Driving Innovation In GCC Corporate Banking

The regional banking and financial services industry is experiencing unprecedented levels of change, with an overcrowded sector being roiled by new and disruptive technology trends.

On the one hand, digital technologies have transformed customer behaviour and expectations, while on the other, banks here need to continue to drive innovation to stand out from their peers and gain competitive advantage.

The need to adapt is now as true for corporate banking as it is for retail: corporates today are looking for more flexibility and personalisation in their banking experiences, and they expect to receive the levels of service they are used to as retail customers.

Corporate needs have evolved from simple payment and cash management services to a stream of new value-added, real-time services such as faster onboarding, improved forecasting, lower connectivity costs, faster data delivery, and integrated bank systems with corporate enterprise resource planning and treasury management systems.

To meet these expectations, banks are looking to leverage the power of emerging technologies such as artificial intelligence (AI), machine learning, digital personal assistants and blockchain. Corporates demand seamless user experiences through the transaction journey—and if their bank cannot provide it, they will look elsewhere.

The challenge for the regional banking sector is that 70 listed banks serve the GCC’s 50 million people—compared with about 12 such banks for the UK’s population of 65 million, according to Bloomberg. Fintech start-ups are also attracting increasing attention in the region, overtaking e-commerce firms as the most actively invested-in sector last year, according to industry watcher MAGNiTT.

Governments here are also embracing fintech, with Dubai International Financial Centre (DIFC) and Abu Dhabi Global Markets courting them with accelerator programmes, attractive licencing opportunities and regulatory sandboxes. The good news is that regional banks do not have to go at it alone—and fintech companies do not have to be the enemy.

The shift to digital technologies and emerging trends such as open APIs have made it easier than ever for banks to partner with agile third-party suppliers such as fintechs and other technology companies, and leverage their capacity to delight customers.

Banks that want to take advantage of cutting-edge technologies no longer have to develop solutions in-house, a process that is both cost-prohibitive and restrictively slow, but can use other companies’ know-how to benefit more quickly from innovation, while deepening their customer relationships.

Some of the leading banks here in the region are grasping the importance of embracing collaboration and co-creation and how this can drive higher levels of innovation. Instead of fearing fintechs, smart banks are working with them to deliver new and better customer experiences. As a leader in the IDC MarketScape for end-to-end corporate banking solution providers, Finastra is well positioned to support such collaborative initiatives.

As the third-largest fintech company in the world, our services are used by banks in over 100 countries, and we continue to work closely with regional banks to help them enhance their services. Over the past decade or so, the UAE has experienced significant digital transformation in the financial-services sector, as banks explore how best to drive innovation, reach new customers and expand their revenue streams.

Finastra recently hosted an event with Mashreq Bank, one of the UAE’s leading financial institutions, to drive a deeper understanding of the growing impact of technology on the corporate banking sector. Mashreq was a logical choice to partner with on this initiative, as the bank has a long history of embracing technology to drive innovation and remain ahead of the digital transformation curve.

Mashreq Bank’s vision is to bring those innovations into the corporate world, and the bank is dedicated to delivering next-generation digital banking experiences. The UAE, and other GCC markets, features a predominantly young, tech-savvy population, with some of the highest rates of smartphone penetration in the world.

Accordingly, many of the technology trends that we are seeing globally are attracting strong attention here, such as banks’ increasing use of cognitive AI solutions to interact with customers. By bringing together senior business and IT leaders from some of Mashreq Bank’s leading customers, including from the telecommunications, utilities and transportation industries, the workshop was designed to examine in-depth some of the key technology trends that are disrupting the market today, including AI, machine learning, digital assistants and blockchain.

The adoption of these new technologies is not an option for banks; embracing change is an imperative for survival for financial institutions as they face ever-evolving customer demands and increasing competition. Smarter banks, however, do not just see new technologies as a threat— they see them as opportunities.

Those organisations that can leverage technologies such as AI and digital assistants to improve the customer experience will reap the benefits of greater customer trust and loyalty—and increased future revenues. By working more closely with third-party companies, including fintechs, banks can prepare for a better mutual future.