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07 November 2018

The fintech revolution: disruptor or innovator?

Majed Al-Ghanemi, Chief Operating Officer of Alawwal Bank sheds light on the development of financial technology in the Kingdom of Saudi Arabia


‘Fintech’ is a term that has been used in the banking sector for years. There are predictions that financial technology will see the demise of traditional banking practises, leading the way for digital-only competitors. With the onset of new financial technologies, the banking sector has been investing heavily in digital infrastructure and is delivering more services through digital channels, but what does this mean for the sector more broadly?

Fintech infrastructure in the GCC

Although the majority of fintech investment has taken place in the US and Europe, a consensus is emerging across GCC countries that governments and financial intuitions must invest in the development of Fintech ecosystems. These ecosystems are critical to nurturing technological innovation that will improve overall efficiency in financial services. The strong support of financial technology in the GCC from investors, regulators, and banks has resulted in the industry being placed on the verge of uber growth.

In Saudi Arabia financial technology is being encouraged at a government level as a result of a combination of factors. These include measures to reduce dependence on oil, a growing millennial population (50 per cent of the country is under the age of 30) and Vision 2030’s strategy which places a huge amount of importance on the role of technology and its contribution to the growth of the Kingdom.

Regulatory changes have also had a huge impact in creating a positive ecosystem for digital adoption and with the stage set, it is clear the digital revolution is coming, but what impact will this have on the current status quo?

Disrupter or innovator?

According to FICO, a data analytics company which focuses on credit ratings and consumer behaviour in the US, only 25 per cent of millennials display brand loyalty towards financial services. This is the reason fintech companies have been so successful in transforming the existing business model of banks. Fintechs have deconstructed banking into several verticals including robotic money managers, ewallets, and virtual currency.

The reality is that fintech is both a disrupter and innovator; it has created pioneering customer experiences around mobile technology. Traditional banking experiences have become outdated. Consumers now expect their financial experiences to be mobile, personalised, customisable, and easily accessible.

While the role of banks has not changed since the inception of money management, customer expectations revolved around these services have. Fintech solutions that have emerged have resulted in a range of developments from lower turn-around times for mortgages, to peer-to-peer lending/currency exchange, and crowd funding. This has greatly improved the customer experience, satiated customer demand, and has given scalable access to financial solutions in a manner which previously did not exist.

An integrated banking model

The solution? A digital ecosystem in which banks collaborate with fintech companies to provide seamless customer experience solutions. Banks are evolving in many ways to meet customer needs from investment to advisory boards. A collaboration will more effectively integrate supply-side specialisation, from origination to bionic authentication, with the core expertise of banks, such as regulatory frameworks, to meet customer needs. If we identify fintech competencies, integrate, and offer a distinguished user experience, the result would be greater than its parts.

The banking industry is all about meeting customer needs and I cannot stress this enough. To be relevant today and in the future, digital innovation linked to customer lifestyle is extremely important; for example, today’s customers demand interaction with banks via their mobile phone and banks that fail to follow will be left behind. History is filled with examples of once great companies that failed to recognise and react to the digital revolution.

Alawwal bank recognises this need to innovate. It has a history of doing so and will continue to do so. To demonstrate, Alawwal was the first bank in the Kingdom to offer transactional capability on the Apple watch. We have also launched an app which encompasses a fully functional independent banking channel allowing customers to start banking from their mobile devices. Today all transactions are available via Alawwal Mobile and we have material plans to further increase our presence in this domain.

More recently, we launched an innovative banking model based on technology and the retail experience. Ibda is a digital branch which offers customers an integrated experience and redefines the traditional banking model into a state-of-the-art café facility. The new branch allows customers to apply and instantly open an account or receive a credit card in under seven minutes while enjoying a selection of beverages and snacks from its partner; Costa Coffee. We expect Ibda to set new benchmarks in how banks engage with their customers across the MENA region.

As for the demise of traditional banks to digital models, it is difficult for one to exist without the other. While banks need to react and embrace digital as a core value, the digital evolution needs to be integrated seamlessly into a bank’s business model to provide an enriched customer experience. Traditional banks have strong reputations, invoke trust, and provide security. While technology solutions offer many advantages, traditional bankers are best placed to integrate the technology into existing, established ecosystems to offer the most value to customers.





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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