Ahmed Al-Faifi, Senior Vice President and Managing Director at SAP Middle East shares his views on technology in the region, the threats and opportunities that lie within.
How has the year been for SAP thus far?
SAP is growing stronger than ever before, with double digit year-on-year growth in the Middle East and winning strategic deals with financial services industry customers across the region. SAP and our channel partners are helping the region’s financial services industry to achieve their digital transformation journey.
We are fully aligned with national visions, such as Bahrain’s Economic Vision 2030, Kuwait Vision 2035’s National Development Plan, and Saudi Vision 2030, which are supporting the financing of small- and medium-enterprises to foster diversified economic growth, promote foreign direct investment, and support new levels of insurance.
What are your views on the development of financial technology in the Middle East?
Technology has always served as a backbone of automation, reconciliation and settlement in the financial services industry. Technology, including digital solutions and cloud computing, is rapidly being adopted by regional financial institutions as part of their digital transformation enablement. In the financial services sector, digital transformation is the key factor to drive customer success, achieve operational excellence and sustain margins.
What are your projections on the market for the rest of the year and going into 2019?
As Middle East financial services firms adopt digital transformation agendas and map their visions to their digital journeys, we will continue to see an increased demand towards adoption to cloud-based solutions.
Real-time data processing and increased demand towards cloud computing capabilities are enabling digital customer engagement, integration with external partners and promoting operational efficiency at financial institutions. We perceive the Middle East’s digital market to continue to grow in 2019, especially as banks and insurance companies work with business software partners like SAP to achieve their digital transformation initiatives.
What are the biggest challenges in technological progression for banks in this market?
The Middle East banking and finance sector faces numerous challenges in their digital transformation journeys. These challenges include managing change as well as existing legacy technology landscape, fostering agility, reducing time to market for new products, and effectively use customer transactional data to better engage and monetise customer relationships.
With a wide adoption of social media amongst the customer base in the region, financial institutions have challenges managing big data initiatives to improve customer analytics and increase campaign responsiveness.
Where do you see opportunities?
We see tremendous growth and opportunities towards the financial services industry adopting the cloud and moving towards software as a service (SaaS) platforms, which can allow their support functions to be managed by providers, so the firms can focus more on their core business.
We perceive significant opportunities towards helping financial services firms collaborating and integrating better with fintech companies as a key opportunity. There are also opportunities for the financial services industry to adopt blockchain and distributed ledger technology to promote operational efficiency, integrate better and quicker with partners and commercial customers and facilitate ease of settlement and reconciliation with payments and trade finance.
We also see tremendous opportunities towards governance and regulatory framework adoption as regulators and central banks in the region continue to introduce and adopt newer initiatives revolving around payments, capital adequacy, operational risk and lending. In addition, we see adoption of compliance automation and simulation solutions by commercial banks to address regulatory requirements as well as monitor their risks accordingly.
Looking to the future, what would you say is the biggest threat to financial institutions?
I believe that with the advent of fintech and digital currencies, financial services firms now must work hard towards sustaining their margins, enhancing their customer engagement, and retaining trust and loyalty in order to grow their market share. The focus on enhancing the customer experience is especially pronounced among the emerging digitally-savvy generation of millennial banking and finance customers.
What are the company’s plans moving forward?
In the Middle East, SAP has been growing significantly, with double-digit year-on-year growth over the past five years.
Our customers are on our side, and our solutions are poised to help our customers to succeed and grow. Across the board, the Middle East’s banking and finance firms, regulators and insurers are all executing digital transformation initiatives across real-time big data analytics, compliance and risk management, omni-channel customer services and customer onboarding, campaigns and loyalty management.
We are working closely with the Middle East’s leading and most innovative banking and finance firms to drive co-innovation and digital transformation, including with the General Authority of Zakat and Tax, Islamic Development Bank, the Saudi Arabia Monetary Authority (SAMA) in the Kingdom of Saudi Arabia.
We’re seeing strong Middle East demand for digital transformation enablers, led by line of business cloud solutions that run on our recently-launched Saudi Arabia public SAP cloud data centre, along with our SAP Hybris portfolio of e-commerce and marketing and customer experience solutions, predictive analytics and machine learning on our SAP Leonardo digital innovation system, governance risk and compliance solutions and variety of core FSI industry solutions running on our SAP HANA in-memory platform and SAP S/4HANA real-time business suite.
How do you envision banking and finance in the next five years?
Banking and finance, much like the rest of the services industries, will inevitably witness a massive emergence into other respective industries in the next five years. With telco and financial technology companies trying to position financial products and win customer loyalty on one hand, and tech giants emerging as ‘one stop shop’ financial supermarket providers on the other side, have a major challenge ahead to either disrupt or be disrupted.
While banking and finance firms are working aggressively towards investing in fintech or collaborating with fintech companies and tech giants, we believe that the and finance companies will continue to ‘manage and own’ the financial products. However, the ‘outlets and front office’ firms offering these financial products might very well be taken over by retail and fintech players while, finance and insurance companies managing the back-office and product lifecycle.
We believe that regulators are expected to continue to rely on sound reporting and prudence adopted by, insurance and finance companies (as opposed to fintech companies) ensuring economic equilibrium between lenders, consumers, and depositors.