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25 February 2019

Embracing disruption in GCC

Financial institutions can out-innovate fintechs through greenfield approach, according to Oliver Wyman


The next big wave of innovation in financial services will be driven by incumbents starting with a blank canvas, according to Oliver Wyman’s State of Financial Services 2019 report, Time to Start Again. The report introduces an emerging new approach called “greenfield”— where existing firms break free from the constraints of their legacy systems, business and talent models.

The greenfield approach seeks to prove that it is possible to build a digital banking or insurance platform that is open to customers in just 12 months, at a materially lower cost than in the past. “Greenfield is when existing firms break free from the constraints of their legacy systems, business and talent models,” explained Mathieu Vasseux, Partner and Head of Financial Service at Oliver Wyman Financial Service (MEA).

The greenfield approach is fuelling a wave of start-ups that are going to market with rudimentary banking and insurance propositions for less than $5 million, which might not account for large amounts of sweat equity.

While fintechs were early movers and catalysts, financial institutions can out-innovate fin-techs through greenfield approach and—the next big wave of innovation in financial services will be driven by incumbents, not fintechs, added Vasseux.

The Gulf

Conventional lenders are introducing more robust digital banking and insurance offerings for between $10 million and $60 million. Regionally, the majority of banks are going digital in a bid to remain competitive and effective in service delivery.

In the last quarter of 2018, Standard Chartered announced plans to reduce its headcount in the UAE as part of a global shake-up, within corporate, commercial and retail banking divisions as most of these divisions are going digital.

The UAE has a high digital penetration rate compared to other countries where the Standard Chartered operates in the emerging markets. Similarly, Abu Dhabi Islamic Bank (ADIB) is making changes to its retail business, including encouraging customers to go digital.

The lender increased the number of its network of ADIB Express branches— new technology-enhanced express banking branches bringing its technologically enhanced units to the UAE. There has been a clear change in the relationship between conventional outfits and their customers in the UAE and banks are investing in technology infrastructure to capture a distinct preference for digital banking.

Additionally, Abu Dhabi Commercial Bank (ADCB) inaugurated its ADCB Hayyak application recently. The paperless account opening app enables new customers to open accounts, receive their debit cards and cheque books without having to visit a branch or complete any paperwork.

According to Mathieu Vasseux, “Regulators are embracing fintech and open-banking, we are now seeing an accelerated push by the central banks and Capital Market Authorities (CMAs) to leapfrog on the fintech environment which is disrupting the competitive landscape massively.”

GCC-based lenders, as well as their international peers operating in the region, are looking for disruptive ways to free themselves from the shackles of their legacy infrastructure and embark on futuristic digitally-creative banking journeys. no-fee transaction accounts to date, Goldman Sachs also launched Marcus in the US and Europe allowing it to enter consumer banking.

Banks are going digital, adapting technologies which can simplify customers’ lives and make their banking experience as seamless and secure as possible. Emirates launched Liv—a digital lifestyle banking that allows customers to open bank accounts instantly as well as allowing money transfer through social media.

Similarly, Royal Bank of Scotland (RBS) is set to unveil a standalone consumer digital lender called Bó as it plots a fightback against the technology ‘unicorns’ which are threatening to lure millions of customers from their well-established rivals.

The Oliver Wyman report said that some of these businesses may not yet be profitable, but over time the digital challengers and greenfield businesses will use what is called ‘flywheel momentum,’ collecting more data, developing new propositions with that data and attracting more talent.

Vasseux said that to be successful financial institutions need to have the same advantages as digital challengers—while also using their deep pockets, extensive customer networks and vast troves of data. The greenfield is an attempt to deliver a customer offering to match or exceed the challengers.

Using modern technology, an open platform and third-party services, new banking and insurance platforms can be built within a year, at a cost of between $10 million and $60 million. Financial services firms will hope to outcompete fintechs with greenfield platforms while having the advantage of tremendous resources and an existing customer base from day one.

Moreover, in the foreign exchange market, regional players like Finablr’s UAE Exchange and Unimoni in Africa are roping in blockchain to outdo well established foreign exchange companies like Western Union and MoneyGram.

Last month the duo became the first in their category in the MENA region to implement blockchain-based money transfer services. UAE Exchange and Unimoni will use Ripple’s blockchain based RippleNet platform to provide seamless cross-border transactions to Thailand—with plans in place to extend it to other countries.

The biggest demography of fintech users are millennials, individuals born between 1980 and 2000. Millennials are also in their prime spending years as well as sustainable investments.

Understanding the techie needs of this class, is crucial for banks to sustain market share, build products and tailor products as well as services to meets the expectations digital bankers. Well established lenders should rope in digital start-ups and invest in resources and services that sustain them as technology keeps on evolving and transforming the banking industry. 





CPI Financial was established in Dubai in 1999 to meet the needs of an ever-expanding financial community, offering a comprehensive portfolio of market-leading products and services tailor-made for the banking and financial services sectors.

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