March 2024

Path of Determination Path of Determination

Dhafer Sahmi Al Ahbabi Chairman, Al Ramz Group

ROADMAP TO EMBARK ON THE GLOBAL HORIZONS

As one of the leading business banking partners in the UAE, National Bank of Fujairah takes pride in being the best Trade Finance Bank in the region to provide tailored trade finance solutions, helping our clients to grow their business on the world map. With nearly four decades of expertise, we provide innovative banking solutions using our digital platforms that are designed to complement your business and offer banking services that meet your working capital and term financing requirements in a simplified manner.

No Point

Welcome to your March 2024 edition of MEA Finance Magazine.

Frequently, when we are at the part of the publishing cycle where this editor’s opening letter is being written, we notice an underlying theme or point that connects the articles and interviews with the wider world around us. Last month it was events, in December 2023 it was the mix of highs and lows being faced, and in the preceding November issue, progression was the thread running through it. However, for this issue, we have not seen anything obvious. Sure, we could stretch some points to attempt to a shaky bridge between our varying coverages, but it would look overly attempted - too forced.

So instead, let us just read and enjoy the heterogeneous mix of informative and absorbing content following from this page.

Our cover story this month, starting at page 30, features our interview with Dhafer Sahmi Al Ahbabi, Chairman of Al Ramz Group, where he talks with us about their path to becoming a leading regional investment bank with great ambitions, “Today Al Ramz stands as a testament to the power of resilience, vision and determination”.

Our Wealth Management feature, from page 18, describes how the region is now well placed to continue developing this sector into a leading global hub, complimented by contributions from leading regional practitioners including Century Financial, Barclays Private Bank, Mashreq, HSBC Private Bank and Lombard Odier.

The effects Embedded Finance is having on the financial sector across the region is

examined in an opinion piece provided by Niraj Naetsawan Country Head, UAE at additiv, where he tells us that we can look forward to highquality, tailored financial services in the near future. And following this is the transcribed MEA Finance Leadership Series Video featuring Adnan Anwar, Deputy Chief Executive Officer of National Bank of Fujiarah, where he explains the bank’s notable results, it’s support for SMEs and plans to take a lead in the regions trade finance market. See the full video with Adnan Anwar and many other market leaders on the MEA Finance website.

Open Banking is gaining prominence in the region as momentum increases to provide the services customers demand and the opportunities for growth it promises. We cover this hot topic from page 40 with added input from Anshu Sharma Raja Chief Technology & Operations Officer for Standard Chartered Africa and Middle East, adding, “As the financial world gets more connected, the need for banking as you go is no longer a ‘nice to have,’ but a necessity.”

Our Market Focus for this issue rests on The Kingdom of Saudi Arabia. These are dynamic times in the nation as it continues the modernisation of its financial markets and engagement in high profile mega-projects, all the while edging closer to the objectives of Vision 2030 and non-oil dependent growth.

And closing off this month’s issue, from page 48 we look again at Islamic Finance, where we explain that this increasingly more societally apt way to transact in finance remains on a longterm growth path to increased prominence.

So, as you make your way through this month’s diverse buffet of banking bulletins, we hope you find a clear point in your precious time to enjoy its diverse array of engrossing and most informative articles.

CONTENTS

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PUBLISHED BY: Creative Middle East Media FZ LLE, 19th Floor, Creative Tower, Fujairah Creative City, PO Box 4422, Fujairah, UAE

MARKET NEWS

6 UAE Trade Connect rebrands to “haifin,” supporting its broader vision to expand beyond UAE

8 Mastercard partners with Central Bank of Jordan to build a more robust digital payment ecosystem in the Kingdom

MARKET FOCUS

10 Pulling Out The Stops

WEALTH MANAGEMENT

14 Positioned to Prosper

18 Right Time, Right Place

20 Meeting Needs

22 Private Banking: Navigating the Exclusive Realm

24 A World of Wealth

26 Wealth & Estate Succession Planning

28 Reasons why it may be time to switch your financial services provider

COVER STORY

30 Path of Determination

UAE Trade Connect rebrands to “haifin,” supporting its broader vision to expand beyond UAE

haifin will now widen the scope of its success to regions across GCC, MENA and APAC

UAE Trade Connect (UTC), an e& enterprise company and the first commercialised blockchain platform transforming trade finance in the UAE, unveiled its new brand identity, “haifin,” as part of its commitment to extend its innovative solutions beyond the UAE, aiming for a significant presence in APAC, MENA, and GCC regions.

The new brand name, “haifin,” reflects the platform’s evolution and carries an ambitious roadmap to expand globally with its fraud-detection solution and further use cases to resolve current market challenges. The rebranding is symbolic of its vision as a leading fintech to connect and protect financial institutions for a more resilient ecosystem.

Salvador Anglada, CEO of e& enterprise, said: “This strategic rebranding reflects e& enterprise’s dedication to nurturing scalable cloud-based solutions that drive substantial market impact by supporting and advancing the global and regional fintech space, paving the way for more inclusive, efficient and secure financial services.

Zul Javaid, CEO of haifin, said: “This rebranding reflects haifin’s mission to serve as the connective tissue in the financial industry. Incorporating AI, FIs and FinTech into its very name, haifin is set to replicate its UAE success in other countries within our region and beyond. The new branding reflects our aspirations to expand our cloud-native and blockchain-based Intellectual

Property (IP) to design tailored solutions to support financial institutions into new territories.”

haifin’s solution can manage various types of trade-related documents, which are inspected, validated and tested for authenticity in real time. Its proprietary technology ensures trust, transparency, and privacy between multiple organisations with a stack of leading-edge technologies deployed locally on e& enterprise’s E1Cloud platform. The robust system validates trade finance transactions, identifies duplication and combats potential fraud in real time. These capabilities empower banks to make informed lending decisions, increase lending confidence and safeguard funds.

The haifin network has grown from seven banks in 2021 to 15 lending institutions comprising 13 major UAE banks and two fintechs, DP World Financial Services and Beehive. Banking members include Abu Dhabi Commercial Bank (ADCB), Abu Dhabi Islamic Bank (ADIB), Al Masraf, Commercial Bank International, Commercial Bank of Dubai, Dubai Islamic Bank, Emirates NBD PJSC, First Abu Dhabi Bank (FAB), Invest Bank, Mashreq Corporate & Investment Banking Group, National Bank of Fujairah, RAKBANK and United Arab Bank, with several more in advanced discussions to join the consortium.

Since its commercial launch in 2021, the platform has inspected transactions worth more than AED 200 billion and identified potential frauds worth several millions of dirhams. The system handles over 4 million data points monthly, and its machine learning capability increases as the dataset grows each month.

Mastercard partners with Central Bank of Jordan to build a more robust digital payment ecosystem in the Kingdom

Mastercard with Central Bank of Jordan (CBJ) collaborates to develop a payment ecosystem digitization blueprint for the country. The collaboration supports the Central Bank of Jordan’s broader efforts to unlock economic growth through promoting acceptance of digital payments, increasing financial inclusion, and combatting high cash usage

The Central Bank of Jordan will benefit from Mastercard’s global expertise to accelerate economic and payments digitization and improve acceptance. Mastercard will use its proven approach, which includes a deep analysis of payment flows between businesses, consumers, and the government with a focus on addressing pain points, such as policy and regulation.

This collaboration represents a strategic roadmap guiding businesses and consumers towards a more efficient,

secure, and accessible financial future. It paves the way for a more connected economy that fosters innovation, drives inclusion, and fuels economic growth.

“With its extensive expertise in assisting governments in driving digital transformation, MasterCard is one of our partners to develop a national payment digitization blueprint in line with the Economic Modernization Vision as one of the royal initiatives, and in line with the National Strategy for e-Payments in Jordan 2023-2025 that seek to :

- Reach a comprehensive and welldeveloped digital transformation that supports the provision of services electronically.

- Pr omote financial inclusion and facilitate and Support the Transformation to a Digital Cashless Economy in the Kingdom.

We plan to have several high-impact initiatives ready for implementation later this year. We expect this to be the start of a long-term collaboration to advance Jordan’s digitization journey,” said His Excellency Dr. Adel Al Sharkas, Governor, Central Bank of Jordan.

“At the heart of every thriving, inclusive economy are interactions between its people, government, and businesses. In this context, Mastercard serves as a trusted partner, technology provider and advisor to governments in the region and beyond. We offer innovative technology solutions, digital platforms and insights that deliver a seamless and secure payment experience to citizens with the aim of building a connected world that works for everyone,” said Adam Jones, Country General Manager, MENA Central, Mastercard.

Currently, most of payments in Jordan are in cash. Economies that are cashreliant bear significant costs in many forms, such as underreported income, with informal economies accounting for up to 40% of the GDP. Moreover, cash is less secure and can be costly for businesses to handle. Merchants and consumers can both benefit from enhanced financial education on the various benefits they can both reap from the use of digital payments.

Pulling Out The Stops

Saudi Arabia is investing billions of dollars to achieve the objectives of Vision 2030, which puts an expanded private sector and non-oil growth at the centre of its future development agenda

Seven years into Crown Prince and Prime Minister Mohammed bin Salman’s Vision 2030 reform agenda, Saudi Arabia has made significant progress in its socio-economic reform agenda. However, efforts to further boost the private sector and attract foreign investment face challenges with the government delaying some projects past 2030.

The country’s economy had one of its steepest contractions of the past two decades hurt by voluntary and OPEC+ oil production cuts, and lower crude prices – a slump matched only by Argentina among G20 countries.

While the International Monetary Fund (IMF) projected in its World Economic Outlook 2024 that Saudi Arabia’s GDP slipped 1.1% in 2023, the Washingtonbased fund expects the Arab world’s largest economy to return to growth this year and next.

Meanwhile, the Saudi banking system is set to continue registering growth above the rest of the GCC region, with strong credit demand led by a dynamic non-oil sector and economic diversification programs.

“Saudi banks will likely report strongbut-slower credit growth of 8%-9% in 2024 compared to 10% credit growth

reported as of December 31, 2023, due to lower mortgage lending growth and tight liquidity,” S&P Global said earlier in February while noting that corporate lending growth will benefit from Vision 2030 projects.

Since 2016, the kingdom has undergone a breakneck speed transformation unveiling a raft of ambitious programmes to expand its economy including the authorities’ set of “national aspirations and priorities” for research, development and innovation (R&D) over the coming two decades.

The Public Investment Fund (PIF), the country’s wealth fund and the driving force behind the country’s economic growth and diversification plans to double its assets under management (AUM) to $1.07 trillion by 2025.

The $700 billion sovereign fund is investing in a broad range of sectors, including retail, construction and real estate and over the years it has created more than 87 new companies as well as over half a million direct and indirect jobs.

Towards Vision 2030

Saudi Arabia’s ongoing economic transformation has helped create high growth, record-low unemployment, contained inflation, and strong external and fiscal buffers while reducing reliance on oil revenues, according to the IMF.

Economists expect the kingdom’s economy to be bolstered by a significant investment program that could be worth more than a trillion dollars by 2030 including big investments planned in the renewables sector, solar plants and green hydrogen projects.

PIF has been deploying capital, including to help stimulate private sector investment. Nearly eight years since its reformulation, the sovereign fund has become a powerhouse both at home and overseas, with the objective to invest $40 billion a year in the local economy.

The size of the fund and the scope of its spending spree – assets are nearly $700 billion – has made PIF a force for modernising Saudi Arabia.

Last June, Saudi Arabia’s wealth fund took control of four of the Gulf state’s top soccer clubs including Cristiano Ronaldo’s Al-Nassr, Karim Banzema’s Al-Ittihad, Riyad Mahrez’s Al-Ahli, and Neymar’s Al-Hilal.

PIF owns a stake in Newcastle United –an English Premier League team that has gone from strength to strength, thanks to a constant stream of Saudi capital in club development. Beyond the world of sports, fund also owns stakes in electric carmakers—Lucid and Ceer—and owns several multi-billion giga-projects such as the $500 billion NEOM City, Qiddiya and the Red Sea Development Company.

Meanwhile, US aircraft manufacturer Boeing is the latest to apply for a licence to establish its Middle Eastern headquarters in Riyadh under Saudi Arabia’s regional headquarters rules that were unveiled in 2021 to curb “economic leakage”.

Plugging budget deficit

Saudi Arabia forecasted a budget deficit for this year and up to 2026 after revising earlier predictions of a surplus, as the kingdom is funnelling money into

giga-projects and expanding its non-oil economy in line with Vision 2030.

“We forecast a budget deficit of 2.3% of GDP in 2024, similar to 2023 and slightly ahead of the 1.9% of GDP budget plan,” rating agency Fitch said in February while projecting a wider deficit of 2.8% of GDP in 2025, “assuming spending in line with budget plans, lower oil prices and oil production of 10 million barrels per day (b/d)”.

Saudi Arabia approved its state budget for 2024 last December and the government projected a fiscal deficit of $21.1 billion (SAR79 billion) or 1.9 per cent of GDP. The budget estimates expenditures of SAR1.3 trillion in 2024 and total revenues of SAR1.2 trillion.

“The greater-than-planned expenditure reflects in part government policies

The Gulf state sold 6, 10 and 30-year notes with respective yields of 4.89%, 5.13% and 5.91%, according to the NDMC. The deal is equivalent to more than half the deficit the government is projecting for this year.

IMF said higher oil prices and steppedup oil production improved Saudi Arabia’s current account to a 10-year high surplus in 2022. However, the 13.6% GDP surplus did not lead to a corresponding increase in official reserves given the large accumulation of assets abroad, though these remain at comfortable levels –almost 20-month import cover.

“Saudi Arabia’s foreign reserves excluding gold dropped to $437 billion in 2023 as financial account outflows in the form of investments abroad outweighed the current account surplus, which

SAUDI BANKS WILL LIKELY REPORT STRONG-BUT-SLOWER CREDIT GROWTH OF 8%-9% IN 2024 COMPARED TO 10% CREDIT GROWTH REPORTED AS OF DECEMBER 31, 2023, DUE TO LOWER MORTGAGE LENDING GROWTH AND TIGHT LIQUIDITY

– S&P Global

designed to limit the impact of high global inflation on domestic real incomes,” said KPMG.

Crown Prince Mohammed bin Salman said that the increase in spending is mainly due to the government’s keenness to implement several projects and expand spending on sectoral and regional development strategies that accelerate economic diversification.

Saudi Arabia plans to tap international and local debt markets in 2024 to fill state coffers. Earlier in January, the kingdom’s National Debt Management Centre (NDMC) sold $12 billion of bonds – its largest deal since 2017.

narrowed to an estimated 4.5% of GDP,” said Fitch Ratings.

The rating agency projected that the Gulf state’s reserves will plunge to an average of $420 billion in 2024/2025, as the current account surplus narrows on the assumption of lower oil revenues.

Reaping the benefits of an economic boom

Saudi Arabia’s financial service sector is the linchpin of Crown Prince Mohammed’s economic diversification programme. The country’s banking sector experienced a landmark year in 2023 and remains on a strong footing.

Banks in Saudi Arabia, like their GCC peers, continue to benefit from significant noninterest-bearing deposits, and despite some migration to time deposits, margins continued to strengthen over 2023.

“Saudi banks have the strongest return on assets forecasts and, when considering their high levels of capitalisation, compare well with that of regional or global peer groups,” S&P Global said in its GCC Banking Sector Outlook 2024 in January.

Banks in Saudi Arabia registered record profits in 2023 on the back of improved operating conditions marked by economic recovery and the central banks’ move to tighten monetary policy. The combined profits of Saudi Arabia’s top five banks –Saudi National Bank (SNB), Al Rajhi Bank, Riyad Bank, Saudi Awwal Bank (SAB) and Banque Saudi Fransi (BSF) – reached nearly $15 billion (SAR 60 billion) in 2023.

SNB reported a nearly 7.69% jump in 2023 net profit to $5,33 billion (SAR 20 billion), Al Rajhi Bank registered a 3.09% decrease in its full-year profit to $4.43 billion (SAR 16.6 billion), SAB’s annual profit reached $1.86 billion (SAR 7 billion), up 45.09%, BSF posted an 18.12% surge to $1.12 billion (SAR 4.22 billion), and Riyad Bank’s full-year profit soared by 14.62% to SAR 8.04 billion.

The IMF said the aggregate capital adequacy ratio of banks in Saudi Arabia is strong, profitability – driven by net interest margins – is high and the nonperforming loan (NPL) ratio is low and declining.

Saudi Central Bank (SAMA) increased its key interest rates by 25 basis points (bps) earlier in July in lockstep with the US Federal Reserve as the Saudi riyal is pegged to the dollar. SAMA hiked its repo rate to 6% and its reverse repo rate to 5.5%, both by 25 bps. The Federal Reserve held interest rates steady at a 22-year high late in January but avoided signalling an imminent interest-rate cut.

However, despite a plunge in mortgage lending, demand for project-related and consumer loans remains strong, helping offset the impact on profitability from rising funding costs linked to higher

interest rates and a greater share of time and saving deposits in banks’ liabilities.

Digital milestones

Banks in Saudi Arabia can pursue strategic investments to grow revenues and optimise costs. “Areas with promising investment opportunities include emerging digital initiatives, re-imagined customer journeys, and the upgrade of underlying technology infrastructure,” according to global consultancy firm Boston Consulting Group.

The digital development of Saudi Arabia’s financial services sector continues apace, with digital payments accounting for 62% of transactions in the Gulf state’s retail sector in 2022, close to the 70% target by 2025.

SAMA published its full open banking framework in November 2022, with an initial focus on account information services to

stc Bank, which boasts eight million retail customers and more than 120,000 merchants within its network, is currently converting all its activities and functions from an e-wallet to a digital bank.

Saudi Digital Bank, which will run on cloud-native infrastructure and will focus on providing hyper-personalised financial services and products, will target both retail and small and medium-sized enterprise customers.

D360 Bank, a Shariah-compliant neobank bank backed by the Derayah Financial Company and PIF, is targeting the underserved segments, focusing on addressing customer pain points and leveraging innovation and technology to make banking convenient, accessible and fair to all.

To counter new digital attackers, incumbents should consider tapping

SAUDI ARABIA’S FOREIGN RESERVES EXCLUDING GOLD DROPPED TO $437 BILLION IN 2023 AS FINANCIAL ACCOUNT OUTFLOWS IN THE FORM OF INVESTMENTS ABROAD OUTWEIGHED THE CURRENT ACCOUNT SURPLUS, WHICH NARROWED TO AN ESTIMATED 4.5% OF GDP

be followed in the second phase by a focus on payment initiation services.

Last April, the central bank established its Open Banking Lab to provide banks and fintechs with a technical testing environment to enable them to develop, test and certify open banking services –part of the apex lender’s broader strategy to expedite open banking services in Saudi Arabia.

The kingdom began publishing licencing requirements for neobanks in 2020 in line with the Financial Sector Development Program, one of the pillars of Vision 2030, and SAMA has licenced three digital banks since 2021.

into growing consumer spending trends to expand their portfolio of partnerships. Saudi Arabia’s incumbent banks are working with non-banking financial institution partners such as buy now, pay later platforms to extend low-cost financing options to targeted SMEs.

The growth in Saudi Arabia’s nonoil economy is being spurred by strong domestic demand, particularly private non-oil investment. To sustain this performance, the kingdom must pursue sound macroeconomic policies and maintain the reform momentum, irrespective of developments in oil markets.

Positioned to Prosper

The region has pretty much proved itself as a leading centre for wealth management and is well positioned to make the best of the technological development and accompanying generational influences that are remodelling the way the prosperous manage their financial affairs

The UAE has gained respect in recent years as a booking centre that provides an attractive playing field for banks and high-net-worth individuals (HNWIs) alike. The country is the largest wealth management centre in the Middle East, with approximately 83,000 millionaires and assets under management (AUM) of about $110 billion.

The Gulf state’s AUM grew more rapidly in 2022 than in any other booking centre, as the country attracted assets not only from other Middle Eastern domiciles but

also from Asia-Pacific, Africa, and Europe – notably from Russia.

The Middle East is emerging as one of the world’s key battlegrounds for global wealth managers and private bankers, with the UAE alone attracting an estimated 4,500 new millionaires in 2023, according to consultancy Henley & Partners.

J.P. Morgan, UBS Group and Goldman Sachs Group are among global banks targeting the region for future growth. Private banking and wealth management remain sectors with enduring growth potential, driven by growing household

and entrepreneurial wealth as well as intergenerational wealth transfer.

However, private banking and wealth management are at the cusp of change. Though the Middle East region’s wealth grew by nearly 40% from $200.2 billion in 2022 to $279.1 billion in 2023, the volatility in the global markets has challenged AUM growth.

The region is adapting to the new realities of a changed global macro environment while looking ahead to new horizons created by its impressive fundamentals.

“Thriving in the emerging new landscape of wealth management will require a focus on strategic positioning, operating model design across the value chain, and development of a well-tuned ‘execution engine’ to create forward momentum,” according to McKinsey & Company.

Meanwhile, sustainable investing is coming of age. The investment theme has gone mainstream with more investors focusing on generating longterm financial returns while contributing positively to the environment and society.

The changes in demographics, technology, environment and social behaviours have set the ground for rapid transformation in the private banking and wealth management industry.

Digitalisation in PB&WM

The wealth management and private banking segments, like the retail banking sector, are witnessing a surge in investments in artificial intelligence (AI), big data analytics, robotics and other innovative technologies to enhance client’s experience and trust.

“Cloud migration, cloud-native applications, leveraging AI, automation of manual tasks and launching of external APIs can help firms significantly improve customer offerings and customer experience while bringing down their cost base and improving accuracy,” according to consultancy firm Capgemini.

Digitalisation in the private banking and wealth management space is being driven in part by a shift in demographics and the investment environment. Once a laggard in the adoption of technology, wealth management is accelerating digitalisation, deploying AI, Big Data, robotics and other technologies to enhance client’s experience and trust—which is central to private banking relationships.

“With client needs and markets shifting, wealth managers cannot rely on bull markets for increased assets under management,” according to Deloitte.

Private banking and wealth management firms have remained largely on the sidelines in an industry where digitalisation has transformed much of the financial services and products.

The industry is typically seen as embodying old-fashioned values and providing discrete, tailored service attributes that remain valuable parts of the business, but McKinsey said for many clients, these qualities are “no longer sufficient.”

AI is making remarkable progress in a wide array of tasks, as demonstrated by the rollout of OpenAI’s ChatGPT and Google’s Gemini. Industry experts expect

THRIVING IN THE EMERGING NEW LANDSCAPE OF WEALTH MANAGEMENT WILL REQUIRE A FOCUS ON STRATEGIC POSITIONING, OPERATING MODEL DESIGN ACROSS THE VALUE CHAIN AND DEVELOPMENT OF A WELL-TUNED ‘EXECUTION ENGINE’ TO CREATE FORWARD MOMENTUM

– McKinsey & Company

the innovative technology to influence every aspect of private banking and wealth management from client service to compliance.

Though several financial institutions have been embedding AI in their core business operations, global consultancy firm EY said the maturity of use cases for leveraging large and complex unstructured information is still evolving.

“Generative AI will eventually collaborate with traditional AI forecasting tools to create reports, explain variances and provide recommendations, thereby elevating the finance function’s ability to generate forward-looking insights,” according to a Boston Consulting Group report.

The enhancements will empower finance professionals to make more informed strategic decisions, leading to improved operational efficiency and effectiveness. The hyper-personalisation inherent in ChatGPT capabilities holds the potential to transform the financial services landscape radically, setting a new standard for customer experience and engagement.

Morgan Stanley Wealth Management is using OpenAI’s technology to leverage its vast data sources to assist financial advisors with insights into companies, sectors, asset classes, capital markets and regions around the world.

Bloomberg also unveiled its version of GPT specifically designed for the financial services sector in April 2023. BloombergGPT can analyse company earnings reports and other financial

statements to identify potential investment opportunities and risks.

The adoption of AI in the wealth management space will have a significant impact by providing more personalised, data-driven advice in areas such as portfolio optimisation, risk management, fraud detection, tax analysis and even relationship management.

Furthermore, the advancements in technology together with the desire to achieve greater efficiencies at lower costs have helped create a thriving wealthtech industry that is being dominated by innovative companies that are leveraging emerging technologies to maintain a competitive edge in the market.

Last November, Abu Dhabi alternate investment fund Lunate partnered with BNY Mellon to set up a $300 million fintech venture to tap into the Middle East region’s burgeoning market for wealth management. The new venture, known as Alpheya and will provide a range of digital services, including financial planning, portfolio construction, trading and rebalancing, risk management reporting, client onboarding and analytics.

“Wealthtechs are rapidly accelerating to achieve the advisory sophistication that customers seek, however, no one in the industry has yet cracked the code to drive economies of scale,” said McKinsey.

Wealthtech firms have pushed the boundaries of the GCC region’s wealth management space, thanks to their advanced client-facing capabilities that include intuitive and comprehensive

dashboards and intelligent portfolio recommendations available to investors and financial institutions alike.

KPMG said digitalisation in the segment has become important for banks to empower their relationship managers with advanced tools and capabilities to offer quick, tailored and intelligent advice.

Wealth management firms and private banks are shifting from the status quo in which relationship managers do everything alone to a supportive situation to help them get through complex and competitive issues.

The pursuit of sustainability

The shift towards sustainable finance has significantly accelerated over the years. Responsible investment, which considers the impact of environmental, social and governance (ESG) factors on risk-adjusted return and is aligned with investor values, has become key to the strategic agenda of wealth managers and private.

The growing demand for impact investing from HNWIs is driving some wealth management firms to develop strategies as public attention towards the global sustainability agenda is on the rise.

The investment theme is increasingly attracting attention in wealth management and private banking segments, driven by the strategy’s promise of utilising a range of non-financial information to better align finance with long-term value and societal values.

CLOUD MIGRATION, CLOUD-NATIVE APPLICATIONS, LEVERAGING AI, AUTOMATION OF MANUAL TASKS AND LAUNCHING OF EXTERNAL APIS CAN HELP FIRMS SIGNIFICANTLY IMPROVE CUSTOMER OFFERINGS AND CUSTOMER EXPERIENCE WHILE BRINGING DOWN THEIR COST BASE AND IMPROVING ACCURACY

– Capgemini

Morgan Stanley projected that investors and companies will need to tackle the increasingly complex terrain of sustainable finance in the coming decade to make informed decisions, mitigate risks and seize emerging investing opportunities.

UAE’s First Abu Dhabi Bank (FAB) unveiled its first ESG-oriented fund for its private banking clients, which is set to provide affluent clients with access to sustainable investing.

The FAB Sustainable Development Goals Fund (FAB SDG Fund), managed by FAB Private Bank (Suisse), seeks to capture long-term investment opportunities that address the world’s major social and environmental challenges.

The World Economic Forum (WEF) said in a report in January that HNWIs and family wealth are uniquely positioned to leverage private capital to drive growth in

GENERATIVE AI WILL EVENTUALLY COLLABORATE WITH TRADITIONAL AI FORECASTING TOOLS TO CREATE REPORTS, EXPLAIN VARIANCES AND PROVIDE RECOMMENDATIONS, THEREBY ELEVATING THE FINANCE FUNCTION’S ABILITY TO GENERATE FORWARD-LOOKING INSIGHTS

– Boston Consulting Group

the ESG sector by supporting long-term societal goals and ambitions.

Wealthy individuals and HNWIs are ideally suited to the kind of approach that the investment theme requires owing to the group’s large pools of capital and multi-generational objectives that support a long-term strategy.

Compared to institutional investors who may be subject to commercial policies or have limited decision-making due to mandated trusts, HNWIs and family offices can be flexible in how they approach investments in terms of size, geographies and asset classes.

With baby boomers expected to pass along nearly $84 trillion in wealth to their heirs and into philanthropy activity by the end of the decade, the great wealth transfer will drastically shake up the private banking and wealth management segments.

Wealth managers and private must adapt to the many ways in which millennial and Gen Z investors differ from boomers, given that one in five businesses has a next-generation member on the board or the management team.

Forward-looking, the new generations may have to be unconventional to achieve continuity. As the wealth management ecosystem undergoes a once-in-a-generation convergence, wealth managers of all sizes have an opportunity to reposition their franchises for a healthier future while broadening how they help clients.

Right Time, Right Place

While highlighting the many factors behind the establishment of the region as a global wealth management hub, Anuj Goel Chief Executive Officer at Century Private Wealth also offers insights into how ESG and AI can be key supports to wealthy families

What is behind the emerging choice or preference forthe GCC, especially the UAE, as a location for managing wealth?

The GCC, in particular the UAE, has emerged as a prime location for wealth management services, due to several factors such as the UAE’s strategic location set at the crossroads of major international trade routes, and the steady economic growth they have experienced over the last 2 decades.

The UAE has developed a robust financial infrastructure, including worldclass banking facilities, investment platforms, and regulatory frameworks conducive to wealth management. For instance, the DIFC has emerged as a leading hub, attracting top-tier financial institutions and wealth management firms. Firms offering sophisticated products and services, including private banking, asset management, estate planning and family office services.

One of the key attractions of the UAE is its favourable tax regime. The country imposes no personal income tax, no capital gains tax and no inheritance tax, making it highly attractive for affluent

individuals seeking to preserve and grow their wealth.

The GCC region has seen a significant accumulation of wealth, driven by factors such as oil revenues, diversification efforts and strategic investments. According to a report by BCG approximately 27% of the GCC’s wealth in 2022 originated from UHNW Individuals, elucidating how HNWI are conducting a vital role in solidifying the GCC’s position economically, thus the emerging preference for wealth management especially in the UAE increasing HNWI demographic.

How are regional jurisdictions planning to build for, and adapting to accommodate the growth of wealth services?

GCC countries are taking proactive measures to accommodate the growth of wealth services. Placing focus on enhancing their regulatory frameworks to attract and regulate wealth management activities effectively.

There’s a collective effort to develop and strengthen financial infrastructure, including banking systems, capital markets and investment platforms. Thus, the increase in technology use, innovation and digitalisation to streamline processes, improve efficiency and enhance the client experience.

Governments are investing in education and training programs to build a skilled workforce capable of meeting the ever-growing demands of the wealth management industry in areas such as financial planning, investment management, and regulatory compliance.

GCC jurisdictions are working to improve market access and connectivity to attract international investors and expand the reach of their wealth management services. This includes initiatives such as signing bilateral agreements, participating in international financial forums, and developing partnerships with global financial institutions.

Moreover, these countries are also establishing specialised wealth management hubs and financial centres to concentrate expertise, infrastructure and services in one location. The DIFC is a prime example of this.

Which asset classes are taking the lead for investors in the region at this time?

In the GCC region, a few asset classes normally take the lead among investors. Real estate has traditionally been a favoured asset class in the GCC due to the region’s rapidly growing population, urbanisation and infrastructure development. Exemplified with Local investors investing in residential and

Anuj Goel Chief Executive Officer at Century Private Wealth

commercial properties, including apartments, villas, offices and retail spaces.

Fixed income securities, including government and corporate bonds, are also quite popular among investors in the GCC. The Sukuk market has played a major part in the region where Islamic banking and finance takes centre stage.

Commodities, particularly gold and oil, continue to attract investors in the GCC region. Gold is often seen as a safe haven asset and a hedge against inflation. While oil investments are influenced by the region’s significant oil reserves and the global energy market dynamics.

Equities has been a growing asset class in this region given the attractiveness for income generation and capital preservation. Nonetheless it has seen a massive rise in interest due to far greater returns it has generated not only in global markets but also regionally.

There is growing interest in alternative investments such as private equity, venture capital, hedge funds and private debt among GCC investors. With the rise of digital transformation and innovation, investments in technology-related assets such as fintech, e-commerce and artificial intelligence are gaining momentum.

Aside from growth and wealth preservation, what do you see as the leading strategic planning priority for wealthy clients and families?

For HNWI clients and families, wealth preservation will always take precedence especially as a mechanism of safeguarding capital for which they have accumulated and grown, while also taking into account the effect of inflation over time.

Prospering wealth for their future generations is also crucial thought and necessity, as from a legacy planning perspective they would favour passing on their wealth to future generations, accounting for economic downturns that could arise.

Another major objective we see clients consider is regarding income-generation.

SUPPORTING ESG PRINCIPLES CAN CONTRIBUTE POSITIVELY TO A FAMILY’S LEGACY AND PUBLIC PERCEPTION

Some wealthy families rely on their investment portfolios to generate a steady stream of income, especially during retirement. This income can come from dividends, interest, or rental income from real estate.

Wealthy families may have specific liquidity requirements, such as buying real estate or making other significant purchases. Balancing long-term investments with sufficient liquidity is crucial.

Could ESG ever become the main driver of investment decisions for the region’s wealthy?

ESG investing has become a global trend to be highlighted as a necessity and framework, driven by the increasing awareness of environmental issues, social responsibility and corporate governance. Companies with strong ESG practices are thought to be better positioned to manage environmental and social risks, reducing potential financial and reputational risks.

Governments in the Middle East are increasingly emphasising sustainability and ESG principles as part of their economic and development agendas. Regulatory frameworks and initiatives are being introduced to promote ESG considerations in investment decisions, creating an environment that encourages responsible & sustainable investing.

Wealthy individuals in the Middle East, who are often associated with influential family businesses, may prioritise investments that enhance their reputation and brand image. Supporting ESG principles can contribute positively to a family’s legacy and public perception.

ESG criteria also aligns well with Islamic finance principles that emphasise ethical and responsible investment practices, making it a natural fit for HNWIs in the

Middle East who may be more inclined to consider investments that align with their ethical values.

How might the inevitable presence of AI change the relationship between wealth managers and their clients?

The presence of AI is expected to enhance the capabilities of wealth managers, improve the client experience, and drive innovation in the wealth management industry. However, it’s essential for wealth managers to strike the right balance between human expertise and technological innovation to ensure that clients continue to receive the personalised attention and empathy that are hallmarks of a trusted advisory relationship.

Wealth managers can deliver more personalised investment advice and tailored solutions using AI-powered algorithms that analyse vast amounts of data to gain insights into clients’ financial goals, risk tolerance and preferences.

By analysing market trends, economic indicators and news sentiment in real-time, AI can assist in identifying opportunities and risks, leading to more effective portfolio management. AI-driven automation can also streamline routine tasks such as portfolio rebalancing, trade execution and performance reporting, allowing wealth managers to focus more on strategic planning and client engagement.

AI-powered risk management tools can assess portfolio risks more accurately and proactively, enabling wealth managers to mitigate potential losses and preserve capital. By continuously monitoring market conditions and portfolio performance, AI can provide early warnings of emerging risks and recommend appropriate risk mitigation strategies.

Meeting Needs

Rasha Badawi CEO, Barclays Private Bank

UAE explains that as HNWIs seek broader opportunities for successful and sustainable investing, improved succession planning options and more satisfying lifestyle opportunities, the region continues to develop as an attractive base for wealthy families and individuals

What is behind the emerging choice or preference forthe GCC, especially the UAE, as a location for managing wealth?

Many wealthy individuals are drawn to the UAE. The region is not only known for its high-profile sporting events, fashion and design, but also its safety, security and increasing provision of high-quality leisure opportunities and education with UK, European and American curriculums available for families. This gives a greater level of choice than is available in some home countries, and makes it a very attractive location as a home base, or leisure destination for UHNWIs and families.

There is also flexibility in terms of wealth structuring so there is often a solution for each individual client circumstance, and English law is wellrecognised and provides a common basis for legal undertakings.

How are regional jurisdictions planning to build for, and adapting to accommodate the growth of wealth services?

From an investment perspective there is increasing coverage from the Asia afternoon into the European open due to the time zone. This can provide clients more opportunities, especially for those with operating businesses across Africa and Asia. We are also seeing hedge funds setting up Asian trading desk coverage in-country, with increasing interest in MENA equities and asset managers being set up here.

The DIFC and ADGM financial zones have provided a good base for international firms to co-locate themselves so there is naturally an ecosystem of ideas and opportunities between private banks, external asset managers, law firms and trustee service companies.

can offer an attractive risk premium relative to other sectors. Private Credit has unsurprisingly been an area of interest also as it can offer an additional illiquidity premium without trade off in terms of the underlying credit quality or risk management. There is a broad

INDIA HAS BEEN AN AREA ATTRACTING PLENTY OF INTEREST IN 2023, WITH A CLEAR SHIFT TOWARD THE COUNTRY FROM CHINA FROM OFFSHORE/INTERNATIONAL FUND FLOWS

Which asset classes are taking the lead for investors in the region at this time?

Given the high interest rates, especially in the US, we see increased interest in cash and fixed income type investments, ranging from on balance sheet deposits to corporate bonds. Some UHWNIs are also selectively looking to financial bonds such as insurers and banks which

trend of UHNWIs typically prioritising income-generating assets to service any liabilities and some have also looked to the Swiss Franc as a key funding currency compared with Japanese Yen which looks to now have more of an upward bias versus the dollar going forward.

India has been an area attracting plenty of interest in 2023, with a clear shift toward the country from China

from offshore/international fund flows. The domestic Indian stock market remains more challenging for investors to directly access, given the currency controls, but we see a trajectory toward more offshore funds and structures in Gift City, Gujarat, India which could reduce frictions and provide access to more specialist opportunities on the ground.

Aside from growth and wealth preservation, what do you see as the leading strategic planning priority for wealthy clients and families?

More and more UHNWIs and their families are looking for integrated support and education for the next generation. One way the UAE has tried to help with this is through the DIFC Family Wealth Centre which runs a series of initiatives designed to help families upskill and put governance capability in place such as formalised family offices. Impact investing is also an increasing strategic priority for many UHNWIs.

Long term succession planning is crucial in our view, and having the right advisors around you is fundamental to effective planning. This means there is a renewed focus on long term relationships between service providers such as private banks and their clients. Philanthropy also slots into this as the wealth creators and settlors of trusts look to give back to society and ensure their children understand the value of their inherited wealth.

Could ESG ever become the main driver of investment decisions for the region’s wealthy?

Investment decisions are often highly personal so we couldn’t predict whether ESG will be the main driver across the board, however we have seen a larger allocation of funds from UHNWIs towards sustainable investing in recent years. This has mainly been at a global level, but with more opportunities arising regionally some of these allocations could target local and regional sustainable finance too.

Rasha Badawi CEO, Barclays Private Bank UAE

PRIVATE BANKING:

Navigating the Exclusive Realm

Providing his take on wealth management across the GCC, Vipul Kapur Head of Mashreq Private Banking describes how the region’s growing global importance to this market is coinciding with the adoption of advanced technology in this sector

What will be the biggest opportunity in Middle East for wealth managers in 2024?

The GCC, especially UAE is emerging as a preferred wealth hub for many entrepreneurs and wealthy families as they look to take advantage of favourable policies and expand their businesses. The region has evolved into a symbol of affluence, opulence, success and economic advancement.

Through its appeal to foreign investments and its prominence in thriving sectors such as real estate, technology, finance, healthcare and tourism, the UAE is steadily progressing towards establishing itself as the premier global wealth hub.

As per the World’s Wealthiest Cities Report 2023, Dubai occupies the 20th position and is home to nearly 70 thousand millionaires, 200 centimillionaires (net worth over USD 100 million) and 15 billionaires. Every year,

particularly after pandemic, this number grows as more HNWIs and UHNWIs chose to relocate and settle in the UAE. Over 5200 HNWIs relocated to Dubai in 2022, highest ever relocation to date, and this trend continues.

In light of this, the key opportunity for wealth Managers is the flow of money from these HNWIs that have relocated to the region in last 18-24 months, accompanied by the Influx of Capital into the region. These individuals have bespoke requirements including financial planning, portfolio management, estate planning and family office set up, as well as lifestyle requirements including travel arrangements and luxury experiences.

Aside from growth and wealth preservation, what do you see as the leading strategic planning priority for wealthy clients and families that reside in the region?

The primary focus of affluent clients remains the growth and preservation of wealth however, the composition and complexities of this very requirement has fast evolved, particularly in Middle East, following the influx of UHNWI’s from across the world.

This evolution, combined with the younger generation’s exposure to international education and the intricacies of succession planning, has made it imperative to seek services from firms specialising in family office services, to capitalise on their growing needs. They need tailormade solutions and personalised services that extend beyond the ordinary, encompassing investment management, estate planning, tax planning, philanthropic planning and risk management. This is even more crucial for the

Vipul Kapur, Head of Mashreq Private Banking

extended families, where the scope goes beyond the immediate sibling group to include a wider range of family members.

Another aspect that has taken importance is the governance and risk management. Clients are increasingly paying more attention to establishing clear rules, responsibilities and decisionmaking processes within the family and businesses. They are aware that any lapse pertaining to tax laws, financial regulations or risk mitigation measures could jeopardise their wealth.

In addition to this, we have seen that many affluent families are increasingly prioritising their social responsibilities and engaging in philanthropy. Government initiatives in this region, investor awareness and supportive regulatory environment have all created a positive impact thereby encouraging clients to focus on issues related to education, healthcare, poverty alleviation and environmental conservation.

Having said that, HNWIs want to make a meaningful difference while ensuring their philanthropic efforts align with their broader financial and estate planning goals. Accordingly, they are keen on seeking guidance around structuring charitable initiatives, setting up foundations and maximising the impact of their charitable contributions.

Could ESG ever become the main driver of investment decisions for the region’s wealthy?

ESG considerations are gaining importance globally in investment decision-making. The adoption of ESG principles depends on various factors, including regulatory environment, investor awareness and cultural considerations.

The Middle East has experienced an increased emphasis on ESG investing, indicating a growing recognition of sustainable practices and the adoption of responsible investment strategies. According to a recent PWC survey, “ESG priorities in the region are in transition. Companies are still in “start-up” mode when it comes to ESG strategy and

AS AN INSTITUTION FOUNDED ON THE PRINCIPLES OF SOCIAL RESPONSIBILITY, INTEGRITY AND TRANSPARENCY, OUR KEY PRIORITY IS TO ADOPT STRONG ESG PRACTICES ACROSS THE ORGANISATION

implementation, with only 18% with teams and systems in place to cover the full remit of ESG functions.” It also highlights that across ESG, the key areas of focus in Middle East remain waste & climate management, diversity and addressing organisational culture and change.

The 28th edition of the international summit on climate change, COP 28 was held in Dubai, a year after Egypt hosted the previous edition. The leaders of this region are committed to unlocking finance to ensure that the nations do not have to choose between development and climate action. As an institution founded on the principles of social responsibility, integrity and transparency, our key priority is to adopt strong ESG practices across the organisation.

Our commitment to sustainability has been unwavering, aligning with the UAE’s Net Zero by 2050 initiative and through our active participation in COP28. We have committed AED 110 billion towards sustainable finance by 2030, as part of our global “Climb2Change” initiative which reinforces our leadership in the sustainable banking frontier. This is a strategic undertaking that seamlessly integrates the bank’s wide-ranging ESG initiatives and milestones, including Mashreq’s long-term sustainable finance commitments and ambitions. The initiative was built on our participation in COP28 and underscores its efforts to drive sustainability and impact.

Our unwavering dedication to sustainability, demonstrated through initiatives like Climb2Change and our support of the Paris Agreement, reflects

our responsibility towards creating a sustainable future.

How might the inevitable presence of AI change the relationship between wealth managers and their clients?

The advent of AI is certainly reshaping the landscape of wealth management, transforming the dynamics between wealth managers and their clients. Our investment in technology and continuous appetite for innovation have been key in redefining customer engagement and satisfaction.

With the ability to process vast amounts of data swiftly, AI equips wealth managers with enhanced analytical tools, providing deeper insights into market trends and personalised investment strategies. This automation streamlines processes and also allows wealth managers to focus on timely, flexible and strategic decision-making. AI-driven algorithms also equip them to offer clients a superior level of personalisation in financial planning, tailoring advice specific to individual needs and goals.

These are great times where technology has established its very definition, that of being an application that helps achieve practical aims of humans. As we progress, striking the right balance between AI-driven efficiency and maintaining a human touch in client relationships will be crucial for the industry’s continued success. Both elements have their merits, and finding the right equilibrium depends on the context, as well as the personal and specific needs of clients.

A World of Wealth

With increasing inward and outward entrepreneurial activity, conducive regulatory regimes and life quality options, Farzad Billimoria Managing Director & Head, HSBC Private Bank, UAE highlights these and many other reasons as why the region is firmly on the world wealth map

Farzad Billimoria, Managing Director & Head, HSBC Private Bank, UAE

What is behind the emerging choice or preference forthe GCC, especially the UAE, as a location for managing wealth?

The emerging preference for the GCC, particularly the UAE, as a wealth management destination can be attributed to several factors. These include a robust financial infrastructure, political stability, attractive tax regimes, favourable geographic location, strong regulatory framework, a growing economy, diverse range of investment

opportunities and a business-friendly environment. The UAE also offers a high quality of life, safety and security. The UAE is, by very many measures, an appealing destination for individuals seeking to manage and grow their wealth effectively.

As wealthy clients and investors from around the world look to the UAE, wealth entrepreneurs here are looking outward and are very international. According to our recent Global Entrepreneurial Wealth Report, a huge majority – 86% – of UAE entrepreneurs have either international operations or plans for international expansion and rank second globally, trailing only behind Hong Kong’s 96%.

How are regional jurisdictions planning to build for, and adapting to accommodate the growth of wealth services?

Regional jurisdictions are positioning themselves as attractive destinations for wealth services and investments, driving economic growth and diversification by implementing various strategies. Firstly, there is financial sector reforms that are being undertaken which include updating laws and regulations, introducing investorfriendly policies and strengthening consumer protection measures to build trust and confidence in the industry. This is facilitating the growth of wealth management services.

There is also the establishment of Financial Free Zones in GCC countries such as the Dubai International Financial Centre (DIFC) and the Qatar Financial Centre (QFC). These zones offer a businessfriendly environment with favourable regulatory frameworks to attract wealth management firms and financial institutions. GCC markets are also investing heavily in infrastructure development to support the expansion of wealth services which includes building state-of-theart financial centres, enhancing digital infrastructure and creating conducive business environments for wealth management firms.

Islamic finance is another growth factor in the region, GCC countries are capitalising on the growth of Islamic finance by developing Sharia-compliant wealth management products and services. This includes sukuk (Islamic bonds), Islamic wealth management solutions, and Takaful (Islamic insurance) to cater to the growing needs of Muslim investors.

GCC countries are also forming strategic partnerships with global financial institutions to enhance their wealth management capabilities which include facilitating knowledge transfer, promoting best practices and attracting international wealth management firms to the region. This is in addition to regional jurisdictions embracing digital transformation in wealth services. We can see the promotion of digital banking, fintech solutions and online wealth management platforms to enhance customer experience and attract techsavvy clients.

Finally, there is also an increasing focus on sustainable investments in wealth management in the region which include promoting environmental, social and governance (ESG) considerations in investment decisions

and encouraging wealth managers to incorporate sustainability principles into their portfolios.

Which asset classes are taking the lead for investors in the region at this time?

Investors in the region are currently showing interest in a variety of asset classes including real estate, equities, fixed income securities and alternative investments like private equity and venture capital. Real estate continues to be a popular choice for investors in the GCC due to its stability and potential for long-term growth. Equities are also gaining traction as stock markets in the region show resilience and growth opportunities. Fixed income securities are favoured by investors seeking more conservative investment options. Additionally, alternative investments like private equity and venture capital are attracting attention from investors looking for higher risk-adjusted returns. Overall, diversification across different asset classes remains a key strategy for investors in the GCC.

Aside from growth and wealth preservation, what do you see as the leading strategic planning priority for wealthy clients and families?

In addition to growth and wealth preservation, one of the leading strategic planning priorities for wealthy clients and families in the GCC is often succession planning. Succession planning involves creating a comprehensive strategy to ensure that wealth is passed down to future generations in a tax-efficient and structured manner. Addressing this allows for wealthy clients and families in the GCC to secure their family’s future, preserve their values and leave a meaningful legacy for generations to come.

Another strategic planning priority for wealthy clients and families in the GCC is often asset protection. Asset protection involves safeguarding assets from potential risks such as economic

downturns, legal liabilities, creditors and unforeseen events. By implementing effective asset protection strategies, wealthy clients and families can mitigate risks, protect their wealth and ensure financial security for themselves and future generations.

In the GCC, there is a notable trend of family-owned businesses going through a transition in management and ownership. As the founding generation hands over the reins and the next generation takes charge, it becomes crucial for families to establish governance frameworks that institutionalise their operations. These frameworks aim to ensure transparency in decision-making, facilitate effective communication and promote harmony within the business. Several countries in the GCC have implemented measures to assist families in achieving these objectives.

Could ESG ever become the main driver of investment decisions for the region’s wealthy?

ESG considerations are gaining traction globally as investors increasingly prioritise sustainability and ethical practices. In the GCC region, the wealthy individuals are also showing a growing interest in ESG investing. As awareness about the impact of businesses on the environment and society rises, it is plausible that ESG could become a significant factor driving investment decisions for the GCC’s wealthy families in the future.

Factors such as transparency, ethical practices and long-term sustainability are becoming more important in investment strategies. In many parts of the world, regulators are advocating for increased transparency about ESG risks and impacts. We expect to see similar trends in the GCC countries as they become more interconnected with the global economy. However, the extent to which ESG considerations will become the main driver of investment decisions for the GCC’s wealthy will depend on various factors, including regulatory developments, market trends and evolving investor preferences

How might the inevitable presence of AI change the relationship between wealth managers and their clients?

The inevitable presence of AI is likely to significantly transform the relationship between wealth managers and their clients in several ways.

Improved efficiency and accuracy as AI can automate routine tasks such as data analysis and report generation. This will free up wealth managers to focus more on strategic planning and relationship building with clients. This could lead to improved service quality and customer satisfaction.

More personalised services as AI has the ability to immediately analyse large amounts of data to derive insights about individual clients. This could enable wealth managers to offer ever more highly personalised investment advice and services based on each client’s unique financial situation, goals and risk tolerance.

AI will enhance risk management as wealth managers will be able to more quickly and comprehensively analyse market trends and identify potential risks. This could improve the effectiveness of their investment strategies and help protect clients’ wealth.

Finally, there is transparency and trust that AI can help wealth managers provide. AI can provide more transparent and detailed information about investments which can help build trust and confidence. However, it could also raise concerns about data privacy and security, which wealth managers will need to address.

While AI can enhance the wealth management experience, it cannot completely replace the human touch. The relationship between wealth managers and their clients will still require trust, empathy and the ability to understand unique client circumstances. AI should be seen as a tool to augment the capabilities of wealth managers, enabling them to provide more personalised and efficient services to their clients.

Wealth & Estate Succession Planning

The wealth management sector is at an inflexion point. Changing market dynamics together with other trends such as the democratisation of advice, demographic shifts and generational wealth transfer are upending established business models

Navigating the succession journey can be complicated for HNWIs. The largest intergenerational wealth transfer in history is set to occur in the next few years – with trillions of dollars expected to pass to the next generation by 2050. Given this significant shift, what are latest trends in wealth and estate succession planning and how are young HNWIs factoring digitalisation and ESG into their investment decisions?

In the GCC countries, approximately 80% of corporations are family owned. That said, in terms of transmission, only 15% of these companies reach the third generation. It is therefore clear that estate planning is needed to help families in their transition process, and in their preparation to anticipate succession plans.

With increasingly international families, how can professional wealth advisors in the Middle East accommodate wealthy families requiring Shariah-compliant estate planning?

Indeed, for many wealthy Middle Eastern families, it is important that their estate plan complies with Shariah principles. There are a number of estate planning strategies that can help these families achieve their goals, such as lifetime gifts, wills or foundations. But if we zoom in on trusts in particular, it is interesting to note that the use of a trust is an excellent option, providing the flexibility of the tool itself with the rigor and framework of Shariah principles.

For example, a contribution to a trust, properly made during the lifetime of the settlor, may be considered an irrevocable

Christophe Lalandre, Senior Executive Officer and Head of Abu Dhabi, Lombard Odier Private Bank

Joëlle de Cerjat Santa Cruz, Senior Wealth Planner, Lombard Odier Private Bank.

gift akin to the Islamic inter vivos gift known as ‘hiba.’

The trust allows for a great deal of flexibility, both in the choice of beneficiaries and in the rules and methods of distribution that best protect their interests. Importantly, the settlor has the option to retain a high degree of control over the investment of the trust’s assets, including the power to restrict investments to those that comply with the principles of Islamic finance.

Shariah principles can be embedded in the trust in a bespoke solution specifically tailored to investor needs. From conception to implementation, from management to distribution, it is possible to incorporate Shariah principles at every stage of the trust’s life.

Which countries in the region have the most innovative estate planning legislation?

A number of Middle Eastern countries are improving their succession planning laws but here I will take a closer look at the international financial centres of Dubai and Abu Dhabi. These two pioneering cities in the Middle East offer solutions and expertise in estate planning, for both Muslims in need of Shariah-compliant solutions, and non-Muslim expatriates. As an example, the Dubai International Financial Centre (DIFC), the Abu Dhabi Global Market (ADGM) and the Ras Al Khaimah international Corporate Centre (RAK ICC) provide Foundations that can be instrumental when it comes to planning a succession for locally held assets. These foundations offer a legal structure for individuals, both Muslim and non-Muslim, to preserve their wealth, ensuring a smooth transition to the next generation.

What are the latest legal developments that are modernising or improving succession planning in the region?

In my view, the new inheritance laws that came into force in the United Arab Emirates in 2023, in a bid to accommodate

its large expatriate population, are likely to improve the approach to estate planning in the country.

For example, with the introduction of the new inheritance law, Shariah law will no longer apply by default to nonMuslim estates in the absence of a will. Instead, these estates will be governed by rules inspired in particular by the British common law concepts and in accordance with the principle of gender equality. In addition, those new rules give non-Muslims the option to draft a will that allows them to leave their estate to whomever they wish, without being restricted by forced heirship rules.

As another example, it is now possible for non-Muslim and Muslim expatriates

from the double pain of losing a family member whilst simultaneously being bogged down in endless conflict due to unsettled or ill-settled succession. A well-thought-out estate plan will help them avoid leaving their children with this kind of traumatic experience.

What emerging trends in the region are currently shaping the future of estate and succession planning?

The internationalisation of families in the Middle East plays a major role in the approach to estate planning and poses many challenges for professional advisers. Different laws may come into play when the estate contains cross-

IN THE GCC COUNTRIES, APPROXIMATELY 80% OF CORPORATIONS ARE FAMILY OWNED. THAT SAID, IN TERMS OF TRANSMISSION, ONLY 15% OF THESE COMPANIES REACH THE THIRD GENERATION

to register a will with Abu Dhabi’s Civil Family Law Courts to settle their estate according to their wishes, without being bound by strict inheritance rules.

These two examples show that in the United Arab Emirates, it is becoming much easier to organise succession through a will, without necessarily having to use more complex inheritance structures.

What are the major concerns of Muslim and non-Muslim expats in the region in terms of succession?

I believe that the major concerns of Muslim and non-Muslim expats in the Middle East in terms of succession are the same as anywhere else in the world: namely, to benefit from legal certainty and predictable, clear and simple rules in order to organise their estate in the best possible way. They all want to protect their loved ones and to spare them

border elements, for example when assets belonging to the estate are held in two or more countries, or heirs to the estate are living in different countries. Different laws applied to the same estate can have unexpected repercussions. For example, some jurisdictions have forced heirship rules and others don’t. Depending on the circumstances, the testator’s freedom may be limited by hereditary reserves that only apply to certain assets in an estate.

As another example, just because the laws of one country apply to the opening of a succession it does not mean that the laws of that same country necessarily determine the inheritance tax to be paid. Cross-border estates can be subject to the tax and inheritance laws of different countries, which can make things very complicated.

Reasons why it may be time to switch your financial services provider

Apex Group explains that transitioning to a new financial services provider can be a daunting prospect, but their research indicates that priorities around technology and scalability are increasingly driving managers to switch

Our survey of asset managers in 2023 uncovered the factors influencing their decisions to shift to a new financial services provider. It reveals how evolving priorities are prompting managers to make a change.

35% said that better technology would be a main driver of moving to a new partner – a 9% increase from 2020 when we last undertook the survey! It was also telling that 37% of voters, more than a third, flagged unreliable service as another driver to switch.

Consider these 6 reasons when changing financial service providers:

1. A single-source provider

67% of managers prefer single-source solutions from partners who can meet all their needs.

2. Global scalability

The best partners can scale globally and adapt to different countries’ regulations, taxes, funds and cultures. The challenge is to scale with consistent service in diverse territories.

3.Rigorous compliance and governance processes

Th e demand to demonstrate robust compliance and cybersecurity processes have become more

intensive each year. The best providers should be able to demonstrate explicitly the strength of internal oversight measures and a businesswide culture of compliance.

4. Technological advancements

New technology is a key selection factor. Providers should show they can meet the new demands of investment reporting and data transfer, with reliable systems and cybersecurity. They should also offer transparent and value-added services to investors.

5. Range of corporate secretarial, foreign exchange and banking solutions

Any modern financial services provider should offer a comprehensive range of corporate secretarial, statutory compliance, foreign exchange and bank account management services.

6. Multi-jurisdictional presence

It is increasingly important for asset managers to count on their service provider’s presence, local expertise and wisdom gained from operating locally across multiple countries.

As fund managers assess outsourcing needs amid rapid innovation in technology and the expansion of sustainability practices, choosing a financial services provider is now a completely different prospect. The process of selecting a new financial services provider now comes with a raft of considerations.

The wider financial services sector is progressing to ecosystems distinguished by frictionless exchanges of data. Environmental, social and corporate governance (“ESG”) ratings are fast becoming embedded in decision-making, regulation is imposing heightened transparency on operational resilience, and cyber security is now paramount.

For firms that need consistency in their global expansion, single-source solutions from partners operating in multiple countries are also becoming more important.

This all means that any decision to switch to a new financial services firm is a critical one.

To help asset managers assess their options, we have launched an eBook that can be used as a reference tool for selection. We have outlined below some of the key value-add services managers should be seeking.

Probe the value-add proposition

As they have expanded, the more pioneering fund services providers have added new products and capabilities, including banking services, capital introduction, collateral management, ESG and sustainability services and foreign exchange solutions.

Managers can become dependent on these services, so it’s vital to perform a comprehensive assessment of a new partner’s ability to ensure they can provide the accuracy and reliability demanded.

Our eBook outlines the full set of core questions to put to providers, but some of the key items include:

Is this a genuine single-source solution for all your needs?

What is the quality of systems, automation, straight-through servicing and cyber security controls?

Does the partner provide scalability and skill in your key asset classes?

Does the firm provide corporate secr etarial and directorship services?

Does it offer foreign exchange and bank account management?

Will the firm be able to support you with your ESG & sustainability goals?

Can the firm manage complex fund strategies?

Key steps when switching

Once a new partner has been selected, an agreed timetable is needed to prepare and execute a project plan. From the outset, both parties need to allocate sufficient resources to accomplish the tasks required for a smooth transition. As well as due diligence checks, the plan should also encompass:

Assessments of full physical and electronic data requirements

Agreement and signing of full ser vice-level agreements, confidentiality and service contracts

Reviews by the new partner of all legal agreements to ensure necessary changes can be verified by legal counsel at an early stage

Preparation of necessary an nouncements and contractual changes for notification to investors

Agreement of data transfer methods and protocols with the prior provider

Test transfer and reconciliation of calculated net asset value between the prior and new provider

Live transfer of current and his torical data covering at least the complete accounting period to facilitate smooth and complete audit processes

A well-planned transition with full transparency and a shared commitment will help assure fund managers they have made the right call.

How can Apex Help?

Our business is unique in its ability to reach globally, service locally and provide cross-jurisdictional services. With our clients at the heart of everything we do, our hard-working team has successfully delivered on an unprecedented growth and transformation journey, and we are now represented by over 12,000 employees across 112 offices worldwide.

Our single-source solution enables us to deliver an extensive range of services across the full value chain, to asset managers, capital markets, corporates, and family offices.

Chairman,

Path of Determination

Dhafer Sahmi Al Ahbabi Chairman, Al Ramz Group tells MEA Finance how their innate resilience, adaptability and determination to be at the forefront of the regional investment banking sector over the past twenty-five years has set them on course to fulfil their vision to emerge as a significant global financial institution

In the twenty-five years since the founding of Al Ramz, how have the business and services that you provide evolved?

From our inception, Al Ramz has been at the forefront of the financial services industry, guided by a vision to provide unparalleled expertise and innovative solutions. Our evolution has been a testament to our adaptability and foresight, continuously enhancing our offerings to stay ahead in a dynamic market.

Initially established as a brokerage firm, our core commitment was to offer reliable and efficient trading services. Over the years, we have expanded our portfolio to include a wide range

Dhafer Sahmi Al Ahbabi,

Al Ramz Group

of financial services, including asset management, corporate finance and investment banking, catering to a diverse clientele from individual investors to large corporations.

Embracing technological advancements has been a key factor in our evolution. We have invested significantly in digital platforms and fintech solutions, ensuring that our clients have access to state-of-the-art tools for online trading, portfolio management and market analysis. This digital transformation has not only streamlined our operations but also enhanced the customer experience, providing them with secure, fast and userfriendly services.

Sustainability and corporate responsibility have also become integral to our business strategy. As we progressed, we recognised the importance of adopting practices that support environmental, social and governance (ESG) principles. This commitment is reflected in our sustainable investment options, our community engagement initiatives and our dedication to maintaining high standards of corporate governance.

Our journey has been shaped by a commitment to excellence, a culture of innovation and a dedication to creating value for our stakeholders. As we celebrate this milestone, we are grateful for the trust our clients have placed in us and are excited about the future. We look forward to continuing to evolve, adapt and lead in the financial services industry, delivering solutions that meet the needs of our clients today and in the years to come.

Today, Al Ramz stands as a testament to the power of resilience, vision and determination.

As a leading fully-fledged regional investment bank, how do you view the future for region’s capital markets?

We are optimistic about the future of the region’s capital markets, considering them to be on a trajectory of substantial growth and innovation. Several factors contribute to our positive outlook:

Technological Advancements:

The integration of cutting-edge technology in financial services, such as blockchain, artificial intelligence and fintech solutions, is transforming the capital markets. These innovations are increasing market efficiency, enhancing transparency and providing new opportunities for investors, which we believe will drive significant growth.

R egulatory Developments: Progressive regulatory reforms and the commitment of regional governments to foster a conducive environment for investment are pivotal. Enhanced regulatory frameworks and the adoption of international best practices are attracting both local and foreign investors, thus deepening the markets and promoting stability.

Div ersification and Expansion:

There is a noticeable trend towards the diversification of the region’s economies away from traditional sectors. Capital markets are expanding their offerings, including green bonds, Islamic finance products and private equity, broadening investment opportunities and attracting a diverse range of investors.

Increasing

Foreign

Interest:

The region’s capital markets are becoming

increasingly attractive to foreign investors, drawn by strong economic fundamentals, high growth potential and improving market accessibility. This influx of foreign capital is expected to continue, further integrating our markets with the global financial system.

S ustainable Investment:

Sustainability is becoming a key focus, with an increasing number of investors prioritising environmental, social and governance (ESG) factors in their investment decisions. The region’s capital markets are responding by offering more ESG-compliant products and services, aligning with global sustainability trends.

At Al Ramz, we are committed to playing an integral role in the growth and development of the region’s capital markets. We continuously strive to innovate, adapt to new trends and uphold the highest standards of integrity and professionalism. Our dedicated team of experts is focused on delivering value to our clients and contributing to the overall prosperity and resilience of our financial markets.

We are enthusiastic about the opportunities that lie ahead and remain dedicated to fostering a robust, dynamic and sustainable future for the region’s capital markets and are looking forward to engaging with all our stakeholders to realise the potential of our markets.

Tell us about Al Ramz’s research activities

At Al Ramz, we understand that our clients value not just the data, but the insights that come from comprehensive analysis. Our multi-dimensional research framework is designed to offer our clients a competitive edge, combining the strengths of fundamental, technical and quantitative analysis. We are committed to providing our clients with a holistic view of the market, empowering them with the knowledge to navigate the complexities of the investment landscape confidently.

Our fundamental research is the cornerstone of our analytical efforts,

focusing on the intrinsic value of investments. This involves a deep dive into economic, financial and other qualitative and quantitative factors affecting industries and individual companies. Our team of experienced analysts conducts thorough evaluations, including financial statement analysis, industry trend exploration, company performance reviews and face-to-face meetings with company management. This rigorous approach ensures that our clients receive detailed, accurate and actionable insights, enabling them to capitalise on investment opportunities with a clear understanding of the underlying value drivers.

Technical analysis forms a critical part of our research offerings, providing clients with a perspective based on market trends, historical data and statistical indicators. Our technical research experts specialise in pattern recognition, chart analysis and the application of various technical indicators to forecast the future price movements of securities. This research is indispensable for traders and investors looking to time their entries and exits in the market, offering them a strategic edge by identifying potential market trends, reversals and continuations.

Our quantitative research offering is designed to cater to clients who seek a data-driven approach to investing.

By employing advanced mathematical models, statistical analysis and algorithmic techniques, we develop sophisticated tools and strategies to identify investment opportunities. This includes risk modeling, portfolio optimisation and the creation of algorithmic trading strategies. Our quantitative research helps clients to make decisions that are not just based on market intuition but are backed by rigorous data analysis and empirical evidence, providing a robust framework for assessing risk and return.

How does Al Ramz’s impactful role in the financial services sector support regional growth and innovation?

Al Ramz has embarked on a journey of regional expansion, aimed at extending our reach and enhancing the depth of our services. This expansion is characterised by the strategic broadening of our service lines to include a full spectrum of financial services, such as sophisticated brokerage solutions, expert market-making, asset management and tailored investment banking services. Our commitment to offering a complete value proposition is evident in our pursuit of excellence and innovation in these areas, ensuring we provide comprehensive financial

solutions that meet the evolving needs of our clients.

At the heart of our regional expansion strategy is a philosophy grounded in forming strategic partnerships with local players. We believe in a collaborative approach, which allows us to combine our expertise and resources with the local knowledge and operational strengths of regional partners. This synergy is designed to enhance the financial ecosystem, foster local market development and provide innovative financial solutions tailored to the unique needs of each market. Our collaborative model is pivotal in creating mutually beneficial relationships, enabling us to navigate diverse market environments effectively and align our services with local market dynamics.

Our ultimate objective is to drive efficient regional growth while maintaining a low capital investment framework. This approach ensures that we can expand our footprint and impact without overextending our resources, thereby maintaining financial stability and delivering sustainable value to our stakeholders. By leveraging strategic partnerships and focusing on service lines where we can offer distinctive value and expertise, we maximise our market impact while optimising our investment and operational costs. This strategy not only supports our growth ambitions but also ensures we remain agile, responsive and competitive in the fast-evolving financial landscape.

Al Ramz is deeply committed to playing a transformative role in the financial services sector, driving not just our own growth but also contributing significantly to regional economic development and the innovation ecosystem. Our expanded service offerings and regional presence are designed to enhance market liquidity, improve access to capital and provide sophisticated financial solutions that support the growth ambitions of businesses and economies across the region. By fostering a more interconnected and innovative financial

landscape, we aim to elevate the overall competitiveness and resilience of the regional markets.

How is Al Ramz and making use of financial technology for clients and for itself?

Al Ramz has developed a new proprietary platform that stands as a testament to our commitment to technological innovation and excellence. This platform is designed with our clients in mind, offering a suite of automated journeys and unique features tailored to the regional market’s nuances. It provides an intuitive, seamless user experience, enabling clients to access a wide range of financial services effortlessly. The platform integrates advanced analytics, real-time market data and personalised investment insights, empowering our clients to make informed decisions with speed and precision.

At Al Ramz, we harness the power of advanced algorithms and robotic technology to revolutionise our institutional trading and market-making capabilities. Our algorithmic trading systems are designed to execute large orders efficiently, minimising market impact while optimising trade execution. These sophisticated algorithms analyse market conditions in real-time, enabling us to make high-speed, informed trading decisions that capitalise on the slightest market movements.

In the realm of asset management, Al Ramz is pioneering the integration of robotic advisory services. This innovative approach combines algorithmic efficiency with human expertise, offering personalised investment strategies and continuous portfolio optimisation. Our robotic advisors utilise vast datasets to analyse market trends, assess risk profiles, and construct diversified portfolios tailored to individual client goals and preferences.

Our investment in robotic process automation (RPA) signifies a transformative shift in how we conduct our operations. By automating routine and repetitive tasks, we have significantly increased our operational efficiency,

reduced the risk of human error and ensured faster turnaround times for client requests. This automation extends across various functions, including transaction processing, compliance checks, and customer service, allowing our team to focus more on strategic initiatives and enhancing client relationships.

Central to our technological advancement is our state-of-the- art customer relationship management (CRM) system, which has been meticulously designed to offer a 360-degree view of our client interactions. This powerful tool enables us to deliver personalised service, anticipate client needs and build stronger, more meaningful relationships. Complementing our CRM, our sophisticated

Geographic expansion is a key pillar of our growth strategy. We aim to establish a stronger presence in emerging markets and solidify our footprint in existing markets, leveraging our expertise to tap into new opportunities and bridge market gaps. This expansion will be approached with a keen understanding of local market dynamics, ensuring that we can deliver tailored solutions that resonate with regional needs while aligning with our global standards of excellence.

The backbone of Al Ramz’s success is our people and the systems that empower them. We plan to continue attracting, developing and retaining

TODAY, AL RAMZ STANDS AS A TESTAMENT TO THE POWER OF RESILIENCE, VISION AND DETERMINATION

data warehousing capabilities ensure that we can store, process, and analyse large volumes of data efficiently. This integration provides us with deep insights into market trends, client behavior, and operational performance, driving data-driven decisionmaking across the organisation.

What is your vision for how Al Ramz will grow as a business in the next twenty-five years?

Our commitment to our clients remains paramount. We envisage an expanded suite of services that continually adapts to the evolving financial landscape, ensuring that our clients’ needs are met with the most innovative, efficient, and effective solutions. This includes diversifying our offerings in areas such as digital asset management, sustainable and responsible investments and bespoke financial advisory services, ensuring that we stay ahead of market trends and client expectations.

top-tier talent, fostering a culture of innovation, inclusivity and continuous learning. Simultaneously, we will escalate our investment in cutting-edge technology, enhancing our operational infrastructure to support scalable growth, improve efficiency and deliver exceptional service. This includes advancements in AI-driven analytics, blockchain for secure and transparent transactions and robust cybersecurity measures to protect our clients and our firm.

In summary, our vision for Al Ramz is to build on our solid foundation, constantly innovating and adapting to ensure we remain at the forefront of the industry. We are excited about the journey ahead and confident in our strategic direction, which we believe will not only grow our business but also contribute significantly to the broader economic landscape and the communities we serve.

Embedded Finance in the Middle East Transforming the Financial Sector

As embedded finance changes paradigms across the region, Niraj Naetsawan Country Head, UAE at additiv, describes how it will bring high-quality financial services, tailored to the unique needs of consumers, particularly in wealth management

The financial services industry finds itself undergoing a transformation driven by the rapid evolution of technology, especially through an open architecture approach. The traditional value chain, characterised by the tight integration between manufacturing and distribution of financial service products under a single entity, is being reimagined. This revolution, driven by the emergence of embedded finance is a transformative force, reshaping how customers interact with financial services. This paradigm shift is not just a mere trend but a profound evolution, redefining the value chain of customer experience and reimagining the role of financial institutions.

The consumers’ voice

Embedded finance disrupts the old paradigm, weaving financial services into the fabric of everyday digital platforms and experiences. The shift at hand goes beyond mere incremental innovation; it establishes a new bedrock for the industry, restructuring the essence of how services are offered and consumed - unbundled, re-bundled and embedded

in new and non-traditional channels. They are more accessible to new customers and can be more tailored to specific consumer needs. At the heart of this revolution is the consumer—a consumer who is unequivocally vocal about the desire for cost-effective, trustworthy and engaging financial solutions.

Services like wealth management and investment advice have traditionally been reserved for the very few. Technology can make these critical financial services

more accessible and inclusive, either fully digitally or through a hybrid approach.

Trust is key to the relationship between consumers and providers of financial services. As we increasingly see financial services offered by non-financial brands, it is natural to ask whether consumers trust these new entrants with their money. Traditionally, banks have had high levels of trust. However, non-financial providers are increasingly trusted to deliver financial and investment services. On average, one in two consumers trust superapps, e-commerce platforms, retailers, telecoms and utilities providers to be their provider of financial services, suggesting that the playing field for embedded financial services is wide open for many non-financial brands.

Furthermore, nearly two thirds of consumers would consider switching their existing financial service providers, especially if the incentives – mainly around costs – align with their needs, painting a narrative of dissatisfaction with the status quo and a call for a more equitable financial ecosystem.

Zooming in on the Middle East, as affluence and digital literacy is rising, there remains a notable gap in the provision of high-quality financial services tailored to the unique needs of the region’s consumers, particularly in wealth management and investment services. Preferences for the delivery of this advice are evenly divided, with consumers showing equal interest in advisor-led models and hybrid models that blend digital platforms with advisor interaction. In line with the global trends,

Niraj Naetsawan, Country Head, UAE, additiv

the Middle East consumers show growing trust in taking financial services from nonfinancial institutions.

Costs, trust and distribution channels play a critical role in the future of the financial services value chain. These factors reinforce the need for a transparent, customer-centric approach—a philosophy that guides the integration of financial services around rich ecosystems, ensuring mobility and choice are at the forefront of financial services.

Finance-as-a-Service: the new ecosystem of value

The democratisation of financial services requires an architecture that champions the right mix of products, embedded seamlessly at the point of need. It’s about orchestrating ecosystems that foster competition, driving down costs and broadening access—a feat achievable through highly efficient and scalable business models that circumvent traditional barriers to service provision.

Finance-as-a-Service (FaaS) is the infrastructure that underpins embedded finance: the seamless integration of financial service capabilities into diverse platforms, whether they be financial firms expanding their offerings or non-financial firms venturing into financial services. The agility of FaaS, powered by APIs, cloud and digital technologies, enables a repackaging of financial services — such as banking, wealth management, credit and insurance — that resonates with the modern consumer’s expectations.

Embedded finance is not merely a conduit for delivering financial services; it’s a fulcrum for inclusion. It eradicates the traditional costs of customer acquisition and galvanises take-up rates by embedding relevant services within existing customer interactions. It is a narrative of relevance, of services tailored to fit the uniqueness of each consumer’s life. It’s not about digitising fragments of the customer experience but redefining the

entire model. For incumbent institutions, it heralds new avenues of distribution, sourcing, and operation—delivering not just services but experiences that resonate across demographics.

A paradigm of retail innovation transcending into financial services: Coop Finance+

It is worth reflecting upon the approach of Coop 1, Switzerland’s largest retailer, to provide comprehensive financial services seamlessly to their customers, via its financial super app Coop Finance+, which is fully integrated with the Coop brand and other digital channels.

Consumer brands may be well-placed to provide financial services, but they need regulated providers to deliver those services, plus a reliable technology partner to connect them. Leveraging additiv’s orchestration platform for embedded finance, Coop was able to integrate and manage various financial services and banking-as-a-service (BaaS) partners, into a seamless end-to-end customer experience. Coop Finance+ significantly enhances the ease and reach of financial services. By consolidating high-quality banking, investment and retirement options into a single app, it simplifies what is often a complex landscape, making these services more accessible and affordable for a broader audience.

Coop’s strategic partnerships exemplify the potential to leverage retail footprints for financial service distribution, marrying convenience with financial empowerment.

Embracing the Future: consumercentric embedded finance

In the Middle East, especially in UAE and KSA, we see large non-banking institutions such as e&, Du, STC, Careem etc, making strategic decisions to foray into the financial services industry. The capability for non-banking institutions to satisfy unmet financial needs stems from

technology’s empowering role, enhancing their customer value propositions. This approach is particularly effective due to the extensive customer base that these institutions have, which is characterised by high loyalty and engagement levels, presenting a ripe opportunity to expand their offerings and fulfil these financial gaps.

Every successful customer journey involves a financial transaction. Combined with consumer insights from various parts of the value chain, non-banking financial institutions can contextualise and personalise financial service propositions and drive new revenue pools.

We at additiv see a landscape where financial services are not bound by institutional walls but are orchestrated across a tapestry of providers, delivering unparalleled choice and transparency. It’s a world where the financial value chain is not a monolith, but a network of diverse opportunities, each offering unique benefits to enhance the consumer experience. As we envision the future, the imperatives are clear. Financial services must be liberated from their traditional confines, embedded within the broader narrative of consumers’ lives, and delivered with an unwavering commitment to accessibility, affordability, and relevance.

This kind of collaboration brings benefits on all sides. For non-financial brands, there is the opportunity to provide new value-added services for their customers. Meanwhile, established financial providers can tap into new markets, new customer segments and new, more efficient distribution channels, accessing much more holistic information about consumer activities and preferences.

In the Middle East we are seeing an emerging trend of the financial services industry heading in this direction. Both non-banking institutions and financial services providers are experimenting, iterating and investing in this space along with regulatory support on open-banking and open-finance being established and further enhanced.

LEADERSHIP SERIES

A History of Progress

Adnan Anwar Deputy Chief Executive Officer of National Bank of Fujairah, explains what lies behind the bank’s notable results, how it is positioning to further support the UAE’s important SME sector and to take a lead in the growing trade finance arena, while at the same time building a sustainable ESG framework

What do you think was behind NBF’s strong results in 2023?

Well, before I attribute the strong results to various businesses, I would like to call out differentiating factors which underpin who we are and the drivers of our results. We are blessed with strong set of shareholders and a supportive Board focused on long-term success, coupled with one of the most highly engaged teams in the GCC banking

sector, who have been instrumental in enabling NBF to become a truly partner bank. We have been able to differentiate on service and creating value for our customer. These strengths have helped us in growing a sustainable business and to achieve a record set of results in 2023 and earlier.

In terms of business-specific achievements, our core businesses like SME and commercial banking, trade finance, retail banking, treasury and

financial institutions business have performed significantly better in the last few years. We have worked hard in recent years to develop a strong balance sheet with disciplined and efficient use of capital that benefited in a high interest rate environment. That helped immensely in our 2023 results.

Our CASA ( Current Account and Savings Account) balances and operating accounts have grown and performed well. We increased our investment portfolio in high quality investment grade bonds, which outperformed the market indices by three to four times through active management by our ALM (Asset and Liability Management) team.

Our focus on quality means that we manage our portfolio in a very professional manner. Our asset quality indicators are faring better than the industry averages. While all this was happening, we continued to carefully invest for our future, and our digitalisation programme is progressing to enhance our customer experience.

What measures and products does NBF have in place to assist the UAE’s ever-important SME sector?

Well, I see SMEs as the lifeblood of any nation’s economic diversification, and arguably NBF has been the most consistent UAE bank when it comes to SMEs.

We have a dedicated business segment serving SMEs under the brand of Business Banking for more than two decades. The dedicated focus has allowed us to provide tailored products and services to the needs of this sector, and we take pride in partnering for success for a number of SME customers.

The type of products and services we offer to this segment range from simple account management services to loans and advances, trade finance, treasury and all sorts of full-scale banking, as

Adnan Anwar, Deputy Chief Executive Officer of National Bank of Fujiarah

the needs vary given wide spread of SMEs, from small up to a decent size. Digitalisation also plays a really key part, catering right from a simple one-man shop to a more sophisticated business, and we invested in our technologies and solutions accordingly. This has helped with the immense growth. With the growing startup and SME sector in the UAE market, we also developed a marketplace platform with the brand name of NBF Connect.

This platform allows small SMEs and startups to come together and get the benefits, and avail other services like legal, HR, accounting firms and many others going beyond banking to facilitate their wider business needs. At the same time, we are looking into technologies and solutions that can enable these SMEs, particularly startups and micro-SMEs to access banking services much more easily.

How is NBF gearing up to meet the growing emergence of Trade Finance as an important vertical in the banking sector?

Trade finance is a significant contributor to the economic diversification and growth of the UAE. NBF has grown since its inception on the back of trade finance business, almost 60% of our business has some anchor of trade finance and has an award-winning offering that ensures its customers keep abreast of developments in regional and global trade.

The principal way NBF is gearing up is by staying closer to customer needs and investing in its trade finance capabilities across new markets in line with the government strategy, digitalisation of processes to provide superior experience and investing in our team capabilities to enable opportunities for our customers.

NBF has been opening new emerging markets to facilitate its customers flow of trade businesses in and out of the UAE and expanding the network of correspondent banks and partners. The UAE government has been signing SEPA agreements with certain jurisdictions to enhance growth, so it is important that we support our

customer journeys in those jurisdictions

In line with our digitally enabled strategy, NBF has been investing in digitalisaiton of processes. Trade is quite technical in terms of documentation and we have implemented new technologies artificial intelligence for enhancing processing speed for our clients. We often come across clients who say that if they need the transaction to be processed on the same day, NBF is the name that comes to their mind, which is very fulfilling.

At the same time, we have invested in our trade finance system which is in the final leg of going live and piloting. This will allow the front and back end to be put into the hands of the customer. The speed, the experience and the self-empowerment going forward is also key as we migrate

of our business philosophy. The way we started was by linking our own businesses and our own models to sustainability practices and frameworks.

We had a number of things common between the ESG framework and business strategy, for example, support for SMEs; we also had healthcare and education as sectors of the business, and support for the development of Emiratis and young talent. As a first step, we aligned these to the broader sustainability requirements. We engaged all stakeholders, from shareholders and the board to our employees.

For us the credibility of what we do was more important than quickly jumping into green bonds and the like. With this change in the last couple of years, we progressed further and we

OUR ASSET QUALITY INDICATORS ARE FARING BETTER THAN THE INDUSTRY AVERAGES

into new generations of customers. So, these are some of the investments we are making to revolutionise the customer experience in this field.

NBF has also been investing in its people and team to augment its transactional banking and trade finance offering, including advisory capabilities to better serve the evolving needs of the customers.

How is NBF meeting the challenges of building a sustainable banking and ESG framework?

I personally do not see sustainability as a challenge. It is rather an opportunity for all of us to have a meaningful impact, not only on business, but on society as a whole. NBF puts the sustainability and Environmental, Social and Governance (ESG) agenda at the heart of our business. Our journey in this space started a few years back and has been at the heart

started following the principles of the United Nations Sustainability Program, which were more closely aligned to long term collaborative change in this respect, and at the same time, the UAE Net Zero by 2050 Strategy. We are a signatory to the UAE Banks Federation One Trillion Program towards sustainable finance.

Acknowledging the critical role of sustainability to the UAE and its communities, the board approved the sustainability position statement and strategy last year, which is very much aligned with business strategy and has assigned the governance of these matters to the board risk committee, which has been renamed as the Board Risk and Sustainability Committee.

We have been making sustainable progress on a number of fronts; for example, our investment portfolio is

already more than 6% ESG-aligned. More than AED 600 million sustainable finance in the space of healthcare and education. We have thousands of SMEs being supported and more than 15% of our portfolio is in that space. The focus on the customer and climate side has been growing and we completed sustainable and renewable energy deals in this space over the last couple of years.

Last year we started engagement with our customers on sustainability through the Living Business Program in collaboration with some external providers. We engaged 16 customers to help them in their sustainable journeys. When we started those programs, we partnered on the business front to promote solar financing, offering green products for our retail as well as business customers. The commercial impact has started becoming more evident, and we are really proud to be making this progress in our business.

Furthermore, over the course of last year we engaged with key stakeholders through a series of strategic partnerships, internal initiatives and policy updates, hosting and participating in sustainabilityfocused events.

In your forty years since founding, what has been your greatest challenge and your greatest achievement?

Well, that is a tricky one. The way I think about it, I think our greatest challenge and achievement has been the same. 2024 marks our 40th anniversary, and when we started, it was a prestigious beginning, being the National Bank of Fujairah. But from the business standpoint, the challenge was how to find our place in what I think is one of the most competitive markets with a very few players accounting for 80% or more share of the market.

But, we have been successful in overcoming that challenge through a clear focus and carefully chosen niche positions, with differentiated service and by being truly a partnership organisation.

Again, with the vision and long-term focus of our shareholders and board of directors, and I would also emphasise our people, we boast one of the most highly engaged teams in the GCC banking sector who have been underlying strengths for our success.

Over the years NBF has built a strong reputation in the industry. Today, we are well-regarded as a trade finance player by our customers and the market, a dominant SME and business banking player, commercial banking player, in treasury and a good corporate bank with niche focus in areas of precious metals and diamonds, energy and marine. We have a growing offering in the real estate

Why do I say a renewed focus? Because with the digital world, AI and what customers are expecting, we need to reinvent our service model to be relevant in times to come.

The principal focus will remain on growing our franchise with a clear focus on quality and speed of execution. Sustainability considerations will underpin the execution of our strategy and the following areas where we will continue to work harder:

We will further cement our position as the clear leader in the SME and commercial banking space

We aim to solidify NBF’s standing as a dis tinctive trade finance

WE ARE A PARTNER BANK TO THE CUSTOMER, AND WE WANT TO MAINTAIN THAT NO MATTER WHAT WE DO

mortgage and the retail baking space, and as well as many others, in Islamic banking with NBF Islamic

The awards we have been winning in the space of trade finance, commercial banking, SME banking and the Islamic window are all testament to what we have been able to achieve in our 40 years of history.

There is nothing as fulfilling and rewarding than our customers saying that they have grown and became successful because of NBF being their first partner bank who supported them through thick and thin. It is, all in all quite a proud feeling.

What are NBF’s plans for the remainder of the 2024 and beyond?

While our strategic direction is not changing, we have recently refreshed our vision, mission and values to highlight our commitment to sustainability and our broader focus on retail banking, and what I would also say - a renewed emphasis on customer experience.

bank in the UAE, emphasizing customer experience in trade finance services.

We will invest in transactional banking and strengthening product offerings across the business segments we serve.

We will continue to grow and invest in our retail franchise, particularly in the affluent and priority segment

We are augmenting our digitally enabled bank strategy, focusing on service value chains across the bank, to provide superior service in the market.

We will be investing in our human capital with a particular focus on development of local Emirati talent.

In whatever we do, we will ensure that our identity as a relationship and partnership bank is maintained alongside digitalisation. We do not want digitalisation to take away that human and people angle, which we would ensure as we go along.

Open Minded

Consumers’ increasing desire for frictionless, more seamless and intuitive value-added experiences is driving governments, banks and regulators to develop open and collaborative financial ecosystems

The financial services industry is undergoing a profound transformation driven by AI, digital innovation and the shift toward digital financial services.

The dizzying speed of change in the banking sector has increased the need for third parties to help financial institutions with data analytics, modernisation of core technology and extension of customer reach beyond traditional banking channels.

Global consultancy Accenture said open banking allows customers to share access to their banking data with trusted

third parties, which then provides the customer with a better banking experience.

Open banking has gained momentum in the GCC region in recent years, making it a core element in the digitalisation of financial services. By embracing open banking frameworks and APIs, banks in the Gulf region can create ecosystems that enable seamless integration of services, enhance customer experiences and drive innovation across the industry.

The innovative technology is revolutionising the financial services sector at pace and scale. With the

lines between financial technology (fintech) players, technology giants and incumbents continuing to blur, banks will increasingly be competing on technologydriven innovations, and their ability to connect with digitally savvy customers.

Banking customers are accustomed to the service standards set by technology companies and have come to expect the same degree of speed, simplicity, consistency and convenience from financial services providers.

GCC banks no longer view application programming interfaces (APIs) simply as technical tools. APIs allow financial institutions to integrate features and experiences consumers want into their existing apps or websites without a heavy, expensive lift. The banks’ ambitions extend beyond monetising APIs to using them to enable entirely new businesses through third parties and collaborations.

The coming years could be a make-orbreak period for some incumbent banks. Boston Consulting Group (BCG) said incumbents will have to either join the digital financial ecosystem movement – or be consumed by it. Platform-based ecosystems offer products and services

that are created and distributed in partnership with third parties.

A new era in digital payments

GCC countries are investing in their banking infrastructure to help money move much faster than cheques and more securely than cash, bringing the benefits of the digital economy to more people and businesses.

The upgraded systems, dubbed realtime payments or instant payments, enhance transparency and confidence in payments while helping consumers, banks and businesses manage their money.

UAE central bank’s Al Etihad Payments launched Aani, an instant payments platform that aims to transform the digital payments landscape in the country, last October. The immediate payments platform allows transactions between consumers, businesses, corporates and government entities to be processed instantly and securely 24 hours a day, seven days a week.

According to ACI Worldwide, as many as 37.2 million real-time transactions were made in the UAE in 2022, and this number is expected to increase to 146 million by 2027, representing a five-year CAGR of 31.5%.

Similarly, Saudi Payments, a unit of the Saudi Central Bank (SAMA), unveiled ‘sarie’ in 2021 to advance the kingdom’s financial ecosystem, mainly through the adoption of faster payments and improvements to banking reconciliation.

Saudi Arabia is currently the biggest real-time payment market in the Middle East, ACI Worldwide said in May 2023 while projecting that transaction volume will expand at a CAGR of 26.1% to 1.2 billion by 2027 from 352 million in 2022.

Banking consumers’ increasing desire for frictionless, more seamless and intuitive value- added customer experiences is driving governments, banks and regulators to develop open and collaborative financial ecosystems.

Open banking has the potential to revolutionise the GCC region’s payments ecosystem and is playing a significant

OPEN BANKING AND THE DIGITAL PAYMENTS IT ENABLES COULD BENEFIT NOT ONLY FINTECH FIRMS BUT ALSO MERCHANTS, BANKS AND CONSUMERS. POSSIBLE ADVANTAGES OF PREPARING FOR THIS NEW APPROACH TO BANKING

AND PAYMENTS INCLUDE LOWER COSTS, FASTER SETTLEMENT AND MORE SECURE TRANSACTIONS

– McKinsey

role in the rise of the digital economy as it makes payments easier and more transparent.

“Open banking and the digital payments it enables could benefit not only fintech firms but also merchants, banks and consumers . Possible advantages of preparing for this new approach to banking and payments include lower costs, faster settlement and more secure transactions,” said McKinsey.

The innovative technology allows incumbent banks to deliver end consumers payment solutions giving online retailers such as Amazon, noon and Careem a convenient way to make direct fund transfers for online transactions.

It mandates banks to provide open APIs to allow software at third-party companies to access payment account information and payment initiation from another. Dubai’s Emirates NBD launched Emirates NBD API Souq – an API developer portal that provides fintech firms, developers and corporate clients an all-in-one ecosystem to rapidly develop innovative financial solutions.

Similarly, Abu Dhabi Islamic Bank unveiled its first API developer portal in 2021 to allow fintech developers to use ADIB APIs to develop their applications while accelerating the adoption of open banking in the UAE.

While real-time payments infrastructure has essentially changed the payments landscape, the true value

of instant payments is only realised when surrounded by value-added services.

Industry experts say open banking will enable the creation of financial dashboards that bring together consumer data such as investments, savings, and cash flow in one location. Similarly, variable recurring payments APIs are paving the way for the future of open banking payments in the Arabian Gulf region.

The new series of regulations and initiatives that are being implemented in the GCC region, especially in Saudi Arabia, Bahrain and the UAE are enabling incredible progress towards real-time payments.

Open banking in the GCC

The radical transformation in the financial services industry is partially being driven by the advancement in digital technology as previously closed industrial systems have become networked and open, providing ideal conditions for open banking to flourish.

PwC said that open banking has the potential to reshape the financial services landscape and several financial centres in the emerging markets, the GCC region included, are making considerable moves in this space.

To become a value architect, incumbent banks should consider playing a range of roles in the value chain. Furthermore, depending on the size, market and

strength of the bank, a legacy bank can embrace any mix of these approaches to increase business model flexibility and differentiate itself from the competition.

Though several banks are adopting open-banking enablers, McKinsey said new entrants including neobanks, fintech firms and payment services providers gain a competitive advantage by building an open platform from the outset.

Bahrain was the first to mandate open banking and the UAE and Saudi Arabia are now making moves to follow their neighbour’s example. The kingdom issued its open-banking rules in 2018, followed by a framework with guidelines on data sharing and governance in late 2020. The government is implementing a Europeanstyle regulation-driven approach.

Following the issuance of its open banking policy in January 2021, SAMA published its full open banking framework in November 2022, with an initial focus on account information services to be followed in the second phase by a focus on payment initiation services.

The central bank introduced an ‘Open Banking Lab’ in December 2022 to speed up the development of open banking in Saudi Arabia. The ‘Lab’ constitutes a ‘technical testing environment’ to enable established banks and fintech companies the opportunity to ‘develop, test and certify’ open banking services to ensure compatibility with the framework.

“To succeed in open banking, banks in Saudi Arabia and the UAE should start thinking like platform companies, flexing their business models to connect people and processes with assets and backing that up with technology infrastructure that can manage interactions from internal and external users,” said Accenture.

By leveraging APIs open banking platforms authorise retail and enterprise clients to access consumers’ financial data in real time and share account information and transaction history with external parties such as vendors, suppliers, business partners and other banks.

The GCC is one example of an emerging global open-banking microcosm and PwC

OPEN BANKING HAS THE POTENTIAL TO RESHAPE THE FINANCIAL SERVICES LANDSCAPE AND SEVERAL FINANCIAL CENTRES IN THE EMERGING MARKETS, THE GCC REGION INCLUDED, ARE MAKING CONSIDERABLE MOVES IN THIS SPACE

expects the innovative technology to reshape the financial services landscape. The varying levels of open banking implementation and regulation across the region present distinct opportunities for the financial service sector.

Leverage the cloud

Open banking is all about data sharing, which creates an opportunity for banks that are at the forefront of the digitalisation revolution to monetise the open-data paradigm.

Built on the cloud, open banking platforms are facilitating ever-increasing on-demand needs of financial data. This can include transactions and consumer experience for third-party providers, payment initiation service providers and account information service providers.

The cloud and other innovative technologies have opened up opportunities for banks to embrace an open banking strategy. However, banks in the GCC region should build up new ecosystems of services and data that comply with various data privacy regulations while adopting strong security models against cybersecurity risks.

“The cloud is the foundation for a bank which is embedded in every touchpoint, personalised in every interaction and able to address emerging customer needs,” said Accenture.

Previously, banks relied on legacy systems and proprietary software, resulting in operations being siloed, scalability being limited, and high costs. However, with the advent of cloud and

open-source technologies, banks can adopt a more agile and collaborative approach to innovation.

Operating in the cloud provides scalability, flexibility, faster time- tovalue, cost-effectiveness and a range of other benefits.

With open banking, incumbents can co-exist with and co-evolve with multiple players in the banking ecosystem. Temenos said open banking is paving the way for traditional full-service banks to morph into new business models such as the aggregator or distributor, the manufacturer or the platform.

Banks can sell third-party products to customers as aggregators or distributors, sell their own products to other customerfacing institutions as manufacturers and facilitate the exchange of financial products and services to multiple distributors and manufacturers as platforms.

Open banking initiatives give customers power over their financial information and create mechanisms for them to choose to share their data beyond their primary banks. By opting to share data, banking customers gain access to a wide range of innovative and tailored financial products and services.

The wave of innovation sweeping the financial services sector is unlikely to slow down. Banks in the GCC region are partnering with fintech firms as they look to address customers’ evolving requirements while facilitating easy access to banking services and products.

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Anshu Sharma Raja Chief Technology & Operations Officer (CTOO) for Standard Chartered Africa and Middle East, and an influential data science leader, tells MEA Finance that the Middle East is at the forefront of the move to Open Banking which will widen opportunities for enhanced customer satisfaction and growth

Is Open Banking now the norm in the region?

As the financial world gets more and more connected, the need for banking as you go is no longer just a ‘nice to have’, but a necessity. Open Banking enables a new age financial fabric, putting more power and decision in the hands of consumers and users on how they choose to share their information. This is a powerful shift and an emerging norm globally as well as in the region.

As part of Standard Chartered’s Open Banking approach, we implemented several strategies and initiatives in Africa and the Middle East (AME) to deliver efficiencies, reduce complexity and drive scale in areas with the most significant growth potential. We, therefore, announced a set of actions to redirect resources within the AME, resulting in considerable changes to the Bank›s operations in the region that ultimately deliver improved services and capabilities for our clients.

How far have Open Banking and API’s expanded into the wider banking markets?

The Middle East has been at the forefront of Open Banking, with Bahrain being the first country to launch an Open Banking framework in 2020. The Bahrain Open Banking Framework ensures consistency by establishing a

Anshu Sharma Raja, Chief Technology & Operations Officer (CTOO) for Standard Chartered Africa and Middle East

common set of Application Programming Interface ( API) specifications and guidelines on security and customer experience. Additionally, Bahrain was the first country in the region to offer an onshore regulatory sandbox, enabling companies to test their Open Banking solutions in a controlled environment, encouraging experimentation and growth. Other countries in the region such as Saudi Arabia and the UAE are also introducing or developing similar approaches.

We have invested in platforms and API frameworks, which serve as the core of our API Banking offering, and successfully deployed it in markets across the globe, especially in the Middle East.

Have the conveniences Open Banking provided customers and clients delighted and satisfied them, or further heightened their CX expectations?

With our Open Banking framework, Standard Chartered has successfully

AS THE FINANCIAL WORLD GETS MORE AND MORE CONNECTED, THE NEED FOR BANKING AS YOU GO IS NO LONGER JUST A ‘NICE TO HAVE’, BUT A NECESSITY

connected ecosystem, it is an added responsibility to ensure data exchanges are protected and at no point is the information leaves our secure channels.

We also measure the customer experience impact across our official channels and initiatives, and have seen a significant increase in customer engagement, as evidenced by a 10-fold surge in click rates and a 193% increase in response for top engagement actions.

Standardisation through Open Banking and APIs has brought in a range of effects, including enhanced customer experience supported by seamless KYC processes. This approach offers an ecosystem where APIs enable customers to link accounts across different banks, facilitating personalised recommendations and bespoke services, along with effective fraud prevention measures.

THE IMPACTS OF OPEN BANKING ARE NOT ONLY PROFOUND BUT ALSO HAVE THE POTENTIAL TO RESHAPE THE BANKING LANDSCAPE ACROSS AFRICA AND THE MIDDLE EAST

improved customer experience, speed to market and integration with partners.

We have made significant efforts to enhance customer experience, primarily through our Open Banking initiatives and personalised services, delivered with highest levels of security. In a digitally

Furthermore, we conducted a study on customer satisfaction in Tanzania which revealed that most customers were satisfied with Standard Chartered. They appreciated the quality of service and the time taken to serve them. They also displayed loyalty, indicating a reluctance to switch banks even for potential savings. This suggests that we have a strong customer satisfaction base that we can build upon.

What do you think is the most profound effect that Open Banking and APIs have had on the region’s banking market?

The impacts of Open Banking are not only profound but also have the potential to reshape the banking landscape across Africa and the Middle East.

Open Banking has fostered creativity and collaboration by sharing data between new and established financial and nonfinancial service providers. This has led to the development of improved services and capabilities for clients. Moreover, Open Banking has paved the way for new business models, partnerships and value propositions. It has spurred the development of app-based services and platforms that offer greater immediacy, convenience, and transparency.

In addition, Open Banking improves operational efficiency, reducing or eliminating the risks and costs of manual processes and streamlining communication flows. This enhances insight and visibility for asset owners, managers and intermediaries.

At Standard Chartered, we have fundamentally transformed our digital capabilities across the AME region by making over 100+ APIs available via our aXess platform, fostering innovation and partnerships with fintechs.

Can Open Banking and APIs create new opportunities and additional growth for regional economies?

The advent of Open Banking has revolutionised financial markets and disrupted traditional banking products with new, innovative services. This has compelled financial institutions to improve their offerings to remain competitive, resulting in increased competition in the market.

The API economy presents a significant opportunity for revenue streams. APIs can be leveraged to charge for services provided through Open Banking or to reduce costs, increase sales and promote other services. This has made APIs valuable for businesses looking to expand their service offerings and enhance their bottom line.

You’re moving fast.

On the Ascent

While Islamic banking’s growth outside core Islamic finance markets is more muted, it remains higher than that of conventional finance and seems set to remain on a growth path for some time to come

The $3 trillion Islamic finance industry continues on its growth trajectory path, with Shariahcompliant assets projected to expand by as much as 10% annually in 2023/24, thanks to solid growth among Islamic banks in the GCC region and a healthy Sukuk market.

Islamic banking is the biggest contributor to Islamic finance assets, accounting for 72% share in 2022 and the sector remains the fastest-growing in the industry, the ICD-LSEG Islamic Finance Development Report 2023 revealed in November 2023.

The sector has grown exponentially to create a market that is competitive for conventional banks in core Islamic countries, gradually eating up their market share and offering products that match their level of service and scale of operation.

“Operating conditions for Islamic banks in the GCC are benefitting from high oil prices and profit rates. We expect sound profitability and solid liquidity to continue, while capital buffers should remain adequate for the risks,” Fitch Ratings said last December while noting that financing growth will remain higher than conventional banks.

Islamic banks across the Middle East, Africa and South Asia (MEASA) region have been among the biggest beneficiaries of the supportive economic outlook, supported by higher commodity prices as well as contained inflation and higher for longer interest rates in the Gulf region.

While Islamic banking’s growth outside core Islamic finance markets is more muted, it remains higher than that of conventional finance, indicating the ongoing appeal of Shariah finance in Africa, Asia-Pacific and Russia.

Meanwhile, the soaring demand for digital financial services and the adoption of financial technology (fintech) solutions are bolstering growth in the Islamic banking sector while advancing customer experience and industry competitiveness.

“A plethora of startups have launched in recent years, offering digital financial services that follow Shari’ah law. Their services range from retail and small business banking solutions to platforms offering tokenised Sukuk issuances,” according to Moody’s.

The Islamic Financial Services Board (IFSB) expects the digitalisation of Islamic banking to bring about a myriad of opportunities for the growth of the industry, including responding to changing customer expectations and the consequential disintermediation due to competition from new entrants.

Growth beyond core markets

Islamic banking is not exclusive anymore to core Islamic finance markets in the MEASA region. The banking segment is increasing its penetration and has become systemically important in Asia and EMEA, with the issuance of Islamic bonds expanding with the international reach of issuers and investors.

“Islamic banking continues to experience high demand and the industry is on the path to reach $4 trillion by 2026,” according to an ICD-LSEG report. A sign of continued demand for Islamic banking is the conversion of conventional banks.

Pakistan’s Faysal Bank completed its transition to a complete Islamic bank after securing an Islamic banking licence from the State Bank of Pakistan in 2022 – making the lender the second-largest full-fledged Islamic bank in the South Asia nation.

Bangladesh’s Islamic banking sector is expected to continue growing over the medium term, driven by rising public demand, new branch openings and supportive government policies.

“More lax prudential requirements have supported Islamic banking growth and motivated conventional banks to provide Islamic products,” Fitch Ratings said, adding that Bangladesh Bank, the central bank, has set the statutory liquidity ratio limit for Islamic banks (5.5%) much lower than for conventional banks (13%).

Several conventional banks in the South Asian country are focusing on Islamic products, either by opening new Islamic branches or windows or by converting into full-fledged Islamic banks.

The Philippines is home to one of the oldest Islamic banks in the world, the Philippine Amanah Bank, which was

founded in August 1973. To strengthen and improve the Islamic banking and finance landscape, the Philippines recently instituted a series of legal reforms that laid a solid foundation for the development of an Islamic finance ecosystem.

Philippines’ Bangko Sentral ng Pilipinas (BSP) plans to allow domestic and foreign banks to establish Shariahcompliant banking windows in the country. BSP issued a draft circular in June 2022 towards a modified minimum capitalisation of conventional banks with Islamic banking units.

a unit of Djibouti-based Salaam African Bank last September.

Meanwhile, the high demand for Islamic financial products in Algeria, such as housing finance, has led to many conventional banks opening Islamic windows, including Banque National D’Algérie, Banque Extérieure d’Algérie and Banque de Développement Local. The Islamic finance sector in Algeria is expected to grow with takaful products about to be rolled out to complement Islamic banking services.

However, the lack of a favourable regulatory environment outside more

OPERATING CONDITIONS FOR ISLAMIC BANKS IN THE GCC REGION ARE BENEFITTING FROM HIGH OIL PRICES AND PROFIT RATES. WE EXPECT SOUND PROFITABILITY AND SOLID LIQUIDITY TO CONTINUE, WHILE CAPITAL BUFFERS SHOULD REMAIN ADEQUATE FOR THE RISKS

– Fitch Ratings

In Central Asia, the State Duma, the Russian parliament’s lower chamber approved, in July 2023, a bill allowing an experiment to introduce the Islamic banking system in the country’s four mostly Muslim-populated regions - Bashkortostan, Chechnya, Dagestan and Tatarstan.

Other markets that will see further expansion in Islamic banking include Bangladesh, Uganda, Nigeria, Algeria and Kenya.

Though Africa is home to around 28% of the world’s Muslim population, the continent’s Shari’ah-compliant banking assets make up a mere 2% of global Islamic banking assets. Moody’s attributed this to the industry’s nascent legal and regulatory landscape but noticeable progress on that front is now being made in jurisdictions.

Uganda’s central bank issued its first Islamic banking licence to Salaam Bank,

mature Islamic finance markets such as the GCC, Malaysia and Indonesia is a hurdle that has so far detracted from the success of Islamic banking

An enabling environment

The GCC Islamic banking sector entered 2024 on a solid footing. The sector’s profitability soared to record highs in line with their conventional peers in 2023, thanks to strong operating conditions and central banks’ moves to tighten monetary policy in lockstep with the US Federal Reserve.

“Supportive oil prices and ambitious economic diversification agendas will sustain strong business activity for Islamic banks across the GCC countries over the next 12 to 18 months,” Moody’s analysts said last September.

The profitability of Shariah-compliant banks operating in the GCC region is

expected to continue to exceed that of their conventional peers in 2024 due to margin advantage. The region’s top five Islamic banks – Al Rajhi Bank, Saudi National Bank (SNB), Kuwait Finance House (KFH), Qatar National Bank (QNB) and Dubai Islamic Bank (DIB) – reported a combined profit of $17.8 billion in 2023.

GCC central banks - including Qatar and the UAE - followed the Federal Reserve’s decision to keep interest rates unchanged to protect their currencies’ peg against the dollar in January. The Federal Reserve held interest rates at a 22-year high for a fourth straight meeting.

“A reversal in the tightening monetary policy from the Federal Reserve through the US dollar peg with Gulf states domestic currencies is not expected before the end of 2024,” Moody’s said while noting that this will continue to help net profit margin preservation for GCC Islamic banks.

The growth trajectory is also bolstered by increased regulatory support, with initiatives such as Shariah-compliant investments further solidifying the industry’s foundation. For years, the GCC region has been the heartland of the Islamic banking sector in terms of assets, with the weakness of currencies in Southeast Asia exacerbating the split between the six-nation bloc and elsewhere in 2022.

KFH’s acquisition of Ahli United Bank in 2022 accelerated the growth of the sector in Kuwait, while for Saudi Arabia, Al Rajhi Bank and SNB posted strong gains in 2023 on the back of the kingdom’s booming mortgage market and funding for projects linked to the Vision 2030 economic development programme.

Though S&P Global forecasted a material slowdown in GCC economies’ real GDP growth in 2023/24 on the back of OPEC+ oil production, Saudi Arabia’s banking system performance will continue to underpin a large portion of the expanding Islamic banking sector.

Overall, growth of around 5% appears plausible in the absence of new major

government investment cycles in other GCC countries.

The Gulf region remains a key Islamic finance hub as the growth in Shari’ahcompliant banks’ assets outpaced that of conventional banks in 2023, supported by the increase in public demand for Islamic products and deep distribution networks.

Banking on the digital momentum

Digitalisation in the financial services sector is reinventing business processes and models while creating new compelling value propositions by leveraging Big Data, AI and other innovative technologies such as the cloud.

Islamic banks are accelerating and strengthening the digitalisation of

Australia’s first Islamic bank, Islamic Bank Australia, received a restricted authorised deposit-taking institution (ADI) licence in 2022 and commenced beta testing in 2023. The digital bank is expected to capture the growing techsavvy Muslim population in the country.

Digital banks are also emerging in core Islamic finance markets, in line with global trends, because of new licensing frameworks that are being introduced by financial regulators. Unlike the incumbents, digital banks are not burdened by legacy infrastructure.

The leading Islamic digital-exclusive banks in the core Islamic markets include Saudi Arabia’s D360 Bank and STC Bank and Bank Fama and Bank

A PLETHORA OF STARTUPS HAVE LAUNCHED IN RECENT YEARS, OFFERING DIGITAL FINANCIAL SERVICES THAT FOLLOW SHARIAH LAW. THEIR SERVICES RANGE FROM RETAIL AND SMALL BUSINESS BANKING SOLUTIONS TO PLATFORMS OFFERING TOKENISED SUKUK ISSUANCES

– Moody’s

complex processes as well as end-to-end customer journeys in lockstep with their conventional peers.

“Digital transformation is crucial to sustaining the growth momentum of the Islamic banking industry by broadening its current outreach, identifying untapped potentials and unlocking opportunities, especially in financially developed markets but with minimal or no presence of Islamic banking,” according to IFSB.

The latest data shows that 610 Islamic banks and windows operated in 77 countries in 2022 and the number is set to grow further as fintech firms, neobanks and the adoption of generative AI are having a material impact on the development of Islamic banking.

Allo in Indonesia. The Islamic finance sector has evolved over the years and banks continue to build on the digital banking momentum to tap into the growing millennial and Gen Z tech-savvy customer segment.

Structural weaknesses still curb Islamic finance’s broader geographical and market appeal but progress toward greater standardisation – in part supported by the digitalisation of the industry – could advance Islamic banking’s growth potential. Furthermore, industry experts expect the increasing focus on sustainabilityrelated themes in core Islamic finance markets to create new opportunities for the industry.

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