators for millennials including a good work-life balance.”

El Mettouri agreed that pay was not the only factor in retaining talented tech staff. “For organisations looking to attract and retain key technology experts, they not only need to offer remuneration packages that are competitive on a local and international scale, but they also need to review their job offers for work-life balance and be able to provide training and development opportunities that will support the individual’s career progression plans,” he said.

David Martinez de Lecea, principal at strategy consultancy Roland Berger, said most IT professionals were looking for opportunities to work with new and promising technologies, rather than old systems and frameworks. Specifically, the importance of artificial intelligence (AI) for most industries is making companies with access to large data pools attractive workplaces for AI specialists, he said.

“In the short term, the biggest barrier to hiring and developing IT skills is the high administrative costs associated with employment, particularly if sourcing from abroad,” he said. “In the long run, the development of home-grown talent in universities of technology and specialist centres is the best way to ensure the availability of a vibrant IT labour force.”

The skills gap, particularly in the ICT field, continues to be a top government priority in the Gulf region. To address the skills shortage, regional governments are deploying policy and training programmes to help solve what Cisco calls “the world’s fastest-growing gap in networking professionals”.

Cisco’s Weston said specific programmes and targeted policies were needed to expand the total pool of qualified IT staff in the region. “More effort is particularly needed to expand networking talent by increasing the number of new networking employees (new graduates), encouraging and enabling mid-career professionals to transition to ICT and networking and increasing the country’s total talent by encouraging immigration,” he said.

Saeed Agha, general manager – Middle East at Palo Alto Networks, said competition for scarce IT talent was a global challenge, “particularly so with talented cyber security resources that we come across when working with our customers and partners in the UAE”.

Agha said common practices such as creating a trusting environment, acknowledging top performers, and clear, transparent communication were essential for organisations to compete in the UAE talent market.

He said IT staff retention could be improved by “offering a challenging work environment that matters and creating a sense of purpose for your employees, ensuring they feel connected to the business and its mission”, adding: “It is also important to provide growth opportunities and flexibility for changing roles and focus domains for your IT employees.”

According to Computer Weekly research, more than half of organisations in the Middle East plan to reduce the amount of money they spend on IT staff in 2017, despite the skills gap. While only 17% of IT decision-makers surveyed by Computer Weekly/TechTarget expect overall IT budgets to be lower in 2017 than in 2016, 53% expect a drop in budgets allocated to IT staff.

Article written by Alicia Buller and published in Computer Weekly on 7 March 2017.

Virtual reality takes off in the Gulf Cooperation Council countries

There is a thriving virtual reality industry in the Middle East, with the technology’s application expected to go far beyond gaming

The UAE is mirroring global trends by eagerly adopting virtual reality (VR) technology. At last year’s annual Dubai-based tech show, Gitex, a major focus was placed on VR products and how they can support the region’s rapidly expanding travel, hospitality and media sectors.

QFC ‘at the forefront’ of fintech discussions

The Qatar Financial Centre (QFC) Authority has hosted its first financial technology (fintech) event of 2017 in collaboration with the global strategy consultancy firm, Roland Berger.
The session, which was held at the QFC’s headquarters, attracted business and financial professionals from Qatar’s public and private sector. It aimed to identify and explain the key trends in the financial services sector and clarify how fintech is disrupting current practices and creating a completely digitalised method of banking and financing.
Kamal Naji, the QFC Authority’s chief strategy and business development officer, highlighted how fintech has transformed the financial services industry over the past few years.
He said: “Now more than ever before, the financial industry is relying on cutting-edge technology and technological innovation to provide its consumers with the highest levels of service.
“For so long, the financial industry refrained from resorting to technology as it continued using traditional methods to manage assets, provide commercial and retail loans, raise funding and transfer money. All of this is now changing across the globe.”
He added: “In the UK, reports show that the 11 leading start-ups in the robo-advice space currently manage over $15.7bn in client assets.”
During a presentation on the opportunities of digitisation and fintech for financial services companies, David Lecea, Roland Berger’s head of Banking Middle East, said: “We are now moving into a new era of fintech where collaboration of financial institutions and fintech startups will be the norm — it is exciting to see the QFC being at the forefront of such discussions.”
Peter Tavener, CFO and COO of Beehive, the GCC’s first peer-to-peer financing platform, said: “We found the event‎ very engaging and look forward to continuing the discussion of how Beehive can contribute to the nascent fintech ecosystem in Qatar. We would like to thank the QFC and Roland Berger for inviting us.”
The event concluded with a group discussion on the different methods and uses of bringing the power of fintech to bear in Qatar and how these methods would benefit and strengthen the local economy and provide additional support for SMEs. The event comes as part of the QFC’s continuous efforts to develop human capital as a driver for economic growth and prosperity in line with Qatar National Vision 2030.

Article published in Gulf Times on 7 February 2017.

Robo-advisors: wealth managers, get ready!

We are witnessing the rise of “robo-advisors”. More accurately, we should call them automated investment management solutions, since they are neither robots, nor do they provide comprehensive financial advice.


Following the disruptive appearance of FinTech startups such as Wealthfront and Betterment in the US, some of the biggest players, e.g. Vanguard and Charles Schwab, launched their own automated investment solutions. The industry is forecast to reach more than two trillion dollars under management by 2020. Other parts of the world still lag behind, but are also expected to follow this trend.

Therefore, traditional wealth managers and financial planners must get ready for the new status quo. What should they do in response to the rise of robo-advisors?

  1. Accept the new reality
    Robo-advisors are receiving close scrutiny from regulators and customers, who still haven’t gone through a bear market with their money being managed by these new solutions. The automated investment model might be tweaked, regulated and transformed but it seems robo-advisors, and their low fees, are here to stay. If they haven’t developed their presence in a specific region yet, it is likely they will.
  2. Consider offering your own robo-advisor
    Given the success of this model, wealth managers would do well to consider entering this market, particularly if they want to serve the retail mass affluent segment that is ideally suited for this model. Some managers ask themselves if they should offer their own automated investment management services, and if so, how? Well, developing a proprietary solution, buying one off-the-shelf or partnering with another provider are all current models that have been successfully deployed.
  3. Focus on the things machines cannot do (yet)
    Not all customers’ needs can be met with an automated solution, at least not yet. If asset portfolio building and management can now be done more efficiently and less costly with an automated tool, wealth managers and financial planners will struggle to justify their fees unless they provide other services. The good news is that there are many aspects of financial planning that cannot be fully done by machines yet: budgeting, insurance, tax, trusts, succession planning and most importantly, behavioral coaching. Leaving the machines to do what they are best at, while focusing on the services humans do better sounds like the best combination to provide an excellent service.

Post originally published in Roland Berger’s blog on 7 December 2016.

Robots on The Rise. How AI Can Change the Financial World?

Why artificial intelligence (AI) might be a game changer for the financial industry.

According to Stephen Hawking, the creation of a true AI will be the most important event in human history. This process is increasingly noticeable within the technologies such as blockchain, biometrics, quantum and cloud computing, etc.Artificial intelligence (AI) is an important part of many popular technology industries – entertainment, automation, electronic gadgets and others. Recently, it has also started to increase its reach and importance in the wider banking industry and financial sectors.

Enterprises directly linked to the FX, binary options, fintech and cryptocurrencies need to confront with enlarged competition, tighter regulatory surroundings and customer requirements – solutions in the field of the artificial intelligence may become a valid response to the booming market.

Machines Better Than a Human

In recent times the saying that anything you can do, AI can do better is becoming increasingly popular. In the world of financial services it may take an entirely new meaning – though we often do not realize, AI is present all around us in many actions of daily life – natural language recognition, self-driven cars, chatbots, etc.

According to Pedro Domingos, the author of The Master Algorithm, “People worry that computers will get too smart and take over the world, but the real problem is that they’re too stupid and they’ve already taken over the world.”

Although this statement can be considered as slightly exaggerated, computers and artificial intelligence really have become and indispensable part of our lives. Still, how this may translate into the world of finance?

At what point can we trace the applications that make life easier for banks, brokerage houses, financial firms and their clients? Many examples can be specified, but let’s start from the customer support, transactions and helpdesks.

Automatic assistants like Siri or Cortana start to gain popularity not only in the daily tasks, but also in the world of finance and banking. Such products as Kasisto by SRI International, a virtual assistant in DBS digibank, secure transactions using voice recognition from Santander or Lubo prepared by RBS as retail banking helper.

All these examples and automated support systems can be directly transferred to the activities of online brokers specializing in derivatives.


Financial Analysis, Security and Fraud Detection

Although above described solutions are impressive, they are currently quite common. So how the AI was implemented on the other fields? A great example would be a startup called Kensho – supported by Google Ventures – currently it is actively used by such banking sharks like Goldman Sachs or

JPMorgan. The tool for executing automated research and financial analysis provide immediate answers to questions expressed in natural language.

Transactions security and the service stability is another challenge faced by almost each brokerage. The response to cyber-attacks was presented by PatternEx – machine learning startup that developed a system to predict, identify and counteract 85% of the most popular attacks within the financial industry.

In the field of fraud detection, the case looks really similar. Feedzai machine learning services allows to monitor all customer’s authorization, clearing and settlement systems in order to detect any abnormal action.

Artificial intelligence undoubtedly affects the transformation of various industries – the financial world is no exception here. Institution which first begin to adapt to the changes will have a potential opportunity to take over the leading position in the coming years and decades. The race has already begun and will only increase its peace.

This article is an excerpt from the latest FM Intelligence Report.

UAE telco launches mobile wallet

Etisalat signs deal with technology company to offer its customers a mobile wallet service, as fintech expands in the Middle East

UAE telco Etisalat has launched a mobile wallet to enable its customers to make payments and money transfers on their smartphones.

The company is using a platform from Oberthur Technologies. As well as account management, the mobile wallet will provide automatic reports and notifications on transactions.

This is a sign of a trend in the Middle East similar to that seen in Europe, Asia and North America, with technology companies looking to take a slice of financial services business.

For example, mobile operator Telefonica’s German business division recently launched a mobile-based bank account, and O2 Banking is using technology from Fidor Bank as a rebranded white label service. Fidor bank, which launched in Germany in 2007, has an office in Dubai’s Silicon Oasis park.

But while these alternative financial platforms have become the norm in the world’s fintech hotspots, including parts of Asia and Europe, experts says this global trend has yet to infiltrate the Middle East.

The latest report from FinTech Week said less than 0.1% of fintech investment originates in the Middle East. “Consequently, the region’s banks and fintech startups are lagging behind their foreign counterparts in the development of new services and business models,” David Martinez de Lecea, a principal at Roland Berger, told Computer Weekly in June.

But the region is now seeing increased investment in financial services technology. Last week, Abu Dhabi Securities Exchange said it would provide access to documents on listed firms via mobile devices through a blockchain-based system, while Emirates NBD banking group announced a pilot for the use of blockchain for transactions between the UAE and India.

Article written by Karl Flinders and published in Computer Weekly on 25 October 2016.