Banking on innovation: Financial industry's survival hinges on novel technologies

Several years ago, the chairman of a programming company made a remark at the World Economic Forum in Davos, stating that “Speed is the new currency in the business world.”

I didn’t fully comprehend the depth of this statement until COVID-19 swiftly disrupted our lives and the business world. This frightening virus swept across every country, bringing our lives to a halt and imposing new rules for transactions, particularly in the financial sector between banks and their customers.

Banks had to rapidly develop and implement new ideas and technologies to provide services that meet the needs of their customers as well as respond to competitive changes and remain competitive.

In other words, Financial institutions were forced to adopt innovation as the foundation of their business models to maintain their brand excellence, embrace rapid change, and create fresh solutions to meet the expectations of their customers, strengthen their competitive positions and protect market share.

The current global economic climate has placed a greater emphasis on the importance of digital technologies, with digital capabilities and skills being critical to ensuring the resilience and sustainability of economic growth. In today’s highly competitive market, banks’ chances of survival depend on the speed of development, creativity, and innovation of their work methods. The provision of advanced and innovative products that meet the needs of their customers is also critical in ensuring a competitive advantage.

Given the significance of innovation in achieving long-term success and survival, media reports highlight the investments banks are making in financial technology and digital transformation. These include platforms, applications, blockchain technology for cross-border payments, and artificial intelligence to improve customer service.

At a time when Western banks are struggling to compete and face significant challenges that may delay their investments in financial technology, Gulf banks are taking the lead by investing heavily in their technological infrastructure and introducing innovative products and digital services. These actions align with the ambitious economic visions and development plans of the GCC, aimed at transforming the region into a global financial, economic, and cultural hub. Innovation is no longer an option but a necessity for the banking industry to remain competitive. Banks must continuously renew themselves or face arrested development.

Chief Executive Officer – Publisher

Joe Chidiac

UAE Central Bank implements Digital Dirham strategy with G42 Cloud and R3

Measure aims to improve financial infrastructure, address payment challenges

The CBUAE recently held a signing ceremony with G42 Cloud and R3 to mark the implementation of its Central Bank Digital Currency (CBDC) Strategy, known as the Digital Dirham. As part of the CBUAE’s Financial Infrastructure Transformation (FIT) Program, the CBDC Strategy is one of nine initiatives aimed at improving financial infrastructure in the UAE.

To bring its CBDC Strategy to fruition, the CBUAE has engaged G42 Cloud and R3 as infrastructure and technology providers, respectively. The first phase of the strategy is expected to take 12 to 15 months and consists of three main pillars. These include the soft launch of mBridge, which will facilitate real-value cross-border CBDC transactions for international trade settlement. Additionally, proof-ofconcept work for bilateral CBDC bridges with India, a top trading partner of the UAE, will be undertaken. Finally, proof-ofconcept work for domestic CBDC issuance will be conducted, covering both wholesale and retail usage.

After several successful CBDC initiatives, such as Project “Aber” with the Saudi Central Bank in 2020, the CBUAE is ready to implement its CBDC Strategy, which will address issues related to domestic and cross-border payments, enhance financial inclusion, and promote a cashless society. The CBDC will also strengthen the UAE’s payment infrastructure by providing robust payment channels and ensuring a resilient and reliable financial system. Moreover, the CBUAE aims to ensure the UAE is ready to integrate payment infrastructures with the potential future tokenization world of financial and non-financial activities.

Saudi Arabia's PIF invests SAR 5 billion in four national contracting companies

Governor outlines fund’s strategy to invest SAR 1 trillion in new projects in region

Yasir Al-Rumayyan, the Governor of Saudi Arabia’s Public Investment Fund (PIF), announced that the fund has invested SAR 5 billion in four national contracting companies – Nesma and Partners, Al-Saif, Al-Bawani, and Almabani. The capital increase aims to build strong entities in line with the country’s construction ambitions.

Speaking at the PIF Private Sector Forum, Al-Rumayyan outlined the fund’s strategy to invest SAR 1 trillion in new projects in the region. “Within the framework of supporting national development as one of the most important pillars of PIF’s strategy, the fund devcided on a strategy to develop 13 strategic sectors in the Kingdom. It also launched initiatives to develop a clear mechanism to involve the private sector as an investor and partner in those sectors. For instance, [real estate firm] Roshn has created opportunities for the private sector by allocating 30 percent of its land to real estate developers to build promising housing,” AlRumayyan said.

Al-Rumayyan also emphasized the importance of the recycling sector and the fund’s efforts to support it, including the establishment of the Saudi Investment Recycling Company (SIRC) and the creation of specialized companies for joint investment to support the private sector’s growth.

Finally, Al-Rumayyan announced PIF’s plan to increase its contribution to local content to 60 percent by the end of 2025.

Saudi Arabia signs 14 investment agreements with sports bodies

Deals to benefit sector with top-tier projects such as events, academies and medical clinics

Saudi Arabia’s Minister of Investment, Khalid Al-Falih, has announced the signing of 14 agreements aimed at developing the Kingdom’s sports and entertainment sectors. The deals were signed during Formula One’s Saudi Arabian Grand Prix in Jeddah, and are part of Saudi Vision 2030’s efforts to increase public participation in sports and sponsor talent development pathways.

These agreements are expected to benefit the sports industry, with projects such as events, academies and medical clinics, as well as the construction of infrastructure projects for motor racing circuits and professional training circuits. The agreements also aim to assist investors in the field of sports studies and consulting.

New partnerships include agreements with BAC Cars and VeloceLife to launch a leading manufacturing facility of BAC sports cars in Saudi Arabia, with PureGym Group to support the expansion of gym and fitness facilities, with Seedorf Group for the establishment of sports academies and sports medical clinics, and with Meritus Formula4 to explore the activation of the Formula 4 academies and hosting championships in Saudi Arabia.

Saudi Arabia’s sports sector has seen significant development in recent years, driven by widespread social transformation and government investment commitments of $2 billion in sports by 2024. The sector’s contribution to non-oil GDP is expected to reach over $22 billion by 2030, with an additional $5 billion in private sector contribution required. This provides significant opportunities for international investors.

Dubai World Cup success reflects UAE's commitment to global excellence

His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, Ruler of Dubai, attended the 27th Dubai World Cup at the Meydan Racecourse. His Highness was accompanied by His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Executive Council of Dubai, and His Highness Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai, Deputy Prime Minister, and Minister of Finance of the UAE.

Speaking on the occasion, H.H. Sheikh Mohammed bin

Rashid Al Maktoum said that the success of the Dubai World Cup reflects the UAE’s determination to be a global role model for achievement and excellence in various fields. The UAE’s superior infrastructure and emergence as a major venue for global tournaments and a magnet for leading international sporting figures have marked the city as one of the world’s greatest sporting destinations, H.H. Sheikh Mohammed added.

His Highness Sheikh Mohammed followed the races of the 27th Dubai World Cup event, which brought together the best racehorses, trainers, and jockeys globally and thousands of spectators.

One of the world’s biggest horse racing tournaments, the prestigious event offered total prize money of $30.5 million. The event’s nine-race card featured 127 horses from 13 countries.

Moreover, H.H. Sheikh Hamdan bin crowned the winner of the main $12 million Group 1 race of the Dubai World Cup, which was sponsored by Emirates Airlines.

Ransomware attacks remain top threat to businesses, $30 Bn in damages expected by 2023

Cybersecurity firm warns of AI risks to digital ecosystems

Ransomware attacks remain the top threat to businesses of all sizes globally and are projected to cause damages exceeding $30 billion by 2023, according to cybersecurity firm Acronis. In its latest Cyberthreats Report, Acronis notes that it stopped over 100 million cyber-attacks in 2022 and that the average cost of data breaches is expected to reach $5 million in 2023.

In Saudi Arabia, breaches are projected to reach an average cost of $7 million, as the country continues to report one out of every five attacks as being ransomware. Cybersecurity experts attribute this to weak credentials, phishing emails, and unpatched vulnerabilities, which remain the top vectors for cyberattacks. Meanwhile, in the UAE, targeted organizations lost over $1.4 million in ransomware attacks, forcing over 40 percent of them to shut down.

The accelerated advancement of AI-driven innovations is causing concern, as cybercriminals are expected to use this technology to create more complex cyber threats. Acronis warns that AI and machine learning (ML) technologies could pose a big risk to digital ecosystems that are not protected. Cyber protection experts believe that cybercriminals are likely to take advantage of these new tools to increase the effectiveness of their attacks by crafting harder-to-detect assaults.

KSA looks to compete with regional transportation hubs with launch of new carrier

Riyadh Air set to serve over 100 destinations, create 200,000 Jobs, add $20 billion to GDP

Saudi Arabia’s Crown Prince Mohammed bin Salman has formally announced the launch of a new national airline, Riyadh Air, in an effort to compete with regional transportation and travel centers. The airline will be chaired by PIF Gov. Yasir Al-Rumayyan and led by industry veteran Tony Douglas as its chief executive. Riyadh Air will operate from the Saudi capital as its hub, and is expected to add $20 billion to the Kingdom’s non-oil GDP growth, while creating over 200,000 direct and indirect jobs.

Riyadh Air aims to leverage the Kingdom’s strategic location between Asia, Africa, and Europe, with plans to serve over 100 locations worldwide by 2030, according to the Vision 2030 official website. Riyadh Air is solely owned by the Public

Investment Fund (PIF), which manages more than $600 billion in assets and is driving the country’s efforts to diversify its economy and reduce its dependence on oil.

According to industry sources, Saudi Arabia is in advanced talks with Airbus to purchase over 40 A350 aircraft, while Boeing is also vying for a share of the Kingdom’s growing transportation market. In addition, officials have announced plans for a new airport in the capital city of Riyadh, spanning 57 sq. km, which is set to accommodate 120 million travelers per year by 2030 and 185 million travelers by 2050. Currently, the capacity of the existing Riyadh airport is around 35 million travelers.

Major U.S. banks lead bailout of First Republic

Wall Street comes to the aid with $30 bn in deposits

Attention returned to the United States after three regional banks, namely Silvergate, Silicon Valley, and Signature, failed within a week. The medium-sized First Republic appeared to be facing a similar situation, as its shares experienced a significant drop after the Silicon Valley Bank crash. Following this collapse, Swiss Credit Suisse had to borrow up to $54 billion from the Swiss Central Bank to restore investor confidence and support liquidity.

On March 15, Bloomberg reported that First Republic was contemplating a sale due to a 70 percent drop in its stock value in the previous nine trading sessions. However, Wall Street came to the bank’s aid the next day, depositing $30 billion to help it out of its predicament.

JPMorgan, Bank of America, Citigroup, and Wells Fargo will contribute approximately $5 billion each, while Goldman Sachs and Morgan Stanley will each contribute roughly $2.5 billion. Additionally, Trust, PNC, US Bancorp, State Street, and Bank of New York Mellon will each deposit around $1 billion.

As of March 12, the bank had over $70 billion in available liquidity, not including additional funds from the Federal Reserve’s Bank Term Funding Program. However, this was insufficient to prevent investors from dumping the stock. The bank had approximately $34 billion in cash as of March 15, not including the new $30 billion in deposits.

UBS acquires Credit Suisse in bid to strengthen global banking sector

Merger worth 3 billion Swiss francs aims to boost financial stability

Switzerland’s largest bank, UBS, has acquired struggling rival Credit Suisse in a merger approved by Swiss authorities to prevent further disruption in the global banking sector. The deal is valued at 3 billion Swiss francs (3.02 billion euros) and will be paid in shares, or 0.76 francs per share, based on Credit Suisse’s value of 1.86 Swiss francs on March 17.

The merger was completed before the bourse opened on March 20, to avoid a panic in the markets. Both UBS and Credit Suisse are among the 30 banks deemed “too big to fail.”

Observers hope that the merger will prevent a widespread panic in the markets. This move follows similar efforts in Europe and the United States to support the banking sector in the aftermath of the Silicon Valley and Signature collapses.

After the merger, the Swiss central bank announced it would provide significant liquidity to both banks, with 100 billion Swiss francs in financial aid allocated to UBS and Credit Suisse.

UBS expects to save approximately $7 billion in costs annually by 2027. Credit Suisse shareholders will receive one share in UBS for every 22.48 shares they own in Credit Suisse, equivalent to 0.76 Swiss francs per share.

The finance minister has also confirmed that UBS will benefit from a government guarantee of approximately 9 billion francs to address any issues that may arise in Credit Suisse’s portfolios.