BANKING TECHNOLOGY
The future of the region’s financial services sector will be written in the cloud The way that financial services are accessed and used today, plus the high levels of innovation in our region, make the cloud the natural home for the banks and financial services providers, says Naim Yazbeck Regional Director, Enterprise and Partner Group (EPG), Microsoft UAE
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he Middle East and Africa is home to one of the world’s most innovative financial services industries. This reputation dates to before the pandemic. A 2018 study from The Economist Intelligence Unit showed how regional bankers, concerned about new industry entrants’ ability to build market share, had started to develop new differentiating offerings. Nearly two thirds (65%) of those polled said this was their strategy. And 57% said they were now viewing their services as a “digital ecosystem” with more than half prepared to engage in open banking, where FSIs expose their services to thirdparty developers through APIs. Around the same time, Microsoft conducted a cross-industry survey to assess the relative maturity of MEA businesses regarding artificial intelligence. We found that the FSI sector was ahead of others, with 44% of organizations found to be in the two most mature stages of adoption.
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Few of these advances can occur without the cloud. It is the toolbox of innovators, host to a vast array of technologies that allow any business to behave as a large-scale enterprise in the digital arena. Barriers to entry, in terms of skills, capital, and geography, are lowered and the scope for collaboration, productivity and cost-cutting is raised. Cost-cutting is of particular interest to regional FSI entities, the stakeholders of which are deeply concerned about financial sustainability. McKinsey research on the African banking segment from 2021 showed that less than 10% of IT budgets was available for value-adding business functionality, with 70% of technology capacity dedicated to maintenance of legacy infrastructure, troubleshooting and daily operations. However, the study suggested that banks could cut costs by more than 20% through cloud migration, and by “pulling on modern levers” they could double the productivity of the IT function.
The COVID factor
Naim Yazbeck, Regional Director, Enterprise and Partner Group (EPG), Microsoft UAE
Banking and Finance news in the MEA market
As with most industries, FSI was upended by the pandemic. Aware that regulators were becoming increasingly tolerant of cloud models, banks migrated in large numbers over the past two years. But their attraction to the cloud went beyond mere business continuity and cost-cutting. They saw the cloud as a foundation for innovation and for unlocking value creation. Beset on all sides by new entrants, including fintech firms and neo-banks,
