MEA Finance - November 2022

November 2022

A Deepening Commitment Annabel Spring CEO, Global Private Banking and Wealth, HSBC

November 2022

A Deepening Commitment Annabel Spring CEO, Global Private Banking and Wealth, HSBC 10 Market Focus: Lebanon | 14 Family Office | 38 Roundtable Event | 50 Wealth and Investment Summit | 61 Awards Winners

27 September 2022 Park Hyatt Dubai United Arab Emirates

Con the Inv

ngratulations to all e winners of Wealth & vestment Awards 2022

www.euroclear.com

Making a Mark

W

elcome to the November 2022 issue of MEA Finance. The currently positive economic trajectory of much of our region is nurturing and attracting more individuals and families that require wealth managers, family office services and fiscal or fiduciary advisors. This in turn is bringing growing numbers of the skilled individuals needed to manage the quickly growing local wealth management sector. Indeed, such is the development of this sector here that key local economies are forming into wealth hubs that could eventually rival the likes of Hong Kong, Singapore, even Switzerland.

At MEA Finance, we have been aware, and somewhat in awe of these developments, and this issue follows in the wake of our highly successful MEA Finance Wealth & Investment Summit and Awards, held on the 27th of September at the Park Hyatt hotel, which we inaugurated to recognise the increasing stature of this sector in the region.

Highlighting the importance of the Private Banking and Wealth Management in the region, our cover story this month features Annabel Spring, CEO, Global Private Banking and Wealth at HSBC, who talks with MEA Finance about why this region stands out to her, as they mark the launch of their new global private banking business in the UAE. The wealth services theme runs through much of this issue with our look into regional family office starting at page 14, “The massive amount of transition and transfers in flight have created a sense of urgency for families to re-structure the way they manage their wealth”, says Shadi Alnasr from BNY Mellon Wealth Management.

And this focus continues from page 50 with a full write-up of our Wealth and Investment Summit, where we cover all of the compelling, thought provoking and insight led panel discussions, comprised of some of the region’s most recognisable sector leaders. Following, from page 61, is coverage of our 2022 Wealth and Investment Awards where all the successes and achievements of this year’s winners are clearly showcased.

Maintaining coverage of our events, another of MEA Finance’s industry leading, signature roundtables took place on the 6th of October at the Mandarin Oriental Hotel in Dubai. Mambu, one the leading SaaS infrastructure providers for banks and financial services companies, hosted the occasion under the theme, Innovation in uncertainty: New business models to future proof banks. Read the account of this lively and informative debate from page 38.

Continuing along the innovation path of the roundtable, on page 48 we hear from Sanat Rao at Infosys on the increasing industry focus on Engagement Banking, “Banks have every reason to be concerned because in an undifferentiated products and services market, engagement or engagement-led selling is their only way to stand out”.

The market focus in this issue is on Lebanon, looking at its’ urgent need for economic reforms, and in our latest look at Islamic Finance, from page 26, we note the potential for this increasingly mainstream kind of banking, “This focus on retail financing, plus prudent underwriting and the development of strong provisioning buffers, means that the return on average assets of Islamic banks looks set to improve”, says Zeeshan Awan from National Bank of Fujairah.

Finally, with our regular quick look at market news, we are confident this edition of MEA Finance will provide you with ample means for richly rewarding reading with a wealth of insightful and engaging content.

mea-finance.com

3

CONTENTS

CONTENTS 34

MARKET NEWS

6

Mashreq on board to support COP27 following signing of MoU with Egypt’s COP Presidency

8

Virtuzone and Wio Bank partner to give SMEs the ability to open a fully digital business bank account

MARKET FOCUS

10

Lebanon: Hobbled by Inaction

FAMILY OFFICE

18 22

Managing Changes Meeting an Expanding Need

ISLAMIC BANKING & FINANCE

26 30 32

Starting Towards its Potential Adjusting with the environment Making Steady Progress

COVER STORY

34

MEA Finance WEB: www.mea-finance.com EMAIL: info@mea-finance.com PUBLISHED BY: Creative Middle East Media FZ LLE, 19th Floor, Creative Tower, Fujairah Creative City, PO Box 4422, Fujairah, UAE

4

Banking and Finance news in the MEA market

A Deepening Commitment

6

ROUNDTABLE: INNOVATION IN UNCERTAINTY

38

10

Rethinking New Business Models for Banking

BANKING TECHNOLOGY

48

Winning the Customer Engagement Game

WEALTH & INVESTMENT SUMMIT 2022

50

Heralding the New Global Wealth and Investment Hub

26

38

WEALTH & INVESTMENT AWARDS 2022

64

MEA Finance Wealth & Investment Awards 2022 winners

48

EXECUTIVE DIRECTOR AND PUBLISHER Kenneth Mitchen ken.mitchen@mea-finance.com GROUP COMMERCIAL DIRECTOR Nap Estampador nap.estampador@mea-finance.com Tel : +971 50 100 5488 DIRECTOR Andrew Cover andrew.cover@mea-finance.com Tel: +971 50 931 3236

50

EVENTS AND MARKETING MANAGER Cris Balatbat crissyb@mea-finance.com Tel: +971 58 594 4818

ADMIN AND FINANCE MANAGER Marilyn Nainque marilyn@mea-finance.com Tel: +971 58 5025836

EVENT AND CONTENT PRODUCER Natasha Cristi natasha@mea-finance.com Tel: +971 50 303 4235

WEB ASSISTANT Marie Orayan web@mea-finance.com

SENIOR DESIGNER Florante Magsakay Tel: +971 52 570 1811

FEATURE CONTRIBUTORS: Mushtak Parker, Walter Sebele

64

Dubai office: #404, Building B, Al Saaha Offices, Old Town Island Burj Khalifa District PO Box 487177, Dubai, UAE Email: info@mea-finance.com

editorial@mea-finance.com

mea-finance.com

5

MARKET NEWS

Mashreq on board to support COP27 following signing of MoU with Egypt’s COP Presidency Mashreq announced the signing of a memorandum of understanding (MoU) with Egypt’s COP Presidency to formalise the Bank’s participation at this year’s United Nations Climate Change Conference, COP27, held from 6 to 18 November 2022 in Sharm El Sheikh, Egypt

T

he sponsorship comes as part of Mashreq’s acknowledgement of the gravity of the global climate challenge and its commitment to further efforts to raise awareness and engagement across the region. The need to deliver more innovative financing solutions, grants and concessions to help developing countries with mitigation and adaptation is clear and Mashreq is in active discussions with several entities that are looking to explore sustainable financing for the first time, providing them with guidance and advice. This makes Mashreq’s involvement in COP27 – and particularly in Finance Day (9th November) a timely one. As a bank, Mashreq is proud to have facilitated USD 11.7 Billion worth of Sustainable Finance deals since October 2020 across GCC, India, Turkey, and Africa.

Mashreq will also participate in panel discussions during Finance Day (9th November) and Energy Day (15th November) and other engagements with customers and partners on ground.

6

Ahmed Abdelaal, Group Chief Executive Officer, Mashreq

Commenting on Mashreq’s COP27 participation, Ahmed Abdelaal, Group Chief Executive Officer, Mashreq, said: “It is very exciting to be able to share

Banking and Finance news in the MEA market

the news of our sponsorship of the 27th United Nations Climate Change conference. We are proud to sponsor COP27 in Egypt and we are convinced that urgent and decisive climate action is necessary to protect people and planet from the intensifying impacts of climate change. We also see the transition to a low carbon and resilient economy as a real opportunity to double our commitment to sustainable finance and invest in sectors that will drive economic growth and create the jobs of tomorrow. In addition, we are also embedding ESG practices across the bank, with the development of a robust sustainability framework to create more value for our people, our customers, and our shareholders.”

C o m m e n t i n g o n M a s h re q ’s participation in the COP27, Ambassador Achraf Ibrahim – General Coordinator for Organisational and Financial Affairs of the COP27, “By embedding ESG practices across the bank, with the development of a robust sustainability framework to create more value for its people, its customers, etc., Mashreq Bank is confirming that sustainability and climate change are at the heart of its priorities. As stated by the Bank, “it facilitated USD 11.7 Billion worth of Sustainable Finance deals since October 2020 across GCC, India, Turkey, and Africa”, therefore COP27 would be an unparalleled platform for Mashreq Bank to shape and advance solutions and reach impactful, actionable outcomes in concert with the leaders of governments and industry stakeholders”.

202208_Kellogg Tract_MEA Finance Ad_210x270mm.indd 1

25/8/2022 5:02 PM

MARKET NEWS

Virtuzone and Wio Bank partner to give SMEs the ability to open a fully digital business bank account As a result of this alliance, Virtuzone will equip its business owners with the tools and support they need for efficient financial management and enable them to set up their business bank accounts fast, without the need to visit a branch

V

irtuzone, Company Formation enable startups, freelancers and small Specialists and corporate and medium enterprises (SMEs) with s e r v i c e s p rov i d e r, h a s seamless access to business banking joined forces with Wio Bank, services while empowering them with the region’s first platform bank, to innovative beyond-banking services. revolutionise the banking process for its Paul Bryson, Group Commercial clients through the next-generation digital Director at Virtuzone, said: “We are banking solution, Wio Business. Paul committed to supporting SMEs and Bryson, Group Commercial Director at Virtuzone, signed the MoU with Prateek Vahie, Chief Commercial Officer at Wio Bank.

Due to strict compliance requirements, opening a business bank account as an entrepreneur can prove to be challenging. With Wio Business, the first tailored business banking application from Wio, Virtuzone seeks to enhance business support for its clients through innovative banking solutions and empower them with the ability to open a fully digital Paul Bryson, Group Commercial Director, corporate bank account within just a Virtuzone and Prateek Vahie, Chief Commercial few days and without having to visit a Officer, Wio Bank physical location.

With the rise of an increasingly digital- assisting them in every way possible. savvy consumer base and a jump in As the world progresses towards digital services, this is an ideal time for digitisation, our clients are also looking for such an innovative alliance to come new ways to modernise their processes. to fruition. Wio Business is curated to We look forward to working with Wio

8

Banking and Finance news in the MEA market

to help businesses grow by instantly creating digital bank accounts without any physical paperwork or branch visits.”

In addition, George Hojeige, CEO of Virtuzone, commented: “As industries across the UAE undergo digital transformation, the banking sector is no exception. Despite this, many SMEs still rely on brick-and-mortar branches for opening and managing their business bank accounts. With Wio Business, we aim to empower the ambitions of our entrepreneurs through a robust digital financial system that offers cutting-edge banking solutions, laying the foundation for a futuristic economy.”

Prateek Vahie, Chief Commercial Officer at Wio Bank, said: “As businesses evolve to become more digital-first in their approach in response to changing consumer behaviour, banking operating models in the region need to mature as well. In Wio Business, we are offering a fast, easy and flexible banking solution to SMEs that helps them focus on their business and cater to their customers better. We are pleased to partner with Virtuzone to support their clientele with more seamless digital banking tools and services and further accelerate our aim to build a collaborative business banking ecosystem in the UAE.” Wio Bank commenced operations in September 2022, bringing three key capabilities of digital banking applications, embedded banking and Banking as a Service (BAAS) to the region. Wio Business is the first digital banking application introduced

by Wio.

BUILD A BETTER TOMORROW ON THE FOUNDATION OF INVESTMENT DECISIONS TODAY Investment management solutions from National Bank of Fujairah are built around your financial goals and growing needs, so you meet priorities of life in a planned and simplified way.

Your our next investment decision is just three th simple steps away: Step 01

Step 02

Step 03

Contact NBF's investment team to discuss your investment requirement.

Select the investment category to determine your exposure: • Conservative • Moderate • Aggressive

Choose your investment option: • Lump sum: Starting From 10,000 USD • Systematic Investment: Starting from $1000 (Monthly or Quarterly basis)

That’s it, you are all set!

Our qualified Asset Managers take charge and keep you updated on a regular basis on your portfolio performance.

NBF Investment Management Investing simplified!

Call 8008NBF(623) to start our partnership nbf.ae Terms and conditions apply

MARKET FOCUS

LEBANON:

Hobbled by Inaction Lebanon’s economy remains drastically weakened against continued deadlock over much needed economic reforms and much uncertainty, and while there is some light at the end of the tunnel, there seems little to prevent it from flickering out

A

series of holdups by depositors seeking funds frozen in the Lebanese banking system is reminiscent of the broader economic crisis that has sunk the country into one of the world’s worst financial crises since the mid-19th century.

Lebanon’s financial system has suffered eyewatering losses over the years and the government estimates overall losses at around $70 billion.

With no clear turning point on the horizon, the Middle East nation’s crippling

10

financial and economic crises are being blamed on the “deliberate inaction” of the country’s politicians, who have been bickering over cabinet posts since May. The International Monetary Fund (IMF) cautioned in September that Lebanon’s economy remains severely depressed against continued deadlock over much-needed economic reforms and high uncertainty.

The $11 billion that was raised by international donors at the CEDRE Conference in Paris in April 2018 remains

Banking and Finance news in the MEA market

locked away and conditional on a series of reforms. The aid was an extraordinary vote of confidence in a country that has made little progress on promised fiscal reforms.

Lebanon agreed with the IMF on a list of 10 reforms to get access to $3 billion to ease its financial meltdown but progress in implementing the reforms agreed upon in April remains very slow.

The political turmoil coupled with the influx of Syrian refugees who fled a civil war back home 11 years ago has combined to dry up inflows and aid from several international organisations and countries.

The country has spiralled out of control as the economic and financial meltdown, now in its third year, has sunk the currency by more than 90%, spread poverty, paralysed the financial system and frozen depositors out of their savings.

Meanwhile, the current political landscape is offsetting the hopes of a

comeback anytime soon as Lebanon is likely to be without a government and president by 31 October.

Caught between a rock and a hard place L e b a n o n ’s u n i q u e c o n s e n s u s government—tailored to deal with a diverse population—rests on a powersharing structure whereby the Prime Minister, President and Speaker of the house must come from the country’s three largest religious groups.

By political convention, the President must be a Maronite Christian, the Prime Minister a Sunni Muslim and the Speaker of Parliament a Shiite Muslim. The Parliament must also contain a 50/50 ratio of Muslims and Christians.

The country has been without a fully functioning government since the catastrophic Beirut Port explosion that killed more than 200 people, wounded over 6,500 and ravaged a huge part of the city on 4 August 2020.

T h e p re s e nt g ove r n m e nt h a s functioned in a limited caretaker capacity under Prime Minister Najib Mikati since May and the premier has until now failed to reach an agreement on a new government with President Michel Aoun.

Political wrangling is stalling the formation of a new government, undermining plans for the much-needed fiscal and structural reforms that would unlock billions of dollars in grants and loans. Lebanon has been scrambling for three years to reform its inefficient and

THE COST OF RESTRUCTURING LEBANON’S BANKING SYSTEM COULD RANGE BETWEEN $23 BILLION AND $102 BILLION IN THE EVENT OF A CURRENCY DEVALUATION. THIS AMOUNTS TO 30%-134% OF NOMINAL GDP – S&P Global

wasteful economy, combat corruption and restructure its ailing banking sector to reach an agreement with the IMF for a bailout program.

Earlier this year, the World Bank accused the country’s political elite of orchestrating a crippling that is threatening the Middle East nation’s long-term stability and social peace.

The Washington-based lender said that Lebanon’s nominal GDP plunged by 58.1% from close to $52 billion in 2019 to $21.8 billion in 2021 and is projected to contract by 6.5% in 2022.

The country’s parliament passed the 2022 budget in September using an exchange rate of LBP 15,000 to the dollar. The budget, which was adopted just three months before the end of the year, calculated expenditures at LBP 41 trillion and revenues at LBP 30 trillion—falling short of economic reform measures that would pave the way for an IMF deal.

The IMF urged Lebanese authorities, during an April staff-level meeting to increase revenues to fund the crippled

WE HAVE BEEN ENGAGED WITH LEBANON FOR A LONG TIME. WE VERY MUCH APPRECIATE THE PRESSURE FROM CIVIL SOCIETY IN LEBANON FOR A PROGRAM THAT IS BENEFICIAL TO THE LEBANESE PEOPLE, AND THIS IS WHAT WE WANT – Kristalina Georgieva, IMF’s Managing Director

public sector and allow for more social spending by calculating customs taxes at a “unified exchange rate” as part of a list of 10 reforms agreed on by both parties.

Friends in high places An international donor conference that was co-hosted by France’s President Emmanuel Macron in August 2021 raised $370 million in emergency aid to meet the most urgent needs of the Lebanese people. The country also secured around $280 million from a donor aid conference that was hosted in the wake of the Port Beirut blast.

Lebanon secured $11 billion in aid at the Paris CEDRE Conference in 2018 and the pledges include $10.2 billion in loans and $860 million in grants. However, the donors want to see the government commit to its long-stalled reforms.

Following his appointment as prime minister, Mikati called on the country’s fractious politicians to set aside differences to secure an IMF deal which according to him is the only chance to save Lebanon from financial collapse.

Several international organisations and donor countries stand ready to help the Middle East country but after the formation of an independent government that will implement the much-need structural reforms.

Financial meltdown For decades, Lebanese banks operated what amounted to a giant pyramid or Ponzi scheme, whereby depositors were paid exorbitant interest rates on simple deposits. The banks in turn lent heavily to the government which racked up mea-finance.com

11

Cloud acceleration = Business acceleration For banks that advance their cloud journey, the checkered flag awaits.

Banks today are missing scale and speed in cloud adoption - our research indicates that the full value of cloud transformation is only realized upon migrating at least 60% of your bank’s workload to cloud. Yet most banks are far from that milestone, and they lack a clear roadmap to get there.

Scan here to access Finacle’s latest Cloud Banking Point-of-view

100+ Countries

1 billion+ customers

1.7 billion accounts

Infosys Finacle has made huge investments and created multiple proven use cases in cloud technology. Access our latest point-of-view 'Banking on Cloud: the next lap' for a detailed roadmap of how banks can accelerate their cloud adoption journey with agility and decisiveness.

Inspiring Better Banking www.finacle.com

huge debts largely due to corruption and bad governance.

The World Bank in August accused the political elite of being cruel by asserting that deposits in Lebanon’s collapsed banking sector are sacred, noting that “a significant portion of people’s deposits at commercial banks have been misused and misspent over the past 30 years.”

Lebanon’s financial services sector relied on bank deposits—mainly from remittances from millions of Lebanese living abroad—to keep its lenders stable.

Banque du Liban (BdL) introduced the so-called financial engineering in 2016 to boost its reserves but instead, the central bank suffered losses of as much as $34.5 billion.

The country’s financial crisis and shortage of foreign currency forced banks to impose strict restrictions on US dollar withdrawals and suspended most transfers abroad which triggered massive protests that began on 17 October 2019.

“We have been engaged with Lebanon for a long time. We very much appreciate the pressure from civil society in Lebanon for a program that is beneficial to the Lebanese people, and this is what we want,” Kristalina Georgieva, the IMF’s Managing Director said in April.

Hit by restrictions on withdrawals, angry depositors have forced their way into more than seven banks since August to access trapped savings as the informal capital controls that were imposed by banks are pushing account holders to take the law into their own hands.

The spate of bank holdups that have snowballed in Lebanon forced banks to close their doors to clients for the second time earlier in October as depositors seek to retrieve funds frozen in the banking system because of the country’s crippling financial crisis. The closure of banks will not only further curtail people’s access to their funds but will likely exacerbate Lebanon’s economic crisis.

Since October 2019, the Lebanese pound has lost more than 90% of its value

against the US dollar. Lebanon’s ministry of finance and the central bank said in September that the pound’s official rate, which has been set at LBP 1,507.5 per dollar since 1997, will be fixed at LBP 15,000, a decision that is effective on 1 November.

However, S&P Global cautioned in May 2021 that the cost of restructuring Lebanon’s banking system could range between $23 billion and $102 billion in the event of a currency devaluation adding, “This amounts to 30%-134% of nominal GDP.”

disputed maritime border and paving the way for the neighbours to ramp up offshore gas production in a gas-rich part of the Mediterranean Sea. France’s TotalEnergies is expected to begin exploring for gas in Lebanese waters as soon as the deal is concluded as the country seeks to strengthen its economy through possible gas wealth.

Lebanese authorities have also started the process of sending Syrian refugees back home with the hope that the decision will ease the country’s economic crisis—where three out of

THE LEBANESE ECONOMY REMAINS SEVERELY DEPRESSED AGAINST CONTINUED DEADLOCK OVER MUCH NEEDED ECONOMIC REFORMS AND HIGH UNCERTAINTY. DESPITE THE URGENCY FOR ACTION TO ADDRESS LEBANON’S DEEP ECONOMIC AND SOCIAL CRISIS, PROGRESS IN IMPLEMENTING THE REFORMS AGREED UNDER THE APRIL SLA REMAINS VERY SLOW – The IMF

The call by BdL for local lenders to recapitalise last year and repatriate part of deposits transferred overseas forced Bank Audi and Blom Bank to sell their Egyptian portfolios to UAE’s First Abu Dhabi Bank and Bahrain’s Bank ABC, respectively. Meanwhile, Capital Bank acquired 100% of Societe Generale de Banque au Liban’s Jordanian business in February, a year after the lender completed its takeover of Bank Audi’s units in Iraq and Jordan.

Light at the end of the tunnel Le b a n o n re a c h e d a ‘ h i s to r i c a l agreement’ with Israel demarcating a

four people now live in poverty. The World Bank projected that as many as 1.5 million Syrians, about a quarter of the Lebanese population, have taken refuge in Lebanon since March 2011 and the situation has strained the country’s public finances, service delivery and the environment.

The country’s bank standoffs are exposing the desperation of the country’s crippling economic and financial meltdown. The international community has demanded reforms to ease the economic crisis, but entrenched political elites, blamed for decades of corruption and mismanagement, have resisted. mea-finance.com

13

FAMILY OFFICE

Family Values Spurred by a growing focus on deployment of assets and transition of wealth, the increasingly important role that family businesses play in regional economies and the changing values of newer generations, family offices are experiencing a greater need for their services

D

espite the economic impact of the pandemic and rising i nte rest ra tes to ta m e soaring inflation, family office popularity is at an all-time high. Over the years, family offices have adapted and transformed their strategy and operations to address a series of disruptions brought on by global economic, social, regulatory geopolitical and technological changes.

Recent global events, digital disruption and global geopolitical tensions are all driving profound change for global businesses and financial markets.

However, for family offices in the Middle East, the current operating environment is creating unique opportunities as their role in global capital flows has grown enormously with much of that activity in the private markets.

“Traditionally focused on balanced, longer-term financial assets, today’s single-family office is a multifaceted operation offering many of the same services as a top-tier private bank or investment firm while remaining a bespoke institution reflecting the

14

attributes and ambitions of the family it serves,” said Deloitte.

There is a growing demand for top talent among the Middle East’s family offices as the newly professionalised institutions are hunting leaders for their boards and highly skilled investment professionals to manage their balanced portfolios.

A projected 53% of Ultra High Net Worth (UHNW) families in the world have intensified their due diligence processes when considering investments as they seek to avoid greenwashing, measure impact and define their approach. Though many family offices are already playing a key role in helping families transition to more responsible investment, wealthy families in the region are demanding increased focus on environmental, social and governance (ESG) across their portfolios as they translate their commitments into concrete actions.

Family-owned businesses are the engines of growth globally and a driving force behind economic diversification in the GCC region. The UAE and Saudi Arabia have been encouraging family businesses

Banking and Finance news in the MEA market

to list on local stock markets to help grow their enterprises, decentralise their assets and enable easier succession, creating great opportunities for family offices.

Modern family offices have their origins in the 1800s when the JP Morgan and Rockefeller families established their own family offices in 1838 and 1882, respectively, to cater to their financial as well as asset management needs.

A global perspective Over the years, family offices—the organisations that support the purpose, legacy and ambitions of the world’s most wealthy families—have become increasingly active and prominent players in the Middle East and global deals landscape, getting involved in investments across both direct investments and funds.

The pandemic and geopolitical tensions combined with high inflation and soaring interest rates have brought with them unanticipated risks as well as opportunities to improve connectivity, take stock of legacy infrastructure and

ask some fundamental questions. “With inflation high, central bank liquidity flagging and interest rates rising, family offices are reviewing their strategic asset allocation,” UBS said in its latest edition of the Global Family Office Report.

Family offices plan in generations and they are setting their sights on the themes that will remain at the forefront t h ro u g h o u t the 2020s i ncl ud i ng sustainable and impact investing, governance, transparency and surviving an economic downturn.

Like any other sector, family offices are being confronted by the changing market dynamics that are calling for new business models, digitalisation—which is disrupting whole industries with new skillsets—and succession-related issues.

BNP Paribas said that family offices are aware of the need to be able to withstand periodic economic or financial crises and thus they deploy investment strategies based on a longer-term horizon and are more balanced in terms of risks.

Family offices invest directly where they have an edge often as an extension of ultra-high-net-worth individuals (UHNIs) or families’ business interests. As the tailwinds that supported asset prices through the pandemic are fading, family offices are seeking both additional sources of return and alternative diversifiers. UBS said that private equity stands out as an asset class with high expected returns and is the only asset class that has attracted higher allocations year after year.

Ethical investing, which incorporates ESG and conscious investing, is gaining traction among family offices as nextgeneration (NextGen) wealth owners are leveraging their capital to advance social and environmental returns. BlackRock, the world’s biggest asset manager, said sustainable investing is more prominent in EMEA with an average of 22% invested in sustainable strategies, 14% in the US, 7% in Asia and a mere 3% in Latin America.

The focus on sustainable, green and impact investments has significantly intensified, and families are increasingly

wishing to hardwire the consideration of sustainable and green investments directly into the structure.

Meanwhile, family offices’ primary d i ve rs i f i c a t i o n c o n c e r n s re l a te to traditional asset classes and geographical diversification. To cope with the current operating environment, which is characterized by high-interest rates, inflation and central bank liquidity flagging, family offices are reviewing their strategic asset allocation.

The trend has seen most family offices reducing their fixed-income allocations and sacrificing liquidity for returns as they increase investments in private equity, real estate and private debt. Deloitte said that the appetite to invest over the

sustainable growth depends on how well these HWNI navigate these treacherous waters and many wealth managers in the Middle East intended to adjust to this new normal.

A survey that was conducted by Deloitte last September also showed that the focus on developing talent within regional family offices while preparing the Next Generation appears to have been effective with a total of 14% believing their NextGen was ready to take the reins now and a further 50% deemed ready within the next five years.

Having said that families which held diverse portfolios and were well prepared in areas such as governance, and cash flow management seemed to

FAMILY OFFICES ARE AWARE OF THE NEED TO BE ABLE TO WITHSTAND PERIODIC ECONOMIC OR FINANCIAL CRISES AND THUS THEY DEPLOY INVESTMENT STRATEGIES BASED ON A LONGERTERM HORIZON AND ARE MORE BALANCED IN TERMS OF RISKS – BNP Paribas

next 12-18 months is strong among family offices with opportunities in distressed and digital businesses being among the most sort after.

Family-owned businesses Family businesses in the Middle East make up a sizeable proportion of the region’s non-oil economy and in these challenging times, the need for adaptability and action to ensure that potential isn’t wasted, and the future is secured has never been as paramount.

The pandemic crisis dramatically shifted the operating environment, creating major challenges and for some, unique opportunities across the entire family offices ecosystem. PwC said that

be weathering the economic downturn storm well. The arrival of the pandemic, high interest and inflation have exposed some family businesses to strategic and operational deficiencies.

PwC said that many family office leaders in the Middle East intend to adjust to this next normal while others are taking stock of their business portfolios and operating structures to figure out ways to become leaner and maintain a competitive edge.

Given the sheer size of regional family offices, whose size is reportedly on average double that of their UK and US counterparts, their businesses need to grow by double digits for future generations to maintain the wealth and mea-finance.com

15

the same standard of living, which pose a colossal challenge for them.

Succession planning continues to be a challenge for family offices globally.

However, this is particularly problematic in the Middle East where large families are more common and many of these relatively younger businesses face succession issues for the first time.

Proper estate and succession planning is key to Middle East families’ long-term financial security. “Given the outsized economic contribution of familyrun businesses in the Middle East, strong family governance is critical for the region’s continued economic success,” said Lombard Odier.

Wealth managers believe that founders of family offices in Kuwait and Saudi Arabia are more experienced in handling the transition of power, it is evident that they learn from previous mistakes and are doing more to avoid repeating them.

The succession problems have been around for the last five years and are expected to remain a challenge for the next 10 years. However, familyowned businesses and UHNW families are adopting protocols to regulate succession, conflict resolution, business valuations and other key issues to preserve wealth and ensure a smooth transition between generations.

“Wealth managers are recognising the importance of liquidity planning that is attached to a strong succession and estate planning proposition,” Rahul Chopra, Head of Dubai, Senior Executive Officer & Managing Director at Charles Monat Associates at the MEA Finance Wealth Summit. There is a massive generational wealth transfer happening in the Middle East as many families in the region have amassed enormous fortunes over the past 50 years.

An enabling environment There is a growing trend for UHNW families in the Middle East to turn to family offices to help them manage their wealth effectively. Family offices continue to be a driving force behind growth in the region

and Capgemini World Wealth Report 2022 highlighted that the size of the HNWI population in the Middle East grew by 5.5% in 2021 while their wealth expanded by 6.3% with the growth led by Israel and the UAE. GCC countries are implementing new initiatives to drive economic growth and enhance family offices’ contribution to non-oil GDP as part of their broader strategies to diversify their economies away from heavy reliance on oil revenues.

Family-owned companies in the UAE, Saudi Arabia and Kuwait, are lining up to list stakes on local stock markets to create robust corporate governance structures as the region is experiencing one of its best years for initial public offerings. Speaking at the MEA Finance Wealth Summit, Ismael Hajjar, Partner,

Private Wealth Centre in August, a move that is set to attract more family offices to the Gulf state. Henley & Partners projected in June that the UAE will lead the world in attracting private wealth to its economy this year as Russian and Ukrainian millionaires seek new homes.

“There’s a high concentration of private wealth in the Middle East as well as large family businesses that are very important to local and regional economies which had created a lot of pent-up demand for more international s t r u c t u re s s u c h a s t r u s t s a n d foundations,” Damien Morgan, Senior Wealth Planner, Private Banking at HSBC UAE during the MEA Finance Wealth Summit in September.

The UAE is poised to welcome 4,000 millionaires as Russia and Ukraine are

WITH INFLATION HIGH, CENTRAL BANK LIQUIDITY FLAGGING AND INTEREST RATES RISING, FAMILY OFFICES ARE REVIEWING THEIR STRATEGIC ASSET ALLOCATION – UBS Group

Entrepreneurial Private Business, Family Office Services at PwC Middle East said that one other way to achieve more disclosure or incentivize family businesses is through public listings on local stock markets.

Saudi Arabia’s family-owned companies that have listed last year include Theeb Rent a Car, Alkhorayef Water and Power Technologies and BinDawood Holding Company and Kuwait’s Ali Alghanim and Sons Automotive Company raised $321 million in June. The UAE is also encouraging more family businesses to list shares on the country’s stock markets to enable easier succession.

The Dubai International Financial Centre’s Authority Board approved the opening of a Global Family Business and

likely to suffer a net outflow of 15,000 and 2,800 HNWIs, respectively, in 2022.

The changing economic landscape requires adaptability and action to ensure that potential is not wasted and that the future is secured as family-run businesses are an integral part of Middle Eastern economies.

While it is often said that each family office is unique, they do share many common attributes in respect to operational practices and service delivery models.

Wealthy families, HNWIs and inheritors in the Middle East are setting up or turning to family offices as they face numerous decisions when stewarding assets for future generations and serving the present-day needs of extended family members. mea-finance.com

17

FAMILY OFFICE

Managing Changes Shadi Alnasr Principal, Senior Client Strategist, Global Family Office, BNY Mellon Wealth Management tells MEA Finance that as the formalised need for family office structures in the region grows, so do the management and purposes of the wealth it services

Shadi Alnasr, Principal, Senior Client Strategist, Global Family Office

W

hat are the leading drivers of the growth of Family Office in the Middle East?

Over the past few years, the world has experienced a public health crisis, social tensions, technological disruptions and economic turbulence, all of which were unseen in decades. All these put together have exacerbated the need for transition of wealth, next gen

18

planning and leveraging technology to reduce risk and increase the visibility of underlying asset performance and most importantly, giving back to the society.

The massive amount of transition and transfers in flight have created a sense of urgency for families to re-structure the way they manage their wealth. Their operating models are evolving into a more corporate-like structure embedding standardised policies and procedures

Banking and Finance news in the MEA market

within their governance framework.

They are also seeking out non-family members to join the offices and often these individuals are highly experienced employees of global firms, bringing with them institutionalisation and a change in behaviour.

Do the requirements from family offices of regional HNWI’s differ much from those of other regions?

Th e re g i o n a l fa m i l y of f i c es a re increasingly catching up with their peers globally. There is an increase in the creation of formalised family office structures and governance activities.

Informal structures, like ‘virtual family offices’ are evolving into more formal, staffed family office entities – bringing a higher level of efficiency with an increased focus on achieving the family’s longterm strategic goals and objectives as it relates to governance, wealth transition and succession planning. Another key trend that is emerging in the current landscape is a focus on building complex, institutional-like asset allocation models.

Sophisticated asset allocation plans bring appropriate diversification to a family’s assets, and when coupled with the right investment solutions, it allows families to navigate seamlessly through the market cycles. As an investment manager, it is imperative to avoid focusing on products; instead, one should tailor investments toward the unique needs, goals and objectives of each family. In general, we advise clients to broadly diversify across asset classes and to include alternative investments in their portfolios for additional diversification in non-correlated assets. A well-drafted investment policy statement, defining asset allocation metrics and investment goals helps guide how we implement and manage the investments with

a laser focus on each family’s unique needs and objectives. Families are increasing their focus on improving operational efficiencies, cost reduction, asset consolidation and effective use of leverage. This is driving demand for Master Global Custody Services due to its attractive proposition which incorporates consolidated reporting, investment performance analytics and superior execution capabilities. A global custody setup also enables the family to leverage their consolidated portfolios managed across multiple investment managers through one loan structure at the master global custodian account level potentially reducing the cost of borrowing.

How is the organisation of the passing of family wealth between generations changing in the region?

There has been a growing trend of wealth transitioning from businesses to individuals and this is what we’re seeing globally as well where there has been a recognized effort to separate the private wealth of individuals with that of business assets. Where initially the business was responsible for both the day-to-day operations and managing the family investments, we’re observing more families increasingly seeking specialized units that focus solely on private wealth with the purpose of preserving the wealth for the next generation. Furthermore, as significant wealth goes through intergenerational transfer, the investment approach implemented by families is also changing. Younger generations want to make a positive environmental impact and are looking for responsible investing strategies and advice, contributing to the sustainability of the family legacy. To that extent, there is a decreasing demand for product or transaction-driven investing and increasing demand for discretionary investment management and outsourced chief investment officer (OCIO) services.

At BNY Mellon Wealth Management, we anticipated these trends and were early in developing and delivering these

services to clients globally. A true test of a family office is the degree to which the transition from one generation of a family to another is managed successfully.

There are three types of challenges that emerge as family offices attempt succession planning: First, concerns that have to do with the inherent nature of conversations and planning around the inevitable wealth transfer.

Secondly, there may be a perceived dichotomy of values between current

The pandemic accelerated trends in technology and innovation, which resulted in shifts in consumer behaviour.

Consumers moved toward using mobile apps and online tools, which made accessing and monitoring their banking, investing and overall wealth portfolios easier, faster and more efficient.

The outlook for the market remains uncertain and volatile due to a number of geopolitical and public policy issues paired up against financial markets cross currents. As a result, family offices are leveraging technology to monitor and reduce portfolio risk and increase

THE MASSIVE AMOUNT OF TRANSITION AND TRANSFERS IN FLIGHT HAVE CREATED A SENSE OF URGENCY FOR FAMILIES TO RE-STRUCTURE THE WAY THEY MANAGE THEIR WEALTH and future generations which further complicates succession planning efforts. For example, successor generations may choose to use their wealth to drive social, economic, and environmental impact in addition to preserving and growing their wealth.

F inally, there are also obstacles related to a lack of expertise needed to effectively carry out succession planning. A significant number of family offices actively partner with trusted advisors in the industry who can help guide the family in their conversations.

How is technology benefitting the role of the family office in the region?

Digitization and new technologies c o nt i n u e to e m e rg e a n d swe e p across many sectors, and the wealth management industry is no exception.

visibility of underlying asset performance to better manage their investments.

What do you consider the most important services provided by a family office?

Wealth Management is not just about growing investments; it’s only a spoke in the wheel. It’s also about prudent lending, reducing cost whether it’s fees or taxes, spending thoughtfully and most importantly protecting and preserving the assets for the next generation. A Family Office, when performing right, can cater to all the needs of the family, be it servicing and managing the investments, incorporating philanthropic strategies, increasing access to liquidity, creating wealth structures or defining spending (dividend to FO members), etc. All these services combined can immensely benefit the family in creating a successful and sustainable legacy. mea-finance.com

19

FO R T H E WO R L D, FO R T H E WO R L D, YO U H AV E A R R I V E D. YO U H AV E A R R I V E D. FO R YO U , FO R YO U , Y E T A N OT H E R Y E T A N OT H E R J O U R N E Y B EG I N S. J O U R N E Y B EG I N S.

With a&legacy of over 50 years, we combine With a legacy of over 50 years, we combine & BenefitsPrivate Banking - Privilege anking - Privileges Benefits Private Banking - Privileges m-based approach putsin together Our team-based approach Our team-based approach the best expertise & experience as the best in expertise & experience as the puts together

nd investmentoldest experts address andto largest banking specialists. every unique requirement of yours.

wealth and specialists. investment experts to address wealth and investment exp oldest and largest banking each and every unique requirement of yours. each and every unique requi

Seamless access to a wide range Seamless of access to a wide range of a wide range of solutions ranging We offer a wide range of solutions ranging We offer a wide range of s solutions and a digital first ethos that solutions and a digital first ethos that poke investment portfolios, wealth from bespoke investment portfolios, wealth from bespoke investment p leverages technology to bring you bespoke leverages technology to bring you bespoke tion, legacy planning including set up preservation, legacy planning including set preservation, up legacy plannin financial solutions. financial solutions. and foundations. of trusts and foundations. of trusts and foundations.

Exclusive Benefits

Exclusive Benefits

tary banking services Preferential pricing across all our products Preferential with complementary pricing across banking all ourservices products with complementary banking servic

rocess for 10 year UAE Dedicated golden visa desk to help and guide you through Dedicated application desk toprocess help and for guide 10 year youUAE through golden application visa process for 10 year

nd outside UAE

Invitation only experience to exclusive premium Invitation events only experience in and outside to exclusive UAE premium events in and outside UAE

The Digital First Approach The Digital First Approach

n’s foray into digital We are banking the first and toget adopt cutting edge technology, We are thelead firstthe to adopt region’s cutting forayedge into digital technology, banking lead andthe getregion’s foray into digita

ur s ng

globally recognised for our game changing globally initiatives recognised for our game changing initiatives

Seamless Award winning proprietary account opening investment trading andwith on-boarding platform access to over 400 funds worldwide

Anytime, anywhere Seamless Easily access your Anytime, Award anywhere winning proprietary Easily access your banking includingaccount opening special privileges banking including investment trading special privileges and on-boarding transfer of money and as Private Banking transfer of money platform and with access as Private to Banking unlimited Forex service Customerunlimited Forex over service 400 funds worldwide Customer

Award winn investm platform over 400 f

Products and solutions with Unique advantages and flexibility Tailormade Accounts and deposits

Family office Services

Mortgage and Real estate financing

currencies for MENA region's first FOInresidents Rall major T Hand E WO R L D, FO R T H E WO RSpecially L D, tailored products including non-residents comprehensive dedicated equity release and commercial YO U H AV E A R R I V E D.family office YO U H AV E A Rfinancing R I V EforD. both resident and

FO R YO U , Y EFinancing T A N OT HER Solutions J ODynamic U R Nfinancing E Y BtoEG I N S. help you acquire, diversify and leverage a wide range of assets

non-UAE residents FO R YO U , Y Lending E T A N OT H E ROffshore Accounts & Lombard J O U R N E Y B EG I N S. Wealth Services A lending solution that creates liquidity against your investment portfolio

Full Range of investment solutions

Investment Solutions Our investment solutions help you invest with confidence, navigate uncertainty and explore potential opportunities in all market conditions With a legacy of over 50 years, we combine

the best in expertise & experience as the

With aPrivate legacy of over 50 years, we combine Banking - Privileges & Benefits Ourinteam-based together the best expertise & approach experienceputs as the

and investment experts to address oldest and largest banking specialists. oldestwealth and largest banking specialists.

Mutual Funds, FX & Structured each and every unique requirement of yours.

Equities Commodities Products Seamless access to a wide range of Seamless access to a wide range of We offer a wide range of solutions ranging solutions and a digital first ethos that solutions and a digital first ethos that from bespoke investment portfolios, wealth leverages technology to bring you bespoke leverages technology to bring you bespoke preservation, legacy planning including set up financial solutions. financial solutions.

Mashreq Fixed Income Global Portfolioof and trusts and foundations.

Capital Funds Solutions Discretionary Mandates

Exclusive Benefits

Private Banking - Priv Our team-based app

wealth and investmen each and every unique

We offer a wide range

from bespoke investm

preservation, legacy pl

of trusts and foundatio

Exclusive Benefits

Preferential pricing across all our products with complementary Preferential pricing banking across services all our products with complementary banking s

Comprehensive Offering Dedicated desk to help and guide you through application Dedicated process desk to for help 10 year and guide UAE golden you through visa application process for 10 A team of experts to help Private Banking Business Banking Corporate Banking with settling needs such as Invitation only experience to exclusive premium events Invitation in and only outside experience UAE to exclusive premium events in and outside UA business setup, housing, Dedicated Relationship End to end solutions Fully integrated Manager to help you tailored to meet the services on education and retirement with your investment, needs of your Investment banking, our preferred Thethrough Digital First Approach The Digitalbusiness First Approach wealth & legacy Financing, treasury & partners planning Capital Markets We are the first to adopt cutting edge technology, We lead arethe theregion’s first to foray adoptinto cutting digital edge banking technology, and getlead the region’s foray into d globally recognised for our game changing initiatives globally recognised for our game changing initiatives

A worldwide reach in over 12 locations to match your ambitions Seamless account opening and on-boarding

Anytime, anywhere Please scan banking including to have us call transfer of money and you back unlimited Forex service

To reach out to our call centre Seamless Easily access your Anytime, Award winning anywhere proprietary Easily access your call 800 PRIVATE (7748283) from within UAE account opening special privileges banking investment including trading special privileges 4 424of 4466 from outside and on-boarding as Private Bankingor +971 transfer platform money with access and to asUAE Private Banking Customer unlimited over 400 Forex funds service worldwide Customer

Award inv platf over 4

FAMILY OFFICE

Meeting an Expanding Need Arjun Mittal Founder and CIO, Abbey Road Investments Group provides insight into the role, the benefits of and the reasons for the expansion and development of family office services in the region at this time

W

hat are the leading drivers of the growth of Family Office in the Middle East?

We would highlight three leading drivers. 1, Inter-generational transfer of wealth. It is estimated that between $1-2 trillion will be transferred to the next generation over the coming 10 years across the Middle East.

This transfer of wealth often needs to be organised in a formal manner to ensure all stakeholders buy into the process.

2, Families are increasingly becoming global in their investment outlook, and are keen to take advantage of different opportunities, including alternative investments which often requires working with specialists who prefer dealing with corporate structures like a Family Office.

3, There is an increasing acceptance amongst families that it is important to have a formal team to help take care of the myriad issues involved with wealth (investments, wealth structuring, succession, tax, legal etc.). The Family Office is proving to be an excellent vehicle to handle all this complexity.

2. What do you define as the top-most benefit of the services provided by a family office?

Arjun Mittal, Founder and CIO, Abbey Road Investments Group

22

Banking and Finance news in the MEA market

Every family has its own unique set of circumstances, and thus they have different requirements from a Family Office. Abbey Road is a Multi-Family Office (MFO) and so appeals to families that either are not ready to go it alone or don’t have the desire to bear the costs of staffing a quality Single-Family Office (SFO). From our perspective, we tend to see two key benefits that families look for from their MFO (which we believe also applies equally to a SFO): 1. Portfolio construction and risk management advice is probably the most common theme we come across, and is an area that Abbey Road specialises in.

We spend quality time with the families to assess their personal balance sheets and to understand their overall investment objectives. This then leads to the use of investment strategies across

a multitude of providers (banks, asset managers etc) to hopefully populate a best-in-class bespoke portfolio for the families. The MFO is also engaged in monitoring the investment strategies to ensure they are fulfilling their objectives.

And we ensure that costs are kept to reasonable levels.

Why is this service important to families? And why is it different to what the banks offer? It is not easy for a family to access unbiased and collaborative advice, as most financial providers work in their own silos. The MFO / SFO is operating on the family’s behalf; it has no agenda (AUM or revenue targets) other than to deliver appropriate and efficient solutions. Another important element is the ability to choose investment solutions from a wide array of providers, and not be dependent on one or two platforms.

Financial markets are increasing in complexity and having a team that is solely focused on investment advice is a critical advantage in today’s investing environment. Finally, we also believe that this independent collaborative approach over time leads, if done well, to better performance and results.

2. The second key benefit families look for from their MFO (and SFO) is the establishment of a robust and sustainable estate and succession planning solution. Similar to portfolio management, families also struggle to put all their lawyers, trustees and bankers together to work on a strategy that considers multi-jurisdictional asset exposure and a rapidly changing tax, legal and regulatory landscape. And the whole process requires time which often is in short supply, especially if the family is busy running a successful business. The MFO or SFO therefore has an important role in ensuring all providers work closely to deliver a cohesive solution to the family.

3. Do the requirements from family offices of regional HNWI’s differ much from those of other regions?

We do not see significant differences in requirements from Family Offices in other

regions to what families need in the GCC. As mentioned above, increasingly family wealth is becoming inter-generational and global in its outlook, and so Family Offices across the world are constantly evolving and adapting to the changing global landscape and the needs of each family. The one difference is that in some parts of the world, Family Offices have been around for much longer and so have evolved into more organised entities with established rules of operation and governance. But this gap is being closed rapidly as Family Offices in the region catch up.

4. How is the organisation of the passing of family wealth between generations changing in the region?

The region is increasingly adopting best practices when it comes to the passing of family wealth between generations. The rise of Family Offices in the region is a

ecosystem of lawyers, trustees and financial advisors helps to embellish the importance of managing and transferring wealth across generations. And finally, the emergence of initiatives like the DIFC Family Business and Private Wealth Centre reinforces the growing importance of Family Offices and the passing of family wealth between generations in the region.

5. How is technology benefitting the role of the family office in the region?

Technology is enabling Family Offices in many areas. For a start, technology is increasingly being used by Family Offices to help consolidate all their assets onto one reporting system (like for example Bank of New York Mellon’s platform), which then has multiple follow-on benefits in observing performance and conducting financial analysis. Another area where technology is helping Family

IT IS NOT EASY FOR A FAMILY TO ACCESS UNBIASED AND COLLABORATIVE ADVICE, AS MOST FINANCIAL PROVIDERS WORK IN THEIR OWN SILOS clear testament to this evolution. Families now better understand the advantages of passing wealth in an organised manner, to ensure it is preserved and grown for future generations. The growth of capital markets in the region is also providing families with more frequent exits (or partial exits) from their business, and this liquidity-event then needs to be appropriately managed, which is also helping to increase learning on wealth preservation and management. The growth of world class financial centres in the region, like the DIFC and ADGM, has also brought high quality talent into the region who specialise in guiding families on these key issues. This growing

Offices is in the creation of bespoke monitoring tools which can be used to build frameworks for each family across investment themes (ESG for e.g.), risk management and any governance requirements. A third area is technology in general is enabling Family Offices to access global opportunities directly and connect with each other all over the world, which creates lots of synergies for the families over time. Lastly, with the UAE’s rapid adoption of new technologies (including digital assets), it certainly made it much easier for Family Offices to benefit from the latest technologies and best practices deployed in other major financial centres. mea-finance.com

23

WEALTH MANAGEMENT AS INDIVIDUAL AS YOU

At OCS International Finance Ltd we pride ourselves on the personal care of our clients. As a competent and reliable partner, we offer bespoke financial solutions, built on truly personalized relationships and a solid foundation of financial expertise.

OUR EXPERIENCE - YOUR FINANCIAL SUCCESS OCS International Finance Ltd +971 4 525 0600 | info@ocs-finance.net | ocs-finance.net

Regulated by the DFSA

This information is provided by OCS International Finance Ltd (“OCS”), a private company, established under the laws of the Dubai International Financial Centre as a Category 3C Authorized Firm that is regulated by the Dubai Financial Services Authority (“DFSA”). This information is intended only for Professional Clients or Market Counterparties (as defined in the DFSA Rulebook – Conduct of Business Module – Section 2.3) and no other person should rely or act upon it. This information is provided for general information purposes only and is not intended to be relied upon as advice or a recommendation and does not take into account the investment objectives, financial situation or needs of any particular investor. An investor should seek independent professional advice when deciding if an investment is appropriate.

Your personalized investment and financial services provider OCS International Finance is a boutique financial and investment services provider located in Dubai’s prestigious International Financial Centre (“DIFC”). OCS International Finance Ltd (“OCS”) is licensed and regulated by the Dubai Financial Services Authority (“DFSA”).

Through its team of experienced advisors, OCS provides personalized and highly specialized asset and investment management services to ensure the optimal financial welfare of clients.

OCS caters to high-net-worth individuals, institutional investors, family offices, corporate entities and investment structures – including trusts and special purpose companies.

establishing long-term client relationships. We leverage our professional expertise to derive maximum investment value for our clients and advise on proven wealth management strategies.

OCS strives to ensure the success of our clients’ financial goals by understanding their investment needs and assessing their risk tolerance, liquidity requirements and investment objectives to structure an optimal solution to fit their investment needs.

Our services include: • Arranging Trade Solutions • Asset Management • Arranging and Advising • Corporate Finance • Non-Discretionary Custodial Advisory Services Our experience – your financial success.

With extensive and wide-ranging experience in structuring customized financial solutions, the OCS team is focused on

OCS International Finance Ltd +971 4 525 0600 info@ocs-finance.net ocs-finance.net Regulated by the DFSA

ISLAMIC BANKING & FINANCE

Starting Towards its Potential The improved operating environment in the MEASA region, and growing interjurisdictional cooperation will sustain the growth of Islamic banks’ assets and liquidity position as the lenders are expected to continue outperforming their conventional peers

T

he Islamic finance sector continues to demonstrate considerable growth globally, driven by continued standardisation of the industry, the robust appetite for Shariah-compliant products and the alignment of its financial instruments with environmental, social and governance (ESG) values.

The war in Ukraine has disrupted commodity supply chains, driving up consumer prices and fuelling inflation worldwide while hawkish interest rate hikes by the US Federal Reserve to cool down inflation is driving other central banks to raise their policy rates despite the risk of derailing growth. However, “the economies of GCC countries, Malaysia and Indonesia will remain strong in 2023

26

because of the high prices of oil and other commodities that boost both corporate and government coffers,” said Moody’s.

The growth in the Middle East, Africa and South Asia (MEASA) region on the back of soaring prices of crude oil and other commodities and the relaxation of pandemic-related restrictions is projected to remain strong over the next 12 to 18 months.

The standardisation of the global Islamic finance legal and regulatory framework represents a huge opportunity for the industry to streamline as well as strengthen processes and practices to broaden the appeal of Shariah-compliant financial products.

Islamic banks are accelerating and strengthening the digitalisation of complex

Banking and Finance news in the MEA market

processes as well as end-to-end customer journeys in lockstep with their conventional peers. According to S&P Global, “accessing bank services digitally, issuing Sukuk on a digital platform using blockchain technology and enhancing cybersecurity will be the three main factors to help improve the industry’s resilience.”

M e a n w h i l e , t h e a l i g n m e n t of certain Islamic financial products with environmental, social and governance (ESG) factors has thrust the industry back on the radar of conscious investors while encouraging the streamlining of the sector to boost its attractiveness. ESGlinked Islamic bonds will likely remain a key issuance theme in core Islamic finance markets supported by government initiatives focusing on sustainability and economic diversification.

Islamic banking The high crude and palm oil revenues are creating positive spill over effects on the other sectors of the economy where Islamic banks do most of their lending.

Meanwhile, inflation across most Islamic banking markets will remain moderate relative to the US as governments are providing substantial subsidies to offset inflationary pressure.

The improved operating environment in the MEASA region will sustain the growth of Islamic banks’ assets and liquidity position as the lenders are expected to continue outperforming their conventional peers. S&P Global projected that the global Islamic finance industry will see double-digit expansion again in 2022-2023 after a 10.2% growth in total assets in 2021.

Over the longer term, Islamic banks in the Gulf region will benefit from the economic diversification agendas of countries, which aim to promote higher employment levels among citizens in the private sector.

The profitability of Shariah-complaint banks will also improve this year as provisioning needs decline and net profit margins widen. “After declining in 2020 when the pandemic first struck, the return on average assets for most Islamic banking systems improved in 2021 partly because of lower provisioning needs as economies recovered,” Moody’s said in September adding that the provisions will drop to pre-pandemic levels in 202223—which will further boost profits.

The retail focus of most Islamic banks will likely help preserve their asset quality going forward as retail asset quality is particularly resilient, thanks to the high proportion of borrowers who work in the public sector, prudent regulations and established credit bureaus.

However, the current operating environment is likely to put more pressure on GCC Islamic banks and lead to more tie-ups to create new national or regional champions. “We expect further merger and acquisition (M&A) activity as many Islamic banks have weaker franchises which lack strong competitive advantages, particularly in pricing, cost of funding and growth opportunities,” said Fitch Ratings.

Over the years, all M&A deals in the GCC region involved at least one Islamic bank. Kuwait Finance House (KFH) closed its four-year acquisition of Bahrain’s Ahli United Bank for $11.6 billion—a rare crossborder merger that will make KFH the

second-largest Islamic bank globally by assets behind Saudi Arabia’s Al Rajhi Bank. “This transaction will position KFH as a dominant bank in the GCC as the addition of AUB’s solid corporate banking franchise complements its large and strong domestic retail customer base,” said Moody’s.

Bahrain’s Al Salam Bank completed the acquisition of Ithmaar Bank’s consumer banking division and several other assets in July in a deal valued at $2.2 billion. The integration of the two banks is expected to be completed within the second half of the year.

Oman’s Sohar International Bank is in talks for a potential merger with Bank Nizwa—no timeline was provided for the expected finalisation of the deal. Islamic banking has evolved over the year and so too have the product structures as the sector moves to offer tailored features to meet the needs of a growing investor base.

Tapping into the next generation The pandemic demonstrated how the capacity of a bank to shift its business online is critical for its continuity. For the Islamic finance sector, banks and Sukuk, digitalisation and increased collaboration with fintechs could help strengthen the industry’s resilience and open new avenues for growth.

“Offering digital banking services, issuing Sukuk on a digital platform using blockchain technology and enhancing cyber security will be the three main factors for industry resilience,” said S&P Global.

Sukuk issuance, which bans interest payments and pure monetary speculation, has been gathering steam outside of core Islamic finance centers such as Luxembourg and London. However, the industry remains largely fragmented and plagued with several challenges including high costs and the probability of human error due to multiple intermediaries that are involved in the issuance process.

To address high costs, lack of transparency and the probability of human error, industry experts say blockchain

could be the missing link. The tokenisation of Islamic bonds by leveraging blockchain technology is expected to reduce the various costs associated with the issuance process—potentially opening the field to start-ups and small and medium enterprises (SMEs).

Blockchain technology has the potential to accelerate and unlock the long-term potential of the Islamic finance sector while enhancing its appeal beyond its traditional borders.

It allows for all transactions to be unalterably timestamped and uniquely cryptographically signed—increasing operational efficiency, cost reduction and enhancing transparency.

Meanwhile, digital banks are emerging in Islamic finance markets because of new licensing frameworks introduced by financial authorities in core Islamic markets in line with global trends. “More digital banks will emerge given that the central bank in Kuwait will also issue digital banking licenses by the end of 2022,” said Moody’s.

Leading Shariah-compliant digitalexclusive banks in the MEASA region include the UAE’s Zand, Saudi Arabia’s D360 Bank and STC Bank and Bank Fama and Bank Allo. Islamic banks have ample liquidity to support their expansion thanks to strong inflows of deposits.

Harmonizing Islamic finance The UAE is leading the charge in developing a unified global Islamic finance legal and regulatory framework. Islamic finance, which bans interest payments and pure monetary speculation, continues to expand across key markets in the MEASA region but the industry has remained largely fragmented with the uneven implementation of its rules.

Muslims make up about a quarter of the world’s population and are said to be the fastest-growing religious cohort and as such, the potential market for Islamic financial services is enormous. S&P Global forecasted that Sukuk issuance will decline in 2022 after a stabilisation at $147.4 billion last year versus $148.4 billion in 2020. mea-finance.com

27

The plunge in issuance is attributed to lower financing needs for some countries and corporates in the MEASA region due to high commodity prices. However, more issuers are tapping the conventional markets where it is easier and quicker to get the funds.

Sukuk instruments remain more complex and time-consuming for issuers than conventional bonds. Most Sukuk issuers are facing the challenge of implementing Standard 59 of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) without changing the credit characteristics of the transaction.

With the adoption of Standard 59, the traditional Murabaha structure is no longer held to be Shariah-compliant by the Bahrainbased organisation and compliance became an obligation throughout the lifetime of the transaction.

S&P Global said that the market for hybrid Sukuk that combine a commodity Murabaha with tangible assets almost froze in early 2021 when the standard came into force in the UAE. The risk of tangibility events is present for Sukuk issuers (mainly non-sovereigns) with limited tangible assets and low headroom.

“The amount that can be raised through the issuance of Islamic bonds can be capped by the value of an obligor’s tangible assets,” Fitch Ratings said adding that a built-in cap on leverage could be negative for issuers with limited tangible assets, asset-light firms and highly indebted issuers—for whom it could restrict access to funding.

While gaps remain, some standardisation has been achieved in language relating to tangibility events, delisting events, indemnity payments and partial-loss events.

Standardisation is expected to make Sukuk issuance comparable with conventional instruments from a cost and effort perspective that it will gain prominence among both issuers and investors.

AAOIFI and Malaysia’s Islamic Financial Service Board (IFSB), two institutions that have traditionally worked independently on their respective mandates in the past, signed an MoU in 2018 to create a level

ACCESSING BANK SERVICES DIGITALLY, ISSUING SUKUK ON A DIGITAL PLATFORM USING BLOCKCHAIN TECHNOLOGY AND ENHANCING CYBERSECURITY WILL BE THE THREE MAIN FACTORS TO HELP IMPROVE THE INDUSTRY’S RESILIENCE – S&P Global

playing field and foster harmonisation and standardisation of regulations.

The UAE took the first step towards the standardisation of Islamic finance in May 2020 by launching the Higher Shariah Authority while Malaysia’s central bank, Bank Negara Malaysia, also started implementing a revised Shariah Governance Framework in 2021 to strengthen board oversight and the responsibilities of Shariah governance.

Moody’s lauded UAE regulators saying the move is credit positive for Islamic finance institutions because it addresses the sector’s main impediment to growth—the complexity and diversity of legislative frameworks and practices across regions and geographies, which creates additional risks and uncertainty in case of litigation.

ESG alignment The majority of Islamic finance countries are exposed to climate transition risks, and several are developing or implementing transition strategies, including significant investment in clean energy.

There has been an increase in the issuance of dedicated social Islamic finance instruments and green Sukuk as the industry realises and leverages its alignment with ESG values.

“Islamic finance does not relate only to the use of proceeds, but Islamic products also have to be structured in a way that complies with Shariah. The global ESGlinked Sukuk market has flourished in recent years, and we expect growth to continue in the medium term,” said

Bashar Al-Natoor, Global Head of Islamic Finance at Fitch Ratings.

The energy transition agenda across the MEASA region is expected to create opportunities to expand social Islamic finance instruments and green Sukuk products. However, adoption will likely remain slow due to additional complexity related to these instruments and a shortage of ESG-focused investors and issuers in key Islamic finance markets.

Though not mutually exclusive, Shariahcompliant financial instruments offer a framework that embodies the social and ethical values of ESG investing— offering investors in the Middle East and Southeast Asia the opportunity to adopt more sustainable and conscious investment strategies while tapping into the potential value of impact investing.

The Islamic finance sector continues to gain momentum with borrowers and investors globally, driven by an increasing understanding of the asset class and a strong alignment of Islamic Shariah core principles with ESG principles.

Islamic finance has gained prominence over the last 50 years, but the industry remains a collection of local industries rather than a truly globalised one and there are no major changes in the distribution of Shariahcompliant financial products over the past decade. The lack of competitiveness for some Islamic finance products and Sukuk issuance-related complexities remain some of the major factors that are deterring the industry from moving more quickly into non-Muslim jurisdictions. mea-finance.com

29

ISLAMIC BANKING & FINANCE

G

lobal Sukuk issuance has moderated through 2022, what do you see as the reasons for this?

Christophe Lalandre, Senior Executive Officer, Lombard Odier, Abu Dhabi Global Markets Branch

Adjusting with the environment Despite reduced Sukuk issuance and the challenges of higher inflation and interest rates, Christophe Lalandre Senior Executive Officer at Lombard Odier, ADGM, explains that opportunities exist for Islamic Finance growth in sustainable investments and how Distributed Ledger Technology will bring clear benefits to Shariah-compliant transactions

30

Banking and Finance news in the MEA market

According to S&P Global, total Sukuk issuance has decreased by 20% over the first half of 2022, compared to the same period last year. This is a result of global macroeconomic considerations, most notably rising inflation, which has led to central banks around the world increasing interest rates. These rate hikes have reduced liquidity and made it more expensive for companies to borrow, and in turn has lessened investor appetite for asset classes across the board, Sukuk included.

This theme has been offset slightly by some core Islamic financing markets, such as Turkey, Bahrain, and the UAE, which have reported marginally higher Sukuk issuances in the same period. In contrast, Malaysia, Saudi Arabia, Indonesia and Kuwait have experienced the largest reduction in Sukuk issuance this year.

In addition to the rising rate environment, we forecast this trend will continue due to lower funding needs in certain countries given higher oil prices have moved some from experiencing fiscal deficit to surplus.

How are commodit y prices affecting the current economic outlook on core Islamic finance markets?

Commodity prices are, and have historically had, a profound impact on the economic outlook of global markets.

The price of Brent oil has softened to USD 93, after having surged to USD 98 following the recent announcement of OPEC+ supply cuts. OPEC’s latest monthly oil market report significantly revised oil demand down based on a reduction in expected Chinese demand with a mention of Covid challenges and recessions in the US and Europe, as well as its supply projections. This means that there may still be oversupply ahead.

Real GDP growth should be impacted by lower volumes and overall lower prices.

However, we highlight that growth will come off a very high base. GCC GDP growth forecasts will be trimmed to reflect the reassessment of production targets from OPEC+. Moreover, concerns about the global growth outlook for next year are growing, making it likely that the increase in production quotas in 2023 will be more modest than previously forecasted. An increase in oil production in 2023 may stand at about half the rate previously expected. Nonetheless, in subsequent years, we anticipate the oil sector will still make a significant contribution to growth.

Current account balances will also be directly impacted by lower oil prices, with downward revisions for all economies, except Qatar. Healthy surpluses are still expected, although the total regional surplus will be cut, to some extent. Fiscal revenue should also be revised down slightly for most GCC countries, although not to the same degree as the oil price revision.

Despite lower oil production and prices and higher borrowing costs, we expect the GCC economies to remain resilient and avoid the recession worries affecting the US and parts of Europe.

Leading indicators continue to highlight a dynamic, non-oil private sector thanks to tourism and still resilient real estate markets.

Are there constraints to the growth of Islamic Finance into new markets, and what are they?

The rising issue of worldwide inflation has forced most central banks to increase interest rates quickly, and sharply. This makes Sukuk issuances more expensive and is driving investors to deploy a risk-off approach. As a result, the Sukuk market suffered, in line with several other asset classes.

In addition, the Islamic finance industry has struggled to expand beyond its traditional markets, owing largely to structural issues around the complexity of the transactions as well as a lack of standardisation across the sector. This

is in addition to the difficulty associated with identifying robust talent with the required knowledge in Islamic finance.

However, an opportunity lies in the Islamic finance market from renewable energies and sustainable investments.

Climate transition investments are expanding in Islamic countries for the financing of their mega projects, including the use of solar plants and nuclear energy. This is a strong trend as sustainable Sukuk issuances have more than doubled over the last five years, and this will likely continue to grow at a robust pace.

What benefits or enhancements can blockchain, digitisation and DLT bring to Shariah compliant transactions?

There are two key angles to consider when thinking about the impact of DLT (distributed ledger technology, or

their occurrence, such as gambling, alcohol, and interest payments. This is not only convenient for asset managers, who do not want to be exposed to noncompliance risk for their clients, but it is also helpful for the regulators who are provided with much better oversight on all market transactions. In addition to Shariah compliant smart contracts, inter-bank or cross-asset management transactions can also be settled faster and more efficiently via DLT. Reconciliation also becomes automatic, which implies larger cost savings for back-office activities.

The second opportunity lies in the possible investments on the basis of the DLT technology. This represents a valuable prospect for investors looking to diversify their portfolios by adding these digital assets to their existing asset mix.

Digitisation would bring speed, efficiency and simplification to global

THIS IS A STRONG TREND AS SUSTAINABLE SUKUK ISSUANCES HAVE MORE THAN DOUBLED OVER THE LAST FIVE YEARS, AND THIS WILL LIKELY CONTINUE TO GROW AT A ROBUST PACE

Blockchain) on Shariah compliance. The first is on the technology itself, where we consider clear benefits in terms of Shariah compliance when it comes to using DLT as an infrastructure layer.

Not only does it seem to be safer and faster for administration than current systems, it also provides the opportunity for smart contract overlays that govern transactions in real time. For example, it would be possible to programme transactions and block those that contain certain non-Shariah activities prior to

Shariah-compliant transactions. Today, the system is highly dependent on the executing asset manager to stay within the mandate and be classified as Shariah-compliant. Progressive technologies now provide the end investor control of these transactions and allow for full transparency of portfolios including alignment with each assets’ Shariah-compliance. This is much more convenient and granular than only looking at the wrapper-level, which is the current approach. mea-finance.com

31

ISLAMIC BANKING & FINANCE

Making Steady Progress Zeeshan Awan Head of Islamic Banking at National Bank of Fujairah, provides a rounded account of the current shape of the Islamic finance sector in the current global climate with views of what we can expect to see develop in this market

G

lobal sukuk issuance has moderated through 2022, what do you see as the reasons for this?

Economic and geopolitical developments earlier in the year only had a muted impact on Sukuk markets. Issuance eventually

32

slowed on the back of two trends: multiple interest rate hikes by the Federal Reserve and other central banks and persistently high oil prices.

The Federal Reserve has hiked its respective benchmark interest rates 5 times, taking the interest rates from

Banking and Finance news in the MEA market

almost zero to 3.00-3.25 per cent in September. This monetary tightening strengthened the dollar, which meant that most sovereign Sukuk issuers relied on borrowing from domestic rather than international markets in the first six months of this year.

Soaring oil revenues meant reduced government funding requirements in core Sukuk markets such as Saudi Arabia and thus smaller issuances in these markets. The Kingdom reported a $21 billion budget surplus in Q2, boosted by an 89 per cent increase in oil income from the previous year. Despite this, the Saudi government has pledged that its spending will not be influenced by oil price movements and will continue to curb spending this year, signalling smaller issue sizes ahead.

The governments of Turkey, Pakistan, Indonesia and the Emirate of Sharjah were the only sovereigns to issue international Sukuk, collectively raising just $8 billion. Meanwhile, a single $1 billion issuance sufficed for the Islamic Development Bank, usually a big issuer in international Sukuk markets. The market has also witnessed a growth in ESG linked sharia compliant sukuk, which we expect to have more traction going into the future.

Economists at the Federal Reserve ex p e c t f u r t h e r b e n c h m a r k ra te increases will reach a range of 4.44 percent by end of 2022 and to peak around 4.625 per cent in 2023 %. These multi decade elevated levels of high rates will likely deter some issuers from borrowing in international markets.

Still, despite increasing costs for dollar debt, there is an opportunity for issuers below investment grade to negotiate more favourable rates as higher sukuk yields attract bargain-hunting investors.

How are commodity prices affecting the current economic outlook in core Islamic finance markets?

At the macroeconomic level, higher commodity prices (particularly for hydrocarbons and palm oil) are expected to underpin a more robust recovery in major Islamic finance markets such as the Gulf states, Malaysia and Indonesia.

Moreover, inflation in these countries will also remain moderate because of government subsidies and interest rate hikes.

The outlook is also positive for the Islamic banking sector. Financing to public-sector employees, who enjoyed stable employment during the pandemic, constitutes the lion’s share of retail financing in the GCC region. This focus on retail financing, plus prudent underwriting and the development of strong provisioning buffers, mean that Zeeshan Awan, Head of Islamic Banking, NBF

THIS FOCUS ON RETAIL FINANCING, PLUS PRUDENT UNDERWRITING AND THE DEVELOPMENT OF STRONG PROVISIONING BUFFERS, MEAN THAT THE RETURN ON AVERAGE ASSETS OF ISLAMIC BANKS LOOKS SET TO IMPROVE the return on average assets of Islamic banks looks set to improve.

Profitability will be further driven up thanks to efficiency gains from digitalisation, as well as rising interest rates, particularly in the Gulf states where domestic currencies are pegged to the US dollar.

What benefits or enhancements can blockchain and DLT bring to shari’a-compliant transactions?

For shari’a-compliant transactions, distributed ledger technology (DLT) is expected to reduce transaction costs, help tokenise assets and contribute to the transparency of transactions. DLT can also help to speed up the transfer of shari’a-compliant assets by mobilising funds from investors.

DLT might increase trust between trading partners, enhancing global commerce while masking sensitive information like pricing and trade secrets. DLT might increase trust and transparency by keeping customers aware of every trading stage. DLT-enabled trade networks may reduce logistical and operational inefficiencies in shari’acompliant transactions. Long-term DLT implications in trade finance might lead the way.

How can digitisation unlock the growth of Islamic banking and finance?

Digitisation is helping banks to reduce operating expenses by streamlining and automating internal processes, as well as cutting the costs of acquiring and serving customers. Global rating agency Moody expects digitisation to accelerate among Islamic banks, helping these banks expand at a lower cost. Another benefit of digitisation, particularly for banks with a small physical presence, is improved access to the public, which can also help to boost revenue. mea-finance.com

33

COVER INTERVIEW

A Deepening I Commitment

n t h e t wo ye a rs s i n c e becoming Chief Executive, Global Private Banking and Wealth, how frequently has this region come to your attention?

Marking the launch of their new global private banking business in the UAE, Annabel Spring CEO, Global Private Banking and Wealth, HSBC talks with MEA Finance about how this sector of the market is changing why this region stands out to her in today’s world

34

Banking and Finance news in the MEA market

We have a long-standing presence in the UAE for over 76 years and in the last several decades of visiting the country, I have personally witnessed its tremendous pace of progress. It stands out in a tough global economy with a predicted 5% growth rate in the next year despite global market and economic volatility.

The region has always been a strategically important growth market for HSBC Global Private Banking with a pivotal position as a key gateway to emerging wealth pools across the region and a growing international community.

With the launch of our new HSBC Bank Middle East Global Private Banking here

we are ready to cater to a fast-growing HNW investor base that wants to hold assets in the country, while retaining the flexibility to structure portfolios across key international financial hubs.

We have continuously invested in the Middle East especially in the UAE, both in Dubai international Financial Centre (DIFC) and Abu Dhabi Global Markets (ADGM), as well as Saudi Arabia and Qatar. We are also building on our private banking services in Egypt, Kuwait and Bahrain, as well as in geographies that align to the unique needs of UAE expats (e.g., onshore India).

The current economic backdrop is challenging. What’s your strategy to combat that and has that changed?

Despite global headwinds, the strong positive growth in the region is, at least in part, due to well-managed Covid protocols attracting an influx of high-networth individuals from across the globe.

In the UAE, progressive government policies and actions across a range of social and economic areas have also made the country a large recipient of investment, technology and talent from across the globe, as well of course as commodity prices.

Outside the Middle East the picture is more challenging. As such, we are advocating a focus on quality, income and diversification, though always with an eye out for opportunities as these are interesting times where protection of wealth is important as is making the most of the opportunities.

We continue to support our clients t h ro u g h vo l a t i l i t y, h e l p i n g t h e m understand complex global geopolitical dynamics and how best to navigate their investments while keeping their long-term goals on track.

Clients’ needs are changing and there are more different types of investors than ever before. How are you catering to their needs?

Our wealthy clients are looking for

Annabel Spring, CEO, Global Private Banking and Wealth, HSBC

DIGITAL TRANSFORMATION HAS ALLOWED US TO MOVE THE BANK TO AN INTERACTIVE MODEL OF CLIENT ENGAGEMENT THAT ALLOWS US TO FACILITATE THEIR NEEDS, WHEREVER THEY ARE IN THE WORLD

a fluid experience of local advice and global diversification opportunities, an alignment between personal and business needs, a focus on both traditional and innovative asset classes and have varied service preferences.

UAE clients stand out due to the entrepreneurial spirit of this region, with many family-owned businesses expanding both locally and internationally.

This is one of our key competitive strengths: with our history in the region and HSBC’s global reach we have expertise to serve them personally and their businesses both here and abroad – whether that’s Singapore, Hong Kong, the UK or the US, India or Bangladesh.

In terms of investment opportunities, clients are increasingly interested in a wider range of asset classes. Whether its interesting ideas in the alternatives space or new ESG funds, we are continually innovating. The digital assets space mea-finance.com

35

COVER INTERVIEW

As a result, we see less regional distinction and more variability in personal views, as clients need help aligning their specific financial goals with their personal sustainability objectives. We achieve this with both internal and bestin-class third party product partnerships to offer a full-spectrum of sustainable investment solutions: from innovative discretionary portfolios and alternatives to structured products, equities and bonds. Some of our GCC clients are also exploring sustainable philanthropy which is very encouraging.

What are the challenges around recruiting wealth and relationship managers in the region?

(including NFTs) is also gaining interest: we are exploring it while balancing innovation with a prudent management approach. Of course, our offering spans beyond investments – for instance, we have an exclusive Insurance partnership with Zurich International offering a wide range of protection and investment linked insurance solutions.

The wealth service model is also evolving. While the industry is increasingly focused on the convenience of digital capabilities, client preferences remain deeply personal. Many want to interact with us in an entirely digital way that is customisable to their needs, others value the deeply personal connection that can only be delivered by a relationship manager. For many, a winning offering combines the best of both worlds with balance changing over time. Locally, we now offer a range of online trading capabilities for equities and ETFs across multiple markets with real time pricing, as well as bonds and a wide range of international funds.

36

Do ESG considerations factor into regional HNWI’s investing decisions to a lesser or greater extent than in the rest of the world?

Investment strategies incorporating ESG account for over 25% of professionally managed assets globally – integrating

Our business is anchored in building trust and long-standing relationships, and we invest heavily into attracting, developing and retaining the best talent.

In an increasingly competitive hiring environment, we focus on what makes HSBC a unique place to work and a fantastic long term career opportunity.

We attract individuals who want to work for an international bank with a deep heritage in the region that offers career opportunities both locally and globally. We invest in our people and their expertise.

What differentiates us is not only the sophistication of our wealth products, but also access to the Group’s international

IN TERMS OF INVESTMENT OPPORTUNITIES, CLIENTS ARE INCREASINGLY INTERESTED IN A WIDER RANGE OF ASSET CLASSES ESG into mainstream financial analysis is also well in train. Adoption of ESG investing will grow at an accelerated rate driven by asset owners, risk mitigation and return objectives. By now, ESG is not a new topic for most investors.

Banking and Finance news in the MEA market

network and a strong personal and wholesale banking franchise.

Of course, competitive compensation and benefit packages are also critical.

But it’s not just about the numbers—we are focused on culture of diversity and

collaboration ensuring our employee base reflects the multi-cultural spirit of the UAE and our diverse client base.

What are your thoughts on the future prospects for the private banking market in the MENAT nations?

The growth of the region means it is an exciting market for private banking.

Innovation and vibrant entrepreneurship create a strong demand for world-class wealth management as millionaire households continue to grow.

implement solutions to manage clients’ legacy across generations.

Is technology playing a bigger role in, or changing the ways that you interact with your private banking clients?

The ways in which we interact with clients are constantly evolving to provide a faster and more seamless experience with a wider range of journeys and products. Private Banking remains a high touch client segment, but technology is now providing us with better ways

IN THE UAE, IN ADDITION TO INTERNATIONAL INVESTMENTS, MORE CLIENTS ARE INCREASINGLY HOLDING THEIR FINANCIAL AND REAL ESTATE ASSETS IN THE COUNTRY, AND WE EXPECT THE NATURAL NEXT STEP IS THAT WE SEE MORE ESTABLISHED FAMILY OFFICES HERE With its investment-friendly policies, evolving succession laws for expats, recognised financial centre status and the availability of world-class banking talent, the UAE has established itself as a prominent private banking hub of global relevance.

For HSBC, the UAE is a critical global hub where our clients around the world increasingly want to hold part of their financial and real estate wealth. Our new HSBC Bank Middle East Global Private Banking will add a new dimension to our existing presence in DIFC and ADGM and enable us to provide clients with both onshore and offshore services.

All of our UAE clients have a dedicated Relationship Manager locally to ensure products and advice align to the evolving needs throughout their lifetime and can be a single point of access to connect with expert teams in other geographies.

We also offer access to international wealth and trust specialists who help

to make personalised interaction more efficient and aligned to clients’ preferences. Generational change and digital adoption have made it a necessity in financial services to develop and deliver options to clients on how they can interact with us within an omni-channel engagement model.

Private banking clients have complex needs and are geographically mobile— creating digital platforms to support them is essential at HSBC. Digital transformation has allowed us to move the bank to an interactive model of client engagement that allows us to facilitate their needs, wherever they are in the world. I do think, for all businesses, the pandemic has helped accelerate this trend as intuitive digitally enabled communications have become a core component of day-to-day engagement.

Technology has also facilitated our ability to move beyond servicing our clients with traditional wealth management

products towards an ongoing strategic partnership. We can deliver deep portfolio analytics and insights and use our expertise to provide them with more impactful strategic advice than ever before using real-time data. Clients are now more tech-savvy and connected than ever before. Social and mobile tools mean the world is at their fingertips and we have to not only keep up but act with urgency in their best interest based on ongoing inflow of information. It also enables timeliness and consistency of engagement in response to market movements, changes in personal or business circumstances and needs, etc.

What would you say are the topmost benefits of the services that HSBC can provide to HNWI’s in the region?

HSBC is the largest international bank in Middle East, North Africa and Turkey (MENAT), with a presence in nine countries across the region: Algeria, Bahrain, Egypt, Kuwait, Oman, Qatar, Saudi Arabia, Turkey and the United Arab Emirates.

We believe that our personal and business banking presence around the world makes us unique. Our purpose is to look after our clients and their family and business needs globally, whether it be in banking or investments. Due to our scale and expertise, we can bring the world’s opportunities to our clients and help them manage global risks while we help them protect their wealth and plan for their family’s future and legacy.

In the UAE, in addition to international investments, more clients are increasingly holding their financial and real estate assets in the country, and we expect the natural next step is that we see more established Family Offices here. As that shift accelerates, together with our new HSBC Middle East Global Private Banking, and our existing award-winning operations in the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM), we are ready to offer the best of onshore and offshore services to meet their needs. mea-finance.com

37

ROUNDTABLE: INNOVATION IN UNCERTAINTY

Rethinking New Business Models for Banking Leading figures in the development of Middle East financial services gathered in Dubai for a roundtable hosted by Mambu in collaboration with MEA Finance, to share experiences, gain insights into and debate key challenges confronting the banking sector and emerging business models

38

Banking and Finance news in the MEA market

Presented by

T

he Middle East financial service sector has weathered several storms in recent years from the 2008 global financial crisis to the economic impact of the pandemic and the tightening of monetary policy to push down inflation.

The banking system in the region is as solid as it was pre-pandemic and much healthier than when global central banks started hiking their interest rates in lockstep with the US Federal Reserve (Fed). But can we safely say banks in

the Middle East are out of the woods?

Not really.

Cause for concern is evident in a series of challenges that are confronting incumbent banks including fierce competition from challenger and digitalexclusive banks, shifting customer behaviours and macroeconomic uncertainties. “Banks are at a makeor-break moment,” Deloitte said, while highlighting that they have a short window to act on how they want to position themselves in the new global

financial architecture that digitisation is unleashing.

Simply put, the financial service sector must navigate numerous mounting challenges and uncertainties. MEA Finance in collaboration with Mambu, hosted an exclusive roundtable themed Innovation in uncer tainty : New business models to future proof banks in Dubai, the UAE, where industry leaders discussed key concerns for the region’s banking and financial services sector and the emerging business models that are coming into play.

The Berlin-based financial technology firm’s software as a service (SaaS) cloud banking platform assists banks in their journey towards embracing modern cloud infrastructure and transitioning away from ‘legacy’ technology. They support digital banks, telecoms companies and traditional banks to advance their digital transformation across a range of domains from personal lending, business lending, mortgages, trade finance, digital wallets and current accounts.

With more than 200 customers in over 65 countries, Mambu counts neobanks N26, Tandem Bank, TymeBank, Spanish bank Santander and Dutch bank ABN AMRO among its clients. Digitalisation in the banking sector is swiftly changing the field of play where incumbents are facing increasing competition from nontraditional entrants who are billing on customer experience as their point of sale.

Banks are exploring technological innovations and new business models that include digital banking, open banking, predictive banking and the modernisation of payment systems to harness innovation, drive operational efficiencies and grow business, all to

ensure they are ready to meet the challenges of change and are future proofed to do so.

The tectonic shift

The rally in oil price, which has mostly traded above the $80 mark since February, has pushed crude above the break-even level for almost all the Middle mea-finance.com

39

ROUNDTABLE: INNOVATION IN UNCERTAINTY

East’s producers extending gains earlier boosted by the lifting of pandemicrelated restrictions.

However, the global economy remains fragile going into 2023 due to a confluence of unprecedented challenges including the meteoric rise in inflation and tightening monetary policies around the world. The ripple effects of a more fragile and fractious global economy will be felt in the Middle East banking industry.

“GCC banks with Turkish subsidiaries adopted hyperinflation reporting in H1 2022 under the accounting standard IAS 29 as cumulative inflation in Turkiye had exceeded 100% over three years,” Fitch Ratings said in August. Emirates NBD, Kuwait Finance House, Burgan Bank and Qatar National Bank are worst-affected in terms of the operating profit/risk-weighted assets ratio, the rating agency said.

Manav Daryanani, Principal, Advisory at Mambu said that with inflation at 40-year highs and rising debt levels, both for public and household debt, the global economy faces uncertainties due to the severity of the economic downturn, inflation, geopolitical tensions and climate risk.

However, Daryanani said that there is still an opportunity for Middle East economies, thanks to rising energy prices, an influx of capital, new customers migrating to the region and favourable government spending policies.

To succeed in today’s challenging market, banks must evolve and adopt new

business resilience mechanisms. Industry leaders are considering several business models including embracing new technologies to move to a fundamentally lower cost curve, enhance innovation and create new revenue streams.

“We see in the market several business models including banking as a service (BaaS) proposition for building a separate initiative such as the speedboat approach that we speak about often or maybe super-apps that are very popular in the Asia Pacific,” said Miljan Stamenkovic, the General Manager at Mambu MENA. Banks in South Asia and Europe have led much of the development of the world’s modern banking industry across all dimensions—from growth to business

WE SEE SEVERAL BUSINESS MODELS IN THE MARKET INCLUDING BANKING AS A SERVICE (BAAS) PROPOSITION FOR BUILDING A SEPARATE INITIATIVE SUCH AS THE SPEEDBOAT CONCEPT THAT WE TALK ABOUT OFTEN OR MAYBE SUPER APPS THAT ARE VERY POPULAR IN THE ASIA PACIFIC – Miljan Stamenkovic, the General Manager at Mambu MENA

40

Banking and Finance news in the MEA market

models and innovation. However, the Middle East has tilted the scale, delivering game-changing growth and innovations in banking services.

Grant Niven, the Head of Group Digital at Banque Saudi Fransi said that he has seen a lot of digital disruption over the last nine years that he has been in the Middle East and continues to see it, adding that “adversity leads to more innovation.”

“We are shielded. I’d say in this part of the world in particular compared to my home and other parts of the world that are going through very challenging times,” Niven said while projecting that interest rates and inflation will remain low in the UAE and Saudi Arabia at a time when inflationary pressures have led to multiple rate increases from the US Federal Reserve.

D i g i ta l i s a t i o n a n d i n n ova t i ve technologies are creating unprecedented disruption in the banking sector and the rate of change is accelerating. Niven said Banque Saudi Fransi, one of the Middle East’s oldest legacy banks, is evolving by investing in disruptive new ventures, adopting new business models, leveraging new financial technologies and opening up regional markets to new customers.

“The bank branch is far from dead in terms of traditional banking, but it

Presented by

needs a radical transformation. COVID19 accelerated the need to create great experiences and collaborate with different sectors and business models and provide more financial services and products,” he added.

David Henry, the Chief Operating Officer at Nomo said the Shariahcompliant challenger bank’s business model is quite fortuitous in the current economic conditions. He concurred with Grant that the GCC region is somewhat insulated, thanks to high oil prices that soared to record highs between March and August this year.

“Regional governments have a lot of dry powder to call upon should they need to step in and support the economy,” Henry said adding that for Nomo, which recently launched a Shariah-compliant home financing product, the current economic conditions present an interesting opportunity.

From an innovation perspective, Henry said that the adoption of innovative technologies as a form of efficiency is becoming mainstream. “Partnering with fintechs for some of the well-established incumbent banks in this part of the world who have investment budgets and the capital to deploy is potentially a way to expand the market footprint and share capital through acquisitions,” he added.

To deliver a market-leading platformbased value proposition, banks need to leverage data for personalisation and stronger customer engagement, adopt a cutting-edge technology stack to speed up innovation and develop an agile operating model to respond to fastchanging markets.

Niven said that over the years Banque Saudi Fransi has been building up a venture model both in terms of delivering new business models and tapping into new customer segments. The Riyadhbased bank has been weighing how to invest in innovative digital solutions that are redefining interaction with consumers by offering an array of financial services from digital money transfers to AI-powered credit underwriting.

“Investment in startups is particularly buoyant in the Middle East where funding doubled during Q1 2022 with fintechs accounting for 41% of the total $864 million raised, according to a report by MAGNiTT that was published in August.

Traditional banks have also been assessing how to continue investing in their businesses to transform their services and products to be digital first.

“Technology, modernisation and new business model. We’re trying to smash down all the challenges we’ve got, the internal blockers and call people out to

infrastructure and connectivity through APIs to get access to services that fintechs can grow and accelerate faster, Niven added.

Muhammed Al Nuwaiser, the Head of UAE & DIFC at The Saudi National Bank concurred with Henry that innovation is a means of attaining efficiency for traditional banks while drawing an example of the consolidation between National Commercial Bank and Samba Financial Group—a tie-up that was completed in eight months, thanks to innovation and efficiency.

THE BANK BRANCH IS BY FAR FROM DEAD IN TERMS OF TRADITIONAL BANKING, BUT IT NEEDS A RADICAL TRANSFORMATION. COVID-19 ACCELERATED THE NEED TO CREATE GREAT EXPERIENCES AND COLLABORATE WITH DIFFERENT SECTORS AND BUSINESS MODELS AND PROVIDE MORE FINANCIAL SERVICES AND PRODUCTS – Grant Niven, the Head of Group Digital at Banque Saudi Fransi

transform their parts of the organisation and it’s a top-down initiative,” said Niven.

Regional banks must push ahead with their digital transition to an agile culture, lift barriers to cross-functional collaboration and create semi-autonomous teams that can deliver solutions quickly in alignment with enterprise strategy.

Mohamed Roushdy, Founder of Fintech Bazaar said that the majority of banks in Saudi Arabia have a fintech offering payments services while some fintechs are now venturing into mainstream financial services. Niven weighed in saying that D360 bank, payments provider STC Pay and Saudi Digital Bank moving to full-fledged digital banks.

Legacy banks are powering their foray into digital banking by building the

For regional regulators weighing digital banking’s benefits and risks, the challenge is to strike a balance between supporting innovation and protecting consumers. “Regulators are ahead of us in issuing the guidelines of digital and online transactions, whether it’s Dubai Financial Services Authority (DFSA), the Central Bank of the UAE and the Saudi Central Bank,” said Al Nuwaiser.

Meanwhile, Mohamad Elkhalil, Director of Supervision at (DFSA) highlighted the fact that most traditional banks in the region are either investing in fintechs, launching their own or partnering with one has created a bit of a mess in the financial services industry. “But I think that is a natural phase that we need to go through until every financial institution mea-finance.com

41

ROUNDTABLE: INNOVATION IN UNCERTAINTY

discovers their preferred business model,” he said.

From a supervisory perspective, Elkhalil cautioned that regulators are reactive when it comes to innovation, and they are always one step behind the financial service sector because they let the industry innovate first then step in to understand what’s happening and catch up with developments.

To m m a s o Le o d a r i , t h e C h i ef Investment Officer at Index & Cie weighed in saying that the majority of venture capital and investment in fintechs is not going towards revolutionising banks’ core

Asked whether banks are being held back or if the world is moving too fast, Barbara Biro, the Head of Digital Ecosystem at the National Bank of Ras Al-Khaimah (RAKBANK) said that there are three possibilities, either those banks do not have the proper vision, they can’t figure out financial service industry trends or do not see the reason why they should innovate their services and products.

However, Biro noted that a full-fledged bank cannot be digital-exclusive adding that there are banking services such as wealth management that still require

A speedboat is an independent, cost effective and agile digital banking spinoff that operates like a fintech. The majority of traditional banks in the GCC region are leveraging their existing resources to introduce cloud-native digital spinoffs that enable faster time-to-market for the launching of new products and market expansion.

Mambu said that a well-executed speedboat, often customer-centric or targeting a niche segment, can be quickly scaled up according to the market requirements. The speedboat approach requires legacy banks to quickly develop

systems but it is going toward payments in the fintech subsection of finance.

This means that the capital market, which includes angel investors, is investing money into fintechs and the proceeds are being channelled towards innovation, revolutionising power and cutting costs, Leodari said while highlighting that major banks are not investing in the early stages of fintech startups.

Meanwhile, for challenger banks, the ‘momentum is up and running. “Digitalexclusive banks don’t want to wait for time, they want to get up and running while competing with traditional banks,” said Dalal.

in-person interaction. “A bank cannot go fully digital there. But there are banking products and services that must be the same as and fully digital,” she added.

new digital products and services that attract and delight customers. These offerings need less capital than traditional banking products and they are said to be far less expensive to support.

Pratikk Dalal, the Chief Financial Officer at Al Maryah Community Bank said that momentum is key for a successful digital transformation. He said that most incumbent banks are trying to break the shackles of their legacy systems and adopt architectures that are digital to the core either with a new digital bank or digitalise their core banking platform.

Challengers or neobanks in the Middle East are competing with speedboats

42

New business Speedboats

models

-

Banks in the Middle East were already at the forefront of innovation and digitalisation well before the pandemic.

Industry leaders who attended the roundtable projected that the trend would continue to dominate the financial service sector as some incumbent banks are launching speedboats to transform their core business.

Banking and Finance news in the MEA market

Presented by

from Emirates NBD, Bank ABC and the National Bank of Kuwait as Gulf states broaden access to financial services.

UAE’s Mashreq Bank and Emirates NBD launched digital-exclusive banks for SMEs, NeoBiz and E20 respectively, in September 2019. The unveiling of the digital-exclusive banks came exactly two years after both Mashreq Bank and NBD had launched Mashreq Neo and Liv., lifestyle banks that seek to meet the banking needs of millennials.

Dubai Islamic Bank unveiled its digital offering rabbit in December 2021—a digital app that is aimed at tech-savvy

customers. It offers a current account, globally accepted debit card, payments and money transfer services.

Bahrain’s Bank ABC also launched ‘ila Bank’ in 2019 – an AI-powered and data analytics digital-exclusive bank. ila Bank launched in Jordan in October and aims to expand into Egypt. Meanwhile, NBK launched Kuwait’s first digital bank, Weyay, last November and it will provide retail banking services.

Biro highlighted that there are now two types of fintechs, one that is focusing on the digital transformation of legacy banks and the other one that is going with merchant flow—customer demand

and the government-controlled type of new rails, new payment rails and new product rails.

Nomo’s journey The ongoing transformation in the Middle East financial services market is partly being driven by tech-savvy customers and regulatory initiatives such as regulatory sandbox and open banking—which are creating an enabling environment.

Asked how Kuwait’s Nomo was serving its customers’ overseas banking requirements, Henry highlighted that in plotting new paths to digital innovation,

the greenfield banking approach is confronted by brownfield organisation, brownfield governance and brownfield license. “We are talking about the legacy mindset, the legacy management, the legacy culture and getting approval to launch a product in less than five months,” he added saying that a greenfield bank goes through all these processes.

Greenfield banking models have flourished in retail and small business banking as financial institutions look for faster ways to get new propositions to market. For Nomo, Henry said that the proposition came from Kuwait as the digital bank is positioned to address the

needs of more than 600,000 customers in the Gulf state.

From a governance and people perspective, he said that the legacy mindset is still a huge challenge, but with the help from Mambu, the bank was up and running in nine months. “We have both USD and GBP current accounts, GBP debit cards, USD and GBP term deposits and we onboard customers straight out of Kuwait,” Henry said while noting that all this was achieved in nine months.

The Nomo app is comparable to using Monzo in the UK or one of the

well-established neobanks or fintechs,” said Henry.

Banking-as-a-Service Emerging financial technologies are offering the financial services sector a window to be more innovative and efficient in service delivery. A study by SimonKucher & Partners showed that there are now around 400 neobanks around the world serving close to one billion clients.

From a revenue stream point of view, Neale Crouter-Foy, CTO at Securrency used the Blockbuster analogy to highlight that the remittance market in the Middle East is huge and there is significant cash mea-finance.com

43

ROUNDTABLE: INNOVATION IN UNCERTAINTY

flow coming in, however, this business model is likely to change very soon. “The whole fundamental model has changed,” Crouter-Foy added.

Saad Ansari, the CEO of Xpence, said that the business banking platform is working with different regulators and incumbent banks across the MENA region from Morocco to Egypt to Bahrain. “Different technologies and core systems are being used by banks in these countries, some that are easier to integrate with others are less,” he said.

The biggest challenge the banking sector face is the change of mindset.

“We always see people talking about legacy core banking systems. But no one talks about the legacy mindsets within

the banking industry,” Ansari said adding that a financial institution can have a brand-new core banking system, but what difference does it make to a fintech if the mindset hasn’t changed?

Banks in the Middle East region plan to increase their use of APIs to reduce IT complexity and enable agility and partners. Ansari said that several banks in the region are setting up their APIs and they’ve got their doors open to work with fintechs. Emirates NDB launched a comprehensive and readyto-use financial API developer portal ‘Emirates NBD API Souq’ in September

44

to provide fintechs and developers with an ecosystem to develop innovative financial solutions.

The cloud is moving to the forefront as the focal point for information technology leaders, C-suite executives and board members as the future of financial services is digital. A growing number of non-bank companies are now offering financial services such as bank accounts, digital wallets, payments and lending.

Financial institutions in the region are increasingly offering banking as a service (BaaS)—bundled offerings, cobranded products and services that non-bank companies can use to serve their customers at a time when

the demand for embedded finance has soared to record highs. Banks can adopt a cloud strategy by service type including BaaS, infrastructure as a service (IaaS), platform as a service (PaaS) and software as a service (SaaS).

Niven said that BaaS is the big frontier for financial services that brings together a massive community of different industries, service providers and technology companies.

Over the past 18 months, Banque Saudi Fransi has been building a platform that allows connection with fintechs while allowing them to use the bank’s license to embed and deliver services to the entire country. “At the point of contact for a consumer, be it a corporate, an SME or a

PARTNERING WITH FINTECHS FOR SOME OF THE WELL-ESTABLISHED INCUMBENT BANKS IN THIS PART OF THE WORLD WHO HAVE INVESTMENT BUDGETS AND THE CAPITAL TO DEPLOY IS POTENTIALLY A WAY TO EXPAND THE MARKET FOOTPRINT AND SHARE CAPITAL THROUGH ACQUISITIONS – David Henry, Chief Operating Officer, Nomo

Banking and Finance news in the MEA market

Presented by

retail customer, they want a service and easy access they don’t care from which bank it comes from,” he added.

Though Banque Saudi Fransi expects tiny revenue from BaaS and embedded finance, the bank acknowledges t h a t o n b o a rd i n g g l o b a l u n i c o r n fintechs who consider entering Saudi Arabia’s remittance market will be a great opportunity.

Given the increase in the number of service providers in this space, embedded finance-minded banks and brands evaluating BaaS platforms should consider brand-bank fit, product specialisation and brand-bank relationship. While smaller banks and fintechs initially dominated the BaaS and embedded finance market,

incumbent banks including Emirates NBD and HBSC are now beginning to wake up to its potential.

Cloud solutions allow banks to streamline upgrades by reducing the substantial time and effort that is spent configuring new upgrades and capabilities on disconnected legacy systems by allowing an enterprise’s technology partners to handle both the software and hardware upgrades.

From a strategic point of view, Shiba Nair, Senior Manager - Platform Development and Customer Experience at the National Bank of Fujairah said that

DIGITAL-EXCLUSIVE BANKS DON’T WANT TO WAIT FOR TIME, THEY WANT TO GET UP AND RUNNING WHILE COMPETING WITH TRADITIONAL BANKS – Pratikk Dalal, Chief Financial Officer, Al Maryah Community Bank

financial institutions need to be clear on their digital strategy.

Ecosystems Banking customers are redefining their expectations, taking their cues from other industries that offer multichannel access, product simplicity, seamless integration and ‘segment-of-one’ targeting. They want convenience, personalisation, accessibility and ease of use.

Dalal said that from a hyperpersonalisation perspective, following research of their browsing and shopping patterns, this is the point where digital

banks are catering to the needs and requirements of customers.

PwC said that by observing and often experiencing first-hand what banks offer—or do not offer—new entrants pick off segments of the banking sector and develop narrowly defined, but highly effective solutions to manage customer expectations.

Stamenkovic weighed in saying that digital banks are good at one thing, focusing on solving one problem such as Nomo’s specific banking proposition to work with the expats. From a coordinated approach, Stamenkovic said when all different fintechs in the region collaborate with mainstream banks and their propositions, “this is how the local

financial ecosystem can build a much greater value proposition than any bank can build and deliver to the market.”

Knitting financial ecosystems and the customer journey, Daryanani said that research shows that the embedded finance market will be valued at $7 trillion over the next 10 years, double the market cap of the world’s top three banks.

“There might be a department pushing for digital transformation and take the bank to its ultimate destination, which is being digitally enabled,” Nair said adding that vision might not be successful due to the bank’s core banking system if the mea-finance.com

45

ROUNDTABLE: INNOVATION IN UNCERTAINTY

institution is not open to APIs and be partnering with an ecosystem of fintechs.

On the regulatory front, Nair said that for regulatory authorities in the region to standardise the approach to Electronic Know Your Customer (e-KYC) data, traditional banks need to move from being product-centric to customer-centric while focusing on efficiency and flexibility.

Henry said that there is a need for harmonisation of regulations and financial services in the GCC while noting the different cloud services that are currently available in different jurisdictions across the region.

“The fact that you have to work with Oracle in Saudi Arabia, Amazon Web Services (AWS) in Bahrain Microsoft Azure in the UAE it’s a nightmare,” he said adding

46

that close coordination such as in Europe makes adoption of cloud services much easier for fintechs and banks because currently “the GCC is a bit of a minefield.”

The UAE KYC Blockchain Consortium, the first of its kind in the region, facilitates faster, more secure and streamlined customer onboarding while allowing the sharing of verified e-KYC data between licensing authorities and banks through advanced distributed technologies.

Super apps Fintech withstood the impact of the global pandemic largely because of the increasing presence of digitisation in almost every aspect of our personal and professional lives. However, it accelerated the shift from cash to contactless digital

Banking and Finance news in the MEA market

payments that were already underway among consumers while driving the continued growth in e-commerce.

S u p e r a p p s a re p o p p i n g u p everywhere. They aggregate a broad set of services, both lifestyle and financialbased, with the added value of embedded payment capabilities to provide users with a frictionless experience.

Daryanani posed a question on the potential and opportunities of super apps in the Middle East. RAKBANK’s Biro differentiated super apps, saying purely e-commerce super apps such as Amazon and Noon already enjoy a gigantic user base and the added value services on offer will fuel growth. She highlighted that creating communitybased lifestyle super apps that offer a

Presented by

one-stop shop providing services ranging from payments and financial services to communication and retail services will likely be challenging given the different cultures and nationalities that make up the region’s user base.

Th e f i rst k n ow n s u p e r- a p p i s WeChat, which was launched in 2011 as a messaging platform by Chinese technology giant Tencent. A decade later, WeChat is a portal to more than three million third-party “mini-programs,” a platform from where users can hail a ride, make cashless payments or access retail services.

Biro said super apps are a new revenue stream for banks and they must enable responsible finance, which involves teaching, educating, notifying, warning and enabling alternative options to complete a transaction instead of immediate payments using cash.

Other high-profile super apps in Southeast Asia include South Korea’s Kakao, Japan’s Line, Vietnam’s Zalo, Singapore’s ride-sharing platform Grab and GoTo in Indonesia. Meanwhile, Dubaibased Careem has expanded beyond its initial ride-hailing business to become a ‘super app’ that includes food delivery, grocery shopping, cleaning, shipping and bike rentals.

From a data ownership perspective, Ansari highlighted that it is challenging for incumbent banks to start their super banking apps. Ansari imagined RAKBANK creating a super banking app and a customer that also uses Emirates NBD coming along and plugging their account into a RAKBANK account and then collecting data, a move that will be unlikely.

The rise of open banking around the world is enabling super-apps to use financial data from multiple sources

to target customers’ needs and deliver financial products. Open banking requires a robust, agile, and scalable IT architecture to enable API integrations with multiple entities. Its implementation promises to create a new data-sharing infrastructure, which will form the basis of a much richer range of services and products across the whole of financial services.

The emergence of fintech, combined with economic shifts and regulatory impacts, has changed the game for all financial services providers. The milliondollar question is what is holding banks back from leading the innovation race?

Traditional financial institutions say the major challenge they’re facing is that fintechs often don’t have to meet the same regulatory and compliance requirements that they do. This allows fintechs to move more nimbly into some fields of business. mea-finance.com

47

BANKING TECHNOLOGY

Winning the Customer Engagement Game Sanat Rao Chief Business Officer, Global Head at Infosys Finacle contends that banks still have a long way to go in developing customer engagement and are even letting opportunities slip, allowing others to seize the advantage

I

t is accepted that customer engagement produces better outcomes, in terms of customer ex p e r i e n c e , s a l e s , reve n u e , profitability and other metrics. To put a number to it, according to a Gallup study, better engagement increases wallet share of companies by 55 percent and 23 percent better performance than competitors. A PWC report states that positive customer experiences are a key driver for purchasing decision for 75% of banking consumers.

Unfortunately, research also shows that financial institutions are not engaging with customers as well as they should.

Our recent survey on maximising digital banking engagement, conducted jointly with Qorus found that only 14 percent of banks are successfully engaging customers at scale by proactively offering advice and recommendations; a scant 13 percent say they have fully deployed initiatives empowering employees with real-time insights to improve customer relationships. What are the reasons behind this? The same study hints at the answer.

Channels have not transformed enough But first, some background. The banking

48

Sanat Rao, Chief Business Officer, Global Head, Infosys Finacle

customer engagement journey is going through two waves in parallel. The first wave is seeing routine transactions – bill payment, statement request, even account opening – shift from assisted to selfservice channels. On average, progressive financial institutions conduct 95 percent of their basic transactions, and 30-70 percent of new customer onboarding,

Banking and Finance news in the MEA market

on self-service digital channels. These banks prepared for this by making huge investments in digital channels and migrating the entire customer lifecycle, from onboarding to upselling, to those channels before anyone else.

The second wave is driving bank transactions out of the bank network, and into the third-party channels of the various participants in the financial ecosystem. It is expected that 50 percent of transactions will move out within the next few years. The exponential growth of India’s UPI-based (open) payments lends credence to this prediction. In September 2022 alone, the transactions numbered 4.5 billion, with an e-commerce giant (Walmart’s PhonePe) and Big Tech (Google Pay) taking over 80 percent share. This is despite 60+ UPI apps from the incumbents, challengers, and neo banks.

Coming back to the study, the findings show that the surveyed banks have barely managed to come to terms with the changes of the first wave. When asked to rate their organisation’s digital transformation maturity across various channels – a reasonable proxy for customer engagement – respondents indicated that they had made some progress on contemporary channels such as online and mobile banking (62 percent said it was successfully deployed at scale), and traditional channels such as branch banking (53 percent). But in the case of emerging channels like open banking/ embedded finance, the results were discouraging, in single digits. This means that while banks may be “managing” wave one, they are clearly unprepared for wave two, and consequently, engaging customers on upcoming and future channels.

Analytics has barely got going Analytical prowess is a key factor in customer engagement. For this reason, the survey asked respondents how far they used descriptive, diagnostic, predictive and prescriptive insights to engage with customers. Once again, the results were underwhelming, even in the case of descriptive analytics – the first stage in a linear evolution that is followed, in that order, by diagnostic, predictive and finally, prescriptive analytics – the proportion of banks who claimed they were very successful was only 5 percent. So, when it comes to leveraging insights from data and analytics to help customers spend, borrow, save or invest better, it seems that banks are at the earliest stage of the (typically long and multi-stage) customer engagement journey.

Engagement services are grossly underutilised How well a bank exploits various engagement services, such as personal

integration with accounting or other third-party applications (13 percent), and personalised relationship-based pricing (10 percent) were the only other services to record double-digit results. Banks have every reason to be concerned because in an undifferentiated products and services market, engagement or engagement-led selling is their only way to stand out.

BANKS HAVE EVERY REASON TO BE CONCERNED BECAUSE IN AN UNDIFFERENTIATED PRODUCTS AND SERVICES MARKET, ENGAGEMENT OR ENGAGEMENT-LED SELLING IS THEIR ONLY WAY TO STAND OUT financial management (PFM) tools or relationship-based pricing, is another key driver of customer engagement. Here too, the performance of the surveyed banks was disappointing. PFM or budgeting tools was the only service where they reported moderate results, with 20 percent of respondents agreeing it had been successfully deployed at scale. Account aggregation (17 percent),

The fourth element in engagement, one that the study does not cover, is unique products. New-age players have led the way in engaging customers with innovative products such as Buy Now Pay Later and Smart Deposits. In contrast, incumbents have let the opportunity slip, allowing fintech companies, neo banks and ecommerce platforms to seize the advantage.

How to achieve Golden Engagement Given the importance of engagement in every area – from customer retention to differentiation –banks need to quickly close the gap to the leaders.

However, customer engagement is a long, systematic journey with no shortcuts. Based on our experience, we have devised a three-tier framework called the “Golden Engagement Circle” which can help banks navigate this journey to strengthen engagement across all dimensions.

In brief, the Golden Engagement Circle is a holistic model of customer engagement encompassing the different layers of organisational maturity. The model envisages putting people, processes and technology at the centre to improve banks’ ability to sell, onboard, converse and serve. Seamless integration across channels and platforms further enhances engagement. Done right, with each interaction the bank will help drive financial well-being and empower customers to save, pay, borrow, insure and invest better.

We hope you will find the survey results and the Golden Engagement Circle framework useful to benchmark your organisation’s progress versus peers and take corrective measures where necessary. mea-finance.com

49

WEALTH AND INVESTMENT SUMMIT 2022

Heralding the New Global Wealth and Investment Hub Debating an expansive range of topics and issues focused on the growth of wealth and investment services in the region, The MEA Finance Wealth & Investment Summit and Awards, held at the Park Hyatt Hotel, Dubai UAE on the 26th September 2022, welcomed some of the region’s leading personalities to this enthralling and lively series of discussions

50

Banking and Finance news in the MEA market

T

he Middle East, one of the world’s hotbeds of wealth creation, has seen an acceleration in trends relating to succession planning, alternate investment vehicles, wealth preservation, digitisation in wealth management and growing interest in sustainable investing.

The pandemic created some exceptional challenges for all industries and in wealth management and investment, it is driving pre-existing trends as wealth managers are changing the way they deliver advice and serve clients. The expansion of wealth globally coupled with the changes in

demographics, innovative technologies and environment and social behaviours is creating new customer segments.

Bain and Company projected in July that the wealth management industry, which combines asset management with financial planning and advice, will expand by 67% from $137 trillion in assets under management (AUM) in 2021 to nearly $230 trillion globally by 2030.

Growth is being driven by an increase in do-it-yourself (DIY) investors who are seeking assistance in turbulent markets, as wealth management is set to outpace asset management by an average of 2% every year until 2030.

MEA Finance hosted its Wealth Management Summit & Awards 2022 on 27 September in Dubai and the exclusive annual forum attracted leading wealth managers and industry experts who discussed the new trends, opportunities and challenges facing the private banking and wealth management sectors in the region.

Wealth managers are being confronted with the task of balancing the traditional approach to risk management with the need to respond quickly to the global pandemic that has created massive changes to their operating environment.

As emerging segments grow, an increasing number of wealthy individuals consider environmental, social and governance (ESG) to be an important factor in investment decisions. To date, wealth managers’ primary focus has been developing and launching ESG products to satisfy the burgeoning demand for sustainable investments.

Family offices are an integral part of a high-end subset of wealth management business in the Middle East. Over the years, they have become increasingly important to the region’s entire financial services industry, not just because of the business potential inherent in their massive AUM, but as evidence of the region’s overall wealth management capabilities.

The mounting hopes of post-pandemic recovery in wealth management signal an

imperative to prepare for the changes in technology, consumer needs and society that will shape the future of the wealth management ecosystem.

Succession & estate planning Moderated by MEA Finance’s Nabilah Annuar, the panel on Developments in Middle Eastern Succession and Estate Planning highlighted how foundations, trusts or SPV mortgages are effective succession planning tools in the region.

The largest intergenerational transfer of wealth is taking place among the world’s wealthiest families with $8.6

individuals (HNWIs) in the Middle East, almost 90% think that their family business is set up for an efficient wealth transfer to the next generation but only 24% have a full estate plan in place.

Damien Morgan, Senior Wealth Planner, Private Banking at HSBC UAE, said that wealth transition and the incorporation of family governance are among the catalyst of change when it comes to wealth and succession planning in the region.

“There’s a high concentration of private wealth in the Middle East as well as large family businesses that are very important to local and

THERE’S A HIGH CONCENTRATION OF PRIVATE WEALTH IN THE MIDDLE EAST AS WELL AS LARGE FAMILY BUSINESSES THAT ARE VERY IMPORTANT TO LOCAL AND REGIONAL ECONOMIES WHICH HAD CREATED A LOT OF PENT-UP DEMAND FOR MORE INTERNATIONAL STRUCTURES SUCH AS TRUSTS AND FOUNDATIONS – Damien Morgan, Senior Wealth Planner, Private Banking at HSBC UAE

trillion of global high net-worth wealth (HNW) expected to be transferred from one generation to another between now and 2029. Succession planning continues to be a challenge for wealthier families globally as research shows that not all are prepared for a smooth hand-over.

Navigating estate and succession planning is particularly problematic in the Middle East where large families are more common and many of these relatively younger businesses face succession issues for the first time.

Lombard Odier said in June that its Middle East Investment Survey that out of 300 established high-net-worth

regional economies which had created a lot of pent-up demand for more international structures such as trusts and foundations,” said Morgan. The introduction of the Trust and Foundations Law by the UAE in 2017 created an opportunity for local practitioners to provide “local structures for local assets,” he added.

The succession problems have been around for the last five years and are expected to remain a challenge in the coming decade. There has been an increase in the adoption of policies and procedures for succession by Middle East wealthier families, but some of the policies do not necessarily include key mea-finance.com

51

WEALTH AND INVESTMENT SUMMIT 2022

documents such as family constitutions or conflict resolution mechanisms.

Tim Searle, Founder and Chairman at Globaleye weighed in saying that historically there’s been a dearth of talent in the UAE and HNW clients have to go abroad, either Switzerland, London or further afield to get the sort of succession and advisory they require.

“The complexity of these issues is getting greater and greater, not just because of succession problems, but of course, the regulatory environment in the Middle East and new tax regimes,” Searle said adding that there are notable changes as both the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM) move to attract, not only the money that’s coming to the Gulf state but the necessary advisory that comes with it.

Leevyn Isabel Private Clients Director, O corian concurred with D amien Morgan while adding that motivation is also contributing to a change in the succession planning landscape in the Middle East. “It used to be only about estate planning, but now it’s about protecting assets and tax planning.

We’ll have corporate tax next year and that will be an additional element for wealth managers to factor in when they do estate and succession planning,” Isabel added.

G i ve n t h e o u ts i ze d e c o n o m i c contribution of family-run businesses in the Middle East, strong family governance is critical for the region’s continued economic success. From a global perspective, Samir Raslan, Vice Chairman for Origination Citi Private Bank- EMEA said that as Middle Eastern families are investing globally, they’re exposing themselves to taxation—which a lot of people from this region are not familiar with or they don’t expect it.

Therefore, “the first discussion that we have with clients is to decide what is the best structure for them”—local or global.

Asked about the new solutions that are changing succession planning in the Middle East, Rahul Chopra, Head

52

of Dubai, Senior Executive Officer & Managing Director at Charles Monat Associates noted that there has been a huge transformation in clients’ thought processes adding, “It’s not about growing wealth, but protecting wealth and think about the next generation.”

Chopra said that the regulatory landscape in developed countries has changed over the years and the shift is also happening in the UAE as well. Life insurance is one of the simplest and most inexpensive solutions to pass on wealth and it can be a good way to provide a single pot of liquidity to beneficiaries after the death of a family patriarch.

“Wealth managers are recognising the importance of liquidity planning that is attached to a strong succession and estate planning proposition. Hence, they use life insurance as one of the tools to be attached as an integral part of the overall succession planning proposition,” he said.

Generational wealth transfers are a relatively new phenomenon in much of the Middle East and understanding the interests, perspectives and motivations

Banking and Finance news in the MEA market

of the next generation can strengthen a succession planning strategy. Raslan highlighted that the founders of family wealth in the Middle East tend to find it difficult for them to trust and give up their assets to trust funds, but new generations are open to the idea of establishing trust companies.

Morgan weighed in saying younger generations have seen how family disputes have been very disruptive to businesses and they’re keen to push sort of a governance agenda. “Younger generations have a vested interest to see business legacy lasting into the future and having a comprehensive family governance tends helps to prevent disputes in the future,” he said.

Over the years, life insurance has emerged as a new asset class for planning your succession. It is one of the simplest and most inexpensive solutions to transfer wealth and it can be leveraged to provide a single pot of liquidity to beneficiaries in the event of the founder’s death. Chopra said that more clients in the Middle East are considering plugging life insurance into their overall structure in

succession planning. “Life insurance can be used to create equalisation between the estate, members of the family or the business partners,” he said.

Isabel gave a presentation on succession solutions in the UAE. He underscored the country’s milestone in putting in place tools to govern wealth transfer including trusts and foundations in the DIFC, ADGM and the Ras Al Khaimah International Corporate Centre. To ensure that wealth is preserved and that there is a smooth transition between generations, establishing family protocols to regulate succession and conflict resolution is critical.

Evolving ESG & philanthropy The increasingly growing demand for sustainable investing from investors is driving some private banks and wealth management firms to develop sustainable investing strategies as public attention toward the global sustainability agenda is also rising.

Today, millennial investors and affluent youths are focused on investment solutions that support the UN Sustainable Development Goals, investments that meet ESG values and climate- and sustainability-focused initiatives such as low-carbon investments.

Meanwhile, the rapid creation of new wealth, priorities on sustainability and a greater awareness of how philanthropy can create a positive impact postpandemic are reinventing traditional approaches to giving.

The discussion on Wealth and Society - Evolving ESG & Philanthropy was moderated by Dr Bhaskar Dasgupta, Independent Board Director, Senior Advisor - Sheikh Hamdan Bin Ahmad Al Makhtoum Private Office. Dasgupta noted that it’s interesting to see how wealthy families and family-owned family businesses in the Middle East are factoring in both the ESG and philanthropic practices in their portfolios.

Asked about the latest market trends in wealth and society, An Kelles, Director at Jersey Finance in GCC said that over

the last five years it used to be the ‘S’, the social work, then the E and lately the G is also coming up. “We’ve seen a generational shift as more and more nextgeneration clients think about the impact of their investments. They’re more handson and I can say the new generation is more ESG minded in their philanthropy,” Kelles said.

From a religious perspective, Christofer Langner, the Head of Investment Strategy Private Banking Group at First Abu Dhabi Bank highlighted that because of the religious background of the Middle East region, philanthropy plays a big part while the US is the reigning champion of philanthropy because of the tax incentive associated with it.

changed to 95%,” Hasan said adding that HNWIs and families in the region are considering harnessing their wealth using the ESG, though the topic is still vaguely understood by many people.

Mario Al-Jebouri, the Head of the Dubai Representative Office at Banque Cantonale de Genève, said that the factors that tend to drive individuals to philanthropic activities are different from the ones in the corporate world.

He also noted that HNWIs in different geographic locations such as the US, Asia and Europe tend to donate to different causes including healthcare, education and arts and culture.

“This is definitely indicative of the older generation in terms of their philanthropic

WEALTHY FAMILIES WHO DO PHILANTHROPY IN THE MIDDLE EAST DO IT BECAUSE OF THEIR RELIGIOUS BELIEFS. KAREEM GENEROSITY IS A BIG PART OF ISLAMIC BELIEF. AND IT’S VERY PRESENT IN HOW HNWIS DISTRIBUTE THEIR WEALTH, SHARE AND INVEST IN PHILANTHROPIC ENDEAVOURS – Christofer Langner, the Head of Investment Strategy, Private Banking Group at First Abu Dhabi Bank

“Families who do philanthropy in the Middle East do it because of their religious beliefs. Kareem generosity is a big part of Islamic belief. And it’s very present in how HNWIs distribute their wealth, share and invest in philanthropic endeavours,” said Langner.

Faisal Hasan (CFA), CIO & Head of Asset Management at Al Mal Capital, UAE said that ESG and philanthropy ventures have become more mainstream and institutionalised. “We are seeing kind of a social disruption, where previously, 5% of wealthy families intended to give to philanthropy annually, but that has now

investments or donations, purely because they believe, obviously philanthropy is doing good, but now ESG is philanthropy doing good, plus making profit,” said Al-Jebouri.

However, the new generation of HNWIs, millennials and Gen Z, are focusing on impactful philanthropical donations, which not only concern them as individuals but encompass issues of global concern such as the environment, climate change, investing in innovative technologies and new resources. Al-Jebouri said that the new generation typically tends to invest directly in companies, rather than making mea-finance.com

53

WEALTH AND INVESTMENT SUMMIT 2022

to something which has a social cause or sustainability.

Giving the example of Patagonia, Langner said that the company’s founder Yvon Chouinard and his family relinquished ownership of the 49-yearold firm and transferred it to trusts and nonprofit organisations in September while pledging to redirect future profits toward fighting climate change. The World Economic Forum (WEF) said in January that HNWIs and wealthy families are uniquely positioned to leverage private capital to drive growth in the ESG sector by supporting long-term societal goals and ambitions.

Wealthy individuals and family offices 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. donations to foundations and various other investment vehicles—they want to see the impact their investments or donations are making in society, country or at a global scale.

From a Southeast Asian perspective, Vivek Gehani, the Head of Global South Asia & Middle East at the Bank of Singapore highlighted that there is a big shift between the new generation and the old generation saying, “the new generation is very focused on environment and sustainability.”

“They’re, from young age onwards, focused on the impact of their donations and investments on the environment. And as the millennials and the Gen Z’s are inheriting wealth from older generations, t h ey ’re m o re fo c u s e d o n E S G,” said Gehani.

Meanwhile, on the older generation the G side of ESG, governance, is starting to become very important with familyowned companies that are well governed and have high ESG scores tending to outperform, driven by lower drawdowns and less systemic risks.

The moderator acknowledged that there was consensus among the panellists that there is a substantial shift and

54

increase in the investments that are being made. Dasgupta said that new structures are starting to come up and a lot of impact investment and venture capital funds are coming up that have a thesis that the only thing that they are going to invest in would be impacted investments.

“Globally, you’re starting to see people giving away their family businesses to be run by a trust. And their perspective is not so much as profit maximisation or stakeholder wealth generation, but also consider ESG as a major factor,” he added.

From a philanthropic perspective, Gehani said that several different options are emerging including clients who establish businesses and invest in businesses where all profits are channelled towards ESG initiatives. Meanwhile, other wealthy families in the Middle East are establishing discretionary mandate that invests primarily in ESG initiatives that are backed by the MSCI ratings.

Al-Jebouri noted that several HNWIs are investing directly into impact investment opportunities saying, “the separation between philanthropy and profit no longer exists.” Drawing on ESG and philanthropy’s emotional connect, wealthy families are investing or giving

Banking and Finance news in the MEA market

Safe-haven assets

The Safe Haven Investments - Near & Mid-term Opportunities for Portfolio Enhancement panel was once again moderated by Dr Bhaskar Dasgupta who chronicled the turbulent economic conditions of the last 24 months including the crypto crash, runway inflation and continued interest rate hikes by global central banks in lockstep with the US Federal Reserve (Fed).

Anita Gupta, the Head of Equity Strategy, CIO Office at Emirates NBD said that there has been an increased sell-off of all asset classes in 2022. “A safe haven is an investment that’s going to give you returns through any economic cycle,” Gupta said while posing, “When you look at investments today, you have regions, you have sectors, you have asset classes, you have currencies, you have jurisdictions. What is going to perform in this high inflationary environment?

Gupta said what is super interesting this year is that there is not one single investment or asset class that has escaped the higher rate regime while highlighting that gold has not gone up though the commodity is a safe-haven asset.

The global economy has had three busts in the last 25 years—the dotcom bust in 2000, the 2008 financial crisis, the economic impact of the pandemic in the last two years and fixed income selling off in 2022.

Deepak Mehra, Head of Investments at Commercial Bank of Dubai, highlighted that there is no safe haven adding that the term could actually be a misnomer or probably doesn’t exist. “Now what we all know in wealth management 101 is that your safe-haven asset is something that is aligned with your risk profile,” he said.

Mehra concurred with Gupta’s explanation that if an investor had a diversified portfolio that is aligned with their risk profile and risk appetite over the last 25 years, they could sit through it and still make very good returns.

Building on Mehra, Dr. Niels Zilkens, Lead Market Head Arabian Gulf & NRI at UBS Global Wealth Management said, “safe haven investments is all about preservation of wealth for us as an advisor to our clients.”

“At the end of the day, instead of just trying the right asset class such as gold and real estate, we tried to find a format or a framework for our clients to avoid behavioural mistakes,” Zilkens said adding that there are a lot of losses in portfolios based on over leveraging this year.

George Hojeige, the Chief Executive Officer at Virtuzone also concurred with Mehra that there is no such thing as a safe haven investment. Asked about the shift in investment proportion in different asset classes such as real estate, gold and corporate bonds, Hojeige said that in periods of unstable economic conditions investors tend to shy away from traditional investments such as stock market and real estate, but other emerging investment trends include citizenship by investment.

From an inflationary perspective, Zilkens said that inflation is likely here to stay for a couple of months while noting that several investors have been surprised about how effective and how strong the Fed is fighting inflation. “We believe that the Fed will be

successful in fighting inflation over the next couple of months and it will come down in Q1 2023 which will help equity markets. Until then, equity markets will most likely remain volatile,” he said.

Mehra agreed with Zilkens that consumer price inflation (CPI) needs more time to cool off because it is linked to housing—which is around 34% of the core CPI. Overall, inflation has peaked

side- and supply chain constraints-driven inflations. She also noted that inflation is being driven by different factors across regions e.g food inflation in Sri Lanka, India and some parts of Africa as well as Turkey, which has a 70% inflation rate.

However, for an investor in the UAE, the US or the UK a big mitigator of inflation is income. “Our advice to clients in the current environment is that do not be

A SAFE HAVEN IS AN INVESTMENT THAT’S GOING TO GIVE YOU RETURNS THROUGH ANY ECONOMIC CYCLE – Anita Gupta, the Head of Equity Strategy, CIO Office at Emirates NBD

and is being fuelled in part by a broadbased economic slowdown, a plunge in manufacturing and slowing retail sales.

Mehra said that his advice to clients is for them to hold on to their equity portfolios, adding, “more visibility should be there in the next three to six months.”

Gupta weighed in saying her approach to inflation is from two angles—the demand

over-leveraged. Higher rates are there to stay for some time,” Gupta said. “Stay invested, whether it is your fixed income portfolio or equity portfolio.”

MENA family offices Moderated by Ismael Hajjar, Partner, Entrepreneurial Private Business, Family Office Services at PwC Middle East, the mea-finance.com

55

WEALTH AND INVESTMENT SUMMIT 2022

Growth of Family Office in the Middle East discussed the growth of family offices in the region.

The growth is being driven in part by the need for family enterprise structures that have a corporate setup to manage wealth, the growth in the number of wealthier families relocating to the UAE and the transfer of vast wealth between generations.

Family office businesses in the Middle East make up a sizeable proportion of the region’s non-oil economy and in these challenging times, the need for adaptability and action to ensure that potential isn’t wasted, and the future is secured has never been paramount.

Hajjar said that it doesn’t come as a surprise that more family offices are being established in the Middle East to serve the region’s wealthy families or families from the rest of the world who are relocating to the UAE. He asked the panellists what is a typical family office client and how do you support family offices.

Shadi AlNasr, the Principal of Global Family Office at the Bank of New York Mellon noted that his bank’s typical family office clients are not family offices. “If a

56

THERE IS A MASSIVE TRANSFER OF GENERATIONAL WEALTH GOING ON AS BABY BOOMERS ARE SLOWLY RETIRING AND THE NEW GENERATION IS COMING THROUGH – Arjun Mittal, Founder and CIO, Abbey Road Investments Group

family office client is acting or willing to behave like an institution that’s when my role kicks in to assist them to harness the same institutional infrastructure and the global custody platform used by sovereign funds, central banks and governments to connect them to the financial ecosystem,” AlNasr said.

Farzad Billimoria, Head of Private Banking at HSBC UAE agreed with AlNasr

Banking and Finance news in the MEA market

that there is no typical family office adding, “each family office for us is like a snowflake falling, each one is different than the other. Each one has a typical need, and a need which is very different to the other family offices.”

Billimoria noted that there are different types of family offices including the embedded family office, the multifamily office, the single-family office and the virtual family office—all these are different in their approach and needs.

Meanwhile, Biju Thomas Senior Director, Private Banking at Mashreq said that the commercial bank has been engaged with its family business for quite some time, adding “it’s only natural that we see family office business as an extension.” Thomas said that there has been a lot of movement in the industry as there is an increase in the number of global family offices that are relocating to the UAE. Echoing Billimoria’s words, Arjun Mittal, the Founder of Abbey Road Investment Group said that there is no typical family office, every family has its own needs and its requirements. “There is a massive transfer of generational wealth going on as baby boomers are slowly retiring and the new generation is coming through,” Mittal said while highlighting that the multifamily office is becoming an important vehicle to implement the generational change and succession plan.

Hajjar debunked popular misconceptions about family offices saying they do not only serve to manage investments but also to contribute to a successful transfer of generational wealth. There has been an increase in family offices being set up by the Middle East’s merchant and royal families.

Billimoria attributed the increase in family offices to the explosion of wealth that is being witnessed in the region. “With the explosion of wealth, the needs for those clients are evolving and changing firstly the investment needs, succession requirements and personal desires,” he added.

On how to set up a new family office, AlNasr said that as Mittal and Billimoria have highlighted that there is no typical family office, “there’s no typical process but the ideal way of structuring a family office should involve a lot of planning.”

Asked whether it is important to professionalise family offices, Thomas said that for generations the Middle East and Asia have not been great in terms of transparency, disclosure and governance but that changed in the last ten years when financial institutions started attracting billions of dollars in misgovernance disclosures fines. From a family office perspective, Thomas said it is important that family offices have proper governance and accounting standards in place if they plan to invest globally.

Hajjar said that one other way to achieve more disclosure or incentivize family businesses is through public listings on local stock markets. Given the sheer size of Middle East family offices, whose size is on average double that of their UK and US counterparts, their businesses need to grow by double digits for future generations to maintain the wealth and the same standard of living, which pose a colossal challenge for them.

Investment alternatives A survey by US consultancy firm Cerulli Associates in July showed that more financial advisors looking to further diversify their clients are turning to alternative investments after battling downturns in the stock and bond markets over the past two years.

A l t e r n a t i v e i n v e s t m e n t s a re supplemental strategies to traditional long-only positions in stocks, bonds and cash and include investments in hedge funds, private capital, natural resources, real estate and infrastructure.

The investment alternatives panel was moderated by Christofer Langner, the Head of Investment Strategy, Private Banking Group at First Abu Dhabi Bank.

The panel explored whether alternative investment options such as in the

metaverse, non-fungible tokens (NFTs), tokenisation and crypto assets can gain prominence as the global economy is teetering on the brink of a recession.

Langner opened the panel by noting that the gamut that banks have in the UAE is unfortunately and it’s during times like

is going through significant changes.

Al-Gharabally said he is less worried about how the world would change over the next 10 years but more worried about the changes over the next six months.

Mubashar Ayoob, the Head of Wealth Management – Gulf at Deutsche Bank,

WITH THE EXPLOSION OF WEALTH, THE NEEDS FOR THOSE CLIENTS ARE EVOLVING AND CHANGING FIRSTLY THE INVESTMENT NEEDS, SUCCESSION REQUIREMENTS AND PERSONAL DESIRES – Farzad Billimoria, the Head of Private Banking at HSBC UAE

these that “we remember how important it is to have these alternative investments.”

He posed a question to the panellists, “how do you see alternative investments within this world that we’re living of big change?”

Omar Al-Gharabally, the Chief Investment Officer at Greenstone Equity Partners said that the global economy

noted that the last 40 years, the period from 1980 to 2020, is probably the best years that investors have experienced in the history of financial markets.

However, high inflation, interest rates, the war in Europe, the energy crisis and climate change will make the investment landscape more challenging going forward. mea-finance.com

57

WEALTH AND INVESTMENT SUMMIT 2022

On a positive note, Haitham Juma, Unit Head of Investment Solutions at the National Bank of Fujairah agreed that this year has been quite challenging for most asset classes. “However, though we’re talking about high inflation and soaring yields this shouldn’t be the main driver or the main component of us building an investment strategy,” he said.

Hazem Fouad, the Head of Investments at Mashreq said that looking back over the past 100 years, a 60- or 40-year-old portfolio is in the second worst year and alternative investments will play an even more important role as we go forward.

The low correlation which alternative investments bring to traditional assets and the way they enhance portfolio returns due to the risk and return profile boost portfolio diversification, said Fouad.

The recent surge in alternative investments is seen as the beginning of a new wave of growth. “The next six months probably are significant from a short to medium-term perspective. However, these difficult times lead investors to consider new alternatives investments and technology will play a bigger role in

58

this space,” Devesh Mamtani, the Chief Market Strategist at Century Financial said. European equities are at their lowest in comparison to their US counterparts and a lot has happened in terms of the global economy and this will drive a surge in alternate investments, said Mamtani.

Mittal agreed with other panellists, but he noted that the world is in a different demographic profile and potentially very different economic profile from 100 years ago. “It’s a rapidly changing dynamic environment and I don’t think anyone has

the answers. But if I can try to be positive, the global economy is worth around $100 trillion to cater to a population of 7.5 billion people. There’s got to be opportunities,” added Mittal.

Alternative investments typically have higher fees than traditional investments and capitalise on markets in turmoil.

However, investors should look out for potential risks before investing including loss of a substantial portion of the investment, lack of liquidity, volatility of returns as well as restrictions on

THE NEXT SIX MONTHS PROBABLY ARE SIGNIFICANT FROM A SHORT TO MEDIUM-TERM PERSPECTIVE. HOWEVER, THESE DIFFICULT TIMES LEAD INVESTORS TO CONSIDER NEW ALTERNATIVE INVESTMENTS AND TECHNOLOGY WILL PLAY A BIGGER ROLE IN THIS SPACE – Devesh Mamtani, the Chief Market Strategist at Century Financial

Banking and Finance news in the MEA market

transferring interests and potential lack of diversification—which results in even higher risk due to concentration of trading authority when a single advisor is utilised.

Brett King, Futurist, Bestselling Author and Founder of Moven gave a presentation titled The Future of Smart Economies, AI, Climate and Investment.

King highlighted the seismic changes that are going to shape the future of the wealth management and investment sector over the next 20 to 30 years ranging from changes in regulations to technological innovations and clients’ expectations and demands.

Digital transformation The global wealth management industry is evolving, and the Middle East market is no exception. The outbreak of the pandemic accelerated pre-existing trends in wealth management including the digitalisation of the sector which changed the way wealth managers deliver advice and serve their clients.

“The client experience has been the prompt for the digital transformation j o u r n ey of we a l t h m a n a g e m e nt companies,” said Deloitte.

The discussion on the Digitisation of Wealth Management was anchored by Brett King. The panel explored whether new technological innovations in the financial service sector can deliver tailored services and advisory skills that HNWIs receive from premium finance services providers.

The growth of “automated wealth m a n a g e rs” o r Ro b o - a d v i s o rs i s revolutionising wealth management with unprecedented force. Alex Gemici, the Chief Executive Officer of Greenstone Equity Partners said that digitalisation is creating tremendous opportunities to disrupt the banking sector throughout the entire chain.

Neale Croutear-Foy, the Chief Technology Officer at Securrency Capital weighed in saying wealth management is being disrupted by digitalisation in several different ways than other divisions of the financial services industry. “In terms

of how the technology is being utilised in the market, it’s interesting how Roboadvisors are coming along in the middle segment of the marketplace and one of the things we can see from these types of organisations is that they’re becoming quite niche and focused in terms of how to appeal to a specific client base,” Croutear-Foy said.

In terms of attracting the right talent and how it matches an institution’s digital capabilities, Ayesha Abbas, the Head of Consumer, Private and Business Banking (CPBB) at Standard Chartered Bank UAE said that despite the UAE being an overbanked market with over 50 banks, the hunt for talent always remains. The emerging talent and the newer generations are quite akin to the digitisation and its importance within the conventional banking space, she added.

From a design and experience perspective, Devid Jegerson, the Head of Customer Experience and Platform Development at the National Bank of Fujairah said the banking sector is approaching the market differently while segmenting the market in different layers to offer different investments in

a way that appeals to our broad-base customer segments.

Abbas said that incumbent banks have moved away from the traditional client segmentation of asset under management (AUM) and value to sophistication and preference adding, “if I am a millennial and I prefer to do it myself, then the client journey is built in a way that it’s going to guide me in that direction.”

Once a laggard in the adoption of technology, wealth management is accelerating digitalisation, deploying artificial intelligence (AI), Big Data, robotics and other innovative technologies to e n h a n c e c l i e n t ’s ex p e r i e n c e and trust—which is central to the industry’s relationships.

Bankers and technology professionals who attended the ME A Finance wealth summit agreed that the wealth management sector in the Middle East is expanding and for wealth managers to generate outsized growth in the future, they need to create a more approachable va l u e p ro p o s i t i o n fo r yo u n g e r investors with fewer liquid assets than older generations. mea-finance.com

59

Organised by:

www.mea-finance.com

Fast, easy and transparent from the word go.

There’s a new standard in low-value international payments.

swift.com/go

W

elcome to this issue’s coverage of our recent MEA Finance Wealth & Investment Awards, held and proudly presented on the 27th of September this year, at the Park Hyatt Hotel, Dubai where we recognised achievement, innovation, service and excellence in the wealth and investment markets in the Middle East.

My warmest congratulations to all the winners and sincere thanks to all of you who actively supported and participated in this year’s awards and summit events.

On this occasion we hosted the brightest and the best in the sector and fittingly celebrated the hard work and innovative services provided by companies and individuals in the increasingly competitive regional wealth management and investment markets.

Awards for outstanding performance are an important constituent part of the industry ecosystem, serving not only to provide recognition for admirable achievement and smart innovations, but in so doing, also helping move our services and skills onward to higher levels, improve client experiences and build rightful prestige for the region we inhabit.

We awarded winners across 28 categories that highlight some of the best in what makes the markets of our region a growingly important centre for the fostering and protection of wealth and investment.

At MEA Finance Magazine, we will continue to award outstanding institutions and companies that lead the industry forward.

Congratulations again on all your accomplishments; we are keen to see what you will bring in the business in the coming year.

Nap Estampador Group Commercial Director, MEA Finance

mea-finance.com

63

WEALTH & INVESTMENT AWARDS 2022

T

he MEA Finance Wealth & Investment Awards 202 2 were presented on the 27th of September at the Park Hyatt Hotel in Dubai, UAE. The ceremony h o n o u re d p r i va te b a n ks , we a l t h managers and advisors, family office service providers, asset managers and technology providers in the Middle East and Africa for their achievement and innovation in the support of the investment goals of private wealth investors.

The glaringly opposing circumstances of current times, with on the one hand, noticeable sectoral growth in our region set against wider, market troubling global

64

uncertainties, presents unique challenges to the businesses and executives working in the GCC, and the wider Middle East’s wealth and investments sector. They rightly deserve visible acknowledgement for their successful efforts and MEA Finance gladly recognises the dedication, imagination and sheer hard work of these institutions in the region. Their deployment of digital investment tools to deliver sustainable growth and providing sound investment guidance to HNWIs, is a lasting testament to their skills and commitment.

Hundreds of entries were critically evaluated by a panel of judges comprised

Banking and Finance news in the MEA market

of industry experts and commentators.

Twenty-nine category winners were chosen after considerable evaluation of their research and knowledge of the market, consideration of the full range of the needs of their clients and customers, and an assessment of all relevant developments and achievements over the previous year.

The twenty-nine awards honouring the winners of the awards were presented in two sections, the first for technology providers and the second for banks and financial institutions. Maximillian Th u r n e r f ro m O C S I nte r n a t i o n a l Finance Ltd, the event Lead Partner,

was on hand to open the awards by presenting the first awards of the evening.

Here follows the full list of the MEA Finance Wealth & Investment Awards 2022 winners:

TECHNOLOGY INNOVATIONS 1.

Best Wealth and Investment Technology Company – Azentio Software Private Limited

2. Best Wealth & Portfolio Management Software Solution – HedgeSPA Pte. Ltd. 3. Best Digital Innovation and Services in Wealth Management – Mashreq Private Bank 4.

Best Cyber Security Technology – IBM

5. Best Cyber Assurance and Resiliency Capabilities – National Bank of Fujairah 6. Best Investment Risk Analysis and Portfolio Management Solution Provider – WEALTHBRAIN 7.

Best Bancassurance Implementation – Infosys Finacle for Emirates NBD

6. Best Regional Asset Management Firm for HNWI’s – Al Mal Capital

15. Best Wealth Planning and Investment Consultancy Services – BNP Paribas Wealth Management

7.

16. Best Discretionary Portfolio Management (DPM) – First Abu Dhabi Bank (FAB)

Best Fund Provider for ESG Investments – HSBC

8. Best Capital Raising Firm – Greenstone Equity Partners

17. Best Foundation Services – Ocorian

9. Best Fund Provider for Sustainability Related Investments – HSBC

18. Best Brokerage and Investment Management Platform – Saudi Fransi Capital

10. Best Sustainable Finance Initiative – Barclays Private Bank

19. Best Robo Advisory Provider – Commercial Bank of Dubai

11. Best International Real-Estate Investment Firm – Walton International Group Limited

20. Best Family Office Platform Provider – BNY Mellon Wealth Management

3. Best Domestic Private Bank – Emirates NBD

12. Best Real-Estate Investment Firm – Bahrain – GFH Financial Group

4. Best Global Private Bank UAE – Standard Chartered Bank

13. Best real-Estate Investment Firm – Saudi Arabia – Saudi Fransi Capital

21. Most Innovative Bespoke Investment Advisory Firm – Century Private Wealth

5. Best Family Office Service – First Abu Dhabi Bank (FAB)

14. Best Succession Planning Services – M/HQ

FINANCIAL INSTITUTIONS 1.

Best Private Bank – UAE – Mashreq Private Bank

2.

Best Investments Management Firm – GFH Financial Group

22. Best Investment Citizenship and Residency Advisory Firm – Next Generation Equity

mea-finance.com

65

WEALTH & INVESTMENT AWARDS 2022

Best Wealth and Investment Technology Company Azentio Software Private Limited was the recipient of the Best Wealth and Investment Technology Company award in the Middle East. The Wealth and Investment Technology Company award was conferred to Azentio Software in recognition of the company’s MFund Plus Investment Management Suite which offers end-to-end private banking solutions for investment, asset and wealth management.

The end-to-end solution brings together market-leading capabilities for banks and financial institutions by setting new standards in the investment management industry. MFund Plus is used by more than 80 clients with over 10,000 users with multiple profiles including relationship managers, fund managers and customers. It serves more than $500 billion in assets under management.

Azentio counts Oman National Investment Development, HSBC, Itqan Capital and SEDCO Holding among its customers in the Middle East. KWAP, Maybank Group, RHB as well as Public Mutual Berhad, Hong Leong Asset Management, SBI Mutual Fund & Pension Fund and Tata Asset Management are among its clients in Southeast Asia.

Best Digital Innovation and Services in Wealth Management Mashreq Private Bank walked away with the Best Digital Innovation and Services in Wealth Management award. The Dubai-based bank was presented with the award in recognition of its wealth management reporting capabilities that provides clients personalised and interactive format.

Mashreq began its digital transformation journey in 2016. The bank digitised its core systems, created value-accretive digital tools for relationship managers and digitised customer journeys. The digitalisation strategy allows relationship managers to better serve their customers while empowering customers to both transact independently due to digital interventions or access their relationship managers.

The bank also joined forces with the Dubai Financial Markets to develop digital capabilities that enabled its clients to subscribe for initial public offerings with/ without leverage or set up a local equities account at their convenience. Mashreq is the only bank in the UAE that offers end-to-end capabilities in the market.

Best Cyber Security Technology IBM Security was honoured with the Best Cyber Security Technology award in recognition of the company’s Guardium data security solutions, a product that was built to adapt evolving cyberthreat environment. IBM Security Guardium provides complete visibility, protection and compliance throughout the data security lifecycle.

The solution protect data across the hybrid cloud by discovering and classifying data, encrypting and protecting data, monitoring activity across the cloud, automate compliance as well as detecting and responding to threats. IBM believes that the future of security is an integrated platform approach leveraging open standards, artificial intelligence and automation to connect security tools and data across the hybrid cloud with capabilities for seamless integration with managed services.

The company opened a Security Operations Centre in Saudi Arabia in 2020 to offer its regional clients support in responding to cybersecurity incidents and helps them proactively manage emerging threats through real-time analysis and early warning notification of security events.

66

Banking and Finance news in the MEA market

Best Cyber Assurance and Resiliency Capabilities In the cyber assurance and resiliency category, the National Bank of Fujairah (NBF) was conferred with the Best Cyber Assurance and Resiliency Capabilities award in the Middle East region. NBF has built a robust cybersecurity strategy that focuses on three main pillars which include identity protection, data protection and culture.

The banks’ resiliency and assurance platforms incorporate self-learning detection, automated investigation and the capabilities to conduct cyberattack and phishing simulations. The platforms also deploy advanced authentication including biometrics and facial recognition while providing cybersecurity tips to employees and clients as part of a cyber strategy that is aimed at protecting the identity and wider interests of NBF. The UAE-based bank has invested significantly to foster a cybersecurity awareness culture among its employees, partners and customers to equip them to be fully aware and deal with potential cybersecurity threats.

NBF conducts various cyberattack simulations to test the effectiveness of its defences as part of its broader cyber resiliency programme. The bank uses the learnings from these simulations to improve the bank’s cyber resiliency as well as inform and evolve the bank’s cybersecurity strategy.

Best Investment Risk Analysis and Portfolio Management Solution Provider The Best Investment Risk Analysis and Portfolio Management Solution Provider award was given to Wealthbrain in recognition of the platform’s strategic ambitions to empower clients with data-driven analytical insights to assist them in making intelligent investment decisions.

Founded in 2019, Wealthbrain has established itself as a wealthtech company that consolidates financial investments and lifestyle assets on one platform while creating a unified ecosystem for products and services sought after by investment advisors and end-users. Wealthbrain has offices in the UAE and India and the company is expanding its presence in the UK, Singapore, Mauritius, Switzerland and Italy.

Wealthbrain believes wealth managers require an integrated solutions platform that offers investment consolidation, revenue growth and management, performance analytics and reporting, transparency and cost efficiencies to sustain and grow clients’ assets.

Best Bancassurance Implementation - Infosys Finacle for Emirates NBD Payit powered by FAB was established to promote financial inclusion of nonbanking and low-income workers, and has successfully launched initiatives including the Digital Marketplace, Money On Demand, Domestic Help Payment, and Bill Collection. They have gone on to earn much positive recognition for their all-digital services with features such as uncomplicated customer onboarding and easy wallet top-up via credit card or bank transfer.

mea-finance.com

67

Because you promised they will be your priority We keep our promises. So you can keep yours.

Your family is your greatest wealth, and time with them is invaluable. With our diversified portfolio of investments across a range of markets and sectors, we can focus on making the right investment choices that safeguard your family’s future so you can focus on being by their side.

Realize your promise at gfh.com

Best Private Bank UAE Mashreq Private Bank received the Best Private Bank UAE award in the Middle East, in recognition of the bank’s ability to successfully balance traditional values with innovation and provide best-in-class services and products to customers at a time when digital transformation can lead financial institutions to lose sight of all priorities.

The bank’s digital platform allows clients to trade equities, FX and commodities which they can choose from thousands of securities across multiple exchanges.

Customers also have access to a range of technical analysis and charting tools that can empower them to make optimal investment/trading decisions.

Mashreq’s open architecture investment platforms allow clients to keep their investments offshore through Trust Structures out of Bermuda and Guernsey for long-term wealth transfer and estate planning. Customers need a total deposit or investment of more than AED 4 million, a salary of over AED 200,000 or a home loan of AED 10 million to qualify for private banking.

Best Investments Management GFH Financial Group (GFH) was honored with the Best Investments Management award in the Middle East region. The pandemic impacted the region’s investment banks significantly, but GFH’s business model proved robust and the investment bank fared better compared to its rivals.

Over the past two years, GFH’s global investment activities continued to expand with the Group successfully closing several strategic acquisitions that are well poised to withstand future economic downturns and volatility. The investment bank plans to expand its presence and investment capabilities in North America, Europe and Asia through joint ventures with global asset managers and acquisitions of GP stakes in these markets.

GFH’s growing technology portfolio, which includes investments in Snowflake, DoorDash and UiPath, comprises buyouts and pre-IPO stage deals in technology verticals that are at the forefront of the global digital revolution. The bank’s treasury and capital markets activities generated revenues of $100.5 million at height of the pandemic, comprising 29% of total revenues and 51% growth y-o-y.

Best Domestic Private Bank Emirates NBD was the recipient of the Best Domestic Private Bank award, which was conferred to the bank in recognition of the bank’s success across its full range of services and products including private advisory, real estate solutions and offshore booking and advisory teams certified in ESG. The private banking’s bespoke investment solutions are devised for clients with specific requirements. It offers high-net-worth and ultra-high-net-worth individuals, families and select institutions investment advisory and wealth management solutions through its network of qualified relationship managers and certified investment advisors across the UAE, Saudi Arabia, the UK and Singapore.

Emirates NBD Private Bank offers an open architecture funds platform across equities, fixed income and alternative asset classes that enables clients to create well-diversified, global investment portfolios suited to their individual needs and risk/return requirements. The bank has also expanded its environmental, social and governance charter in line with the United Nations’ SDGs and the UAE’s vision to be a sustainable knowledge-based economy.

mea-finance.com

69

WEALTH & INVESTMENT AWARDS 2022

Best Global Private Bank UAE - Standard Chartered Bank Standard Chartered Bank received the Best Global Private Bank UAE in recognition of its expansive global footprint which allows the bank to combine global, regional and local knowledge to best support our clients.

The bank’s global private banking presence empowers its clients in the UAE to make unbiased investment decisions through transparent processes to curate and discuss diverse insights for more objective advice, combined with opensource access to solutions and access to global leading financial centres.

The accelerating pace of technological innovation is transforming the financial services sector at an exponential pace and Standard Chartered Bank has developed leading wealth management digital capabilities in Africa and the Middle East over the past three years to meet clients’ requirements at their convenience. This includes Online Equity Trading (UAE), SC Shilingi Funds (Kenya) as well as Market Insights on the go and Mobile Trade FX.

Best Family Office Service The Best Family Office Service award was given to First Abu Dhabi Bank (FAB). FAB’s global private banking provides a bespoke offering, investment and retail products and services, for UHNWI in the GCC, MENA and selectively in Asia and Europe.

FAB’s family office advisory approach is based on the principles of trust, reliability and transparency. With an average of 20+ years of industry experience in running funds and institutional mandates, the bank’s investment advisors continuously monitor clients’ portfolios, investigate the impact of market events and closely work with customers to implement strategies based on their risk appetite, liquidity needs and performance objectives.

The bank seeks to be the primary wealth advisor to the MENA region’s HNWI and family offices. FAB Investment Management has one of the largest buy-side research teams in the MENA region with 3 analysts providing in-depth coverage of companies/issuer across the capital structure.

Best Regional Asset Management Firm for HNWI’s Al Mal Capital was the recipient of the Best Regional Asset Management Firm for HNWI’s award in the Middle East. The asset management firm’s network of HNWI, family offices, financial institutions, funds, private equity firms and insurance firms ensures access to the GCC and international markets.

The company has established itself as one of the leading money management platforms investing in MENA, consistently sitting in the top quartile of risk-adjusted returning managers. Al Mal Capital clients enjoy a multi-decade experience of trading in the financial markets across asset classes and different geographies.

Al Mal Capital built a strong track record in co-investments and pre-IPOs. Since 2006, Al Mal Capital participated in numerous global, regional and local IPOs across various sectors such as financial, industrial, technology, and power, with over AED 36 billion in application value. Regionally, Al Mal Capital participated in Saudi Aramco listing in 2019, Dr. Sulaiman Al Habib’s IPO in 2020 and Amanat Holdings’ public offering in 2014.

70

Banking and Finance news in the MEA market

Best Fund Provider for ESG investments HSBC walked away with the Best Fund Provider for ESG investments award.

The bank has effectively shown that an approach to ESG investments that are based on identifying and investing in long-term opportunities while developing them into viable asset classes and striving to improve risk-adjusted returns can provide successful results.

Fund managers and small and large investors are placing an increasing emphasis on ESG issues and HSBC has 21+ global funds that aim to provide longterm returns by investing in companies that may benefit from the transition to a low-carbon economy.

HSBC GIF Global Equity Climate Change invests in normal market conditions a minimum of 70% of its net assets in equities and equity equivalent securities of companies with revenue exposure to climate transition themes which are based in or are listed on a regulated market in any country including both developed markets and emerging markets.

Best Capital Raising Firm Greenstone Equity Partners was honored with the Best Capital Raising Firm award in the Middle East region. The Best Capital Raising Firm award was given in recognition of Greenstone Equity Partners’ capital raising solution that enables fund managers to leverage the leadership team’s 70+ years of collective capital raising expertise in the GCC. To ensure fund managers continue to raise capital compliantly from the GCC, Greenstone further strengthened its regulatory compliance proposition in 2022 by forming a strategic partnership with a leading global firm to provide access to compliance as a service tool.

Since its founding in 2011, Greenstone has facilitated over 11,200 highly targeted roadshow meetings between GCC investors and globally dispersed fund managers. The Dubai-based fund placement firm has worked with over 300 alternative funds that have raised more than $195 billion across the full spectrum of investment strategies, with the average fund size being $160 million.

Best Fund Provider for Sustainability Related Investments In recognition of its pioneering sustainability Related Investments, HSBC received the Best Fund Provider for Sustainability Related Investments award. HSBC’s track record in ESG dates back to the launch of the bank’s Socially Responsible Fund in 2011.

The bank created Climate Asset management in corporation with Pollination, the first of its kind to scale to mainstream natural capital as an asset class that has managed $13.6 billion in sustainable investment strategies. HSBC is committed to playing an active role in supporting the development of a wellfunctioning, sustainable financial system.

The bank joined forces with RadiantESG, a US-based ESG and Diversity & Inclusion specialised consulting firm that is led by women and to date, 2300+ ESG issues have been raised in engagement activities. HSBC invest with purpose and discipline. The bank’s approach incorporates valuation and materiality frameworks, constantly striving to improve risk-adjusted returns whilst integrating sustainability across the platform. HSBC Group pledged to provide between $750 billion and $1 trillion in transition financing and investment by 2030.

mea-finance.com

71

More hands on deck.

Easier to navigate the winds of change.

You are independent. But never alone.

In the investment markets, change can work to your advantage.

You just have to know how to navigate it. See how you can make the best of the opportunities change brings with our in-depth briefings, staggering choice of investment options and much-awarded trading interface.

Extensive spectrum of investment products: 40,000 trading instruments across 125 global markets.

Regulated by SCA Disclaimer: Century Financial Consultancy LLC (CFC) is Limited Liability Company incorporated under the Laws of UAE and is duly licensed and regulated by the Emirates Securities and Commodities Authority of UAE (SCA). Services offered by CFC include financial market products that are traded on margin and can result in losses that exceed deposits. Transactions or trades in the financial markets are very risky, and you should trade only with the capital you can afford to risk or lose.

Before deciding to trade on leveraged products, you should consider your investment objectives, risk tolerance and your level of experience with these products. Trading with leverage carries significant risk of losses and as such margin products are not suitable for every investor, and you should ensure that you understand the risks involved and seek independent advice from professionals and experts if necessary. CFC is not responsible or liable for any result, gain or loss, based on this information, in whole or in part. Refer to risk disclosure on our website.

Best Sustainable Finance Initiative Barclays Private Bank was the recipient of the Best Sustainable Finance Initiative award in the Middle East region. The private bank run multiple sustainability initiatives including its Taskforce on Climate-Related Financial Disclosures and the Green Bond Principles.

Barclays developed the BlueTrack, a methodology for measuring its financed emissions and tracking them at a portfolio level against the goals of the Paris Agreement. The bank’s assets within the sustainable portfolio offering are now above $694 million (GBP 600 million), underpinned by an outstanding performance track record and demonstrable sustainability credentials.

Meanwhile, the world requires an estimated additional investment of between $3-5 trillion annually until 2050 to meet the goals of the Paris Agreement. To that effect, Barclays has already facilitated $72 billion (GBP 62.2 billion) of green financing and the bank continues to see increased demand for products such as sustainability-linked loans and bonds.

Best International Real-Estate Investment Firm Walton International Group Ltd was the recipient of the Best International RealEstate Investment Firm award in the Middle East. The Best Real-Estate Investment Firm award recognised Walton Group’s continued efforts to push the boundaries of innovation with its land-based investment strategies.

The global real estate investment company’s products continue to attract interest regionally and internationally from both conventional and Islamic finance investors, family offices and institutions who are seeking alternative, US real estate-based investment strategies. The strong interest over the past few years is driving continued growth at Walton Group’s Dubai office as they expand their operations and explore other GCC markets.

Founded in 1979, Walton Group currently administer $3.4 billion of real estate assets, over 98,000 acres of land assets under ownership or administration in 24 major North American markets and returned $2.0 billion+ back to landowners and partners.

Best Real-Estate Investment Firm – Bahrain GFH Financial Group (GFH) was honoured as the Best Real Estate Investment Firm in Bahrain. The investment banking group received the award in recognition of its laser focus on high-growth and resilient geographic regions, sectors and businesses that are benefiting from favourable secular trends.

Over the past two years, GFH’s global investment activities continued to expand with the Group successfully closing several strategic acquisitions that are well poised to withstand ongoing/future economic downturns and volatility.

Since the outbreak of the pandemic, GFH has concluded over eight deals valued at $500 million in education and consumer-driven and strong-performing segments of the global real estate sector including retail and logistics/ warehousing. The company’s high-profile investments include the University Technology of Bahrain deal valued at +$100 million, a $10 million investment in Athena Private School for Special Education and an 80% stake in Bahrain’s Hidd Mall worth $62 million.

mea-finance.com

73

WEALTH & INVESTMENT AWARDS 2022

Best Real-Estate Investment Firm – Saudi Arabia Saudi Fransi Capital was honoured with the Best Real-Estate Investment Firm award in Saudi Arabia. This award was conferred to Saudi Fransi Capital in recognition of its real-estate funds that retain strong risk-adjusted performance compared to their peers—with the firm’s Al Qasr GCC Real Estate & Construction Equity Trading Fund and their REIT Management receiving much industry recognition and acclaim in recent times.

Since 2017, when Saudi Fransi launched its global real estate program, the has co-invested in over 25 assets and portfolios across the US and Europe. Its global real estate investments span 15 million square feet of storage space in logistics, 2,100 apartment units in multi-family housing and 2.2 million square feet of leasable area in core and suburban office facilities.

Saudi Fransi’s investment banking business registered a strong 2021 and retained the top spot in Saudi Arabia’s Equity Capital Markets with 33 deals valued at $7.7 billion (SAR 28.8 billion) since inception excluding Aramco’s IPO.

Best Succession Planning Services M/HQ was the recipient of the Best Succession Planning Services award in the Middle East region. The UAE-based multi-service platform offers a holistic and cross-disciplinary combination of a private client law firm’s specialist expertise and the versatile capabilities of a market-leading fiduciary platform.

With 610+ family-holding verticals under administration, M/HQ has extensive experience advising both local and international families – whether Muslim or non-Muslim – with Middle East exposure to a broad range of wealth and structuring issues, the gradual involvement of the NextGen and intergenerational legacy planning.

The firm led the lobbying and education effort that resulted in the introduction of foundations in the Middle East with an estimated $1 trillion in wealth expected to be transferred to millennials over the next 10 years in the GCC region. M/HQ works closely with UHNW families who are considering establishing or have already established a family office to organise and preserve family assets as well as implement intergenerational wealth transfer strategies.

Best Wealth Planning and Investment Consultancy Services In the wealth planning and investment consultancy category, BNP Paribas Wealth Management was conferred with the Best Wealth Planning and Investment Consultancy Services award. BNP Paribas was given the award in recognition of its innovative solutions that serve the bank’s clients in the Middle East and other global financial centres having managed wealth for 150+ years.

BNP Paribas is one of the largest private banks in the Eurozone with $408 billion (EUR 411 billion in assets under management and 6,800+ professionals as of June 2022), providing wealth management solutions to clients across Europe, Asia, the US and Middle East.

With over 900 clients in the Middle East, BNP Paribas provides its clients with global and cross-border assistance covering tax & legal, family law & transmission, cross-border planning, wealth structuring & estate planning and family governance—all under its wealth planning solutions.

74

Banking and Finance news in the MEA market

THE REGION’S ONLY IPO-FOCUSED SUMMIT With the momentum of IPOs in the MENA region and the latest issuances throughout 2022, the inaugural MENA IPO Summit - Dubai 2023 is the perfect stage for the latest insights, key trends and lively discussions between regulators, issuers, investment experts and the companies in strategic preparation for becoming future listings

200+

50+

Attendees

20+

Speakers

Sessions

FOR MORE INFO EMAIL IPODUBAI@DWTC.COM

S T R AT E G I C P AR T N E R

2

Summit Days

1

Workshop Day

TO REGISTER VISIT:

P L AT I N U M S P O N S O R S

D I AM O N D S P O N S O R

GOLD SPONSORS

N E T W O R K I N G P AR T N E R S

S U P P O R T I N G P AR T N E R

WEALTH & INVESTMENT AWARDS 2022

Best Discretionary Portfolio Management (DPM) First Abu Dhabi Bank was the recipient of the Best Discretionary Portfolio Management award in the Middle East region. The award was given to FAB in recognition that it has grown to provide clients with active professional management of their wealth, with flexibility to apply Shariah-compliant or conventional mandates across geographies, asset classes and investment profiles, and of its’ extensive global footprint.

Over the years, FAB has launched several mutual funds which have propelled the bank to be regarded as one of the biggest and leading asset managers in the Middle East with $71.1 billion (AED 261 billion) as of 31 May 2022. The bank made history by becoming the first financial institution in the asset management industry to launch an open-ended equity fund in 2000.

FAB’s diversified range of product offerings ensures that clients receive the most attractive risk-adjusted returns and the bank plans to add more asset classes shortly as part of its bold expansion plan.

Best Foundation Services The Best Foundation Services Provider award went to Ocorian. The award was conferred to Ocorian in recognition of the company’s long-established global network across key financial jurisdictions which allows them to achieve client goals with optimum results such as creating a ‘purpose’ foundation for a UAElisted company that wanted to invest in Dubai real estate using a Cayman fund.

Ocorian’s Middle East team has seen a significant uptick in the use of foundations for domestic structuring and the company is undergoing a lot of work concerning domestic structuring for regional families who want to structure their assets locally. The introduction of foundations regime by the DIFC, ADGM and RAK ICC has seen as many as 550 foundations registered in the UAE as of September 2022.

Ocorian is strengthening its commitment to the Middle East amid a projected growth in private wealth and private clients as wealthy families and HNWI have become more aware of the need for asset protection and intergenerational planning.

Best Brokerage and Investment Management Platform Saudi Fransi Capital received the Best Brokerage and Investment Management Platform award in the Middle East region. The award recognises Saudi Fransi’s support to the financial services industry following recent changes to its trading platform utilizing state-of-the-art design and integrated features that bring all its products under one roof.

Saudi Fransi’s securities brokerage allows investors and traders to create optimal portfolios and trade securities including stocks, bonds, Sukuk, options and funds in any market. The bank also provides trading on margin through conventional and Sharia-compliant lending facilities.

The firm’s journey began in 1985 when Banque Saudi Fransi offered securities brokerage in Saudi equities. Fast-forward to 2022, the upgrade to Saudi Fransi’s online trading platform provides more features, functions and accessibility to all its users. Its design is unique to the market to pursue differentiation to open up a new market space and create new demand for trading and investment services.

76

Banking and Finance news in the MEA market

Best Robo Advisory Provider Commercial Bank of Dubai (CBD) was honoured with the Best Robo Advisory Provider award in the Middle East region. CBD is the first bank in the region to offer a Robo-advisory investment solution, CBD Investr.

The innovative investment app, which was developed in partnership with a Belgian wealthtech firm, is powered by smart algorithms that actively manage investment portfolios to deliver optimal risk-adjusted performance. CBD Investr offers customers convenient access to globally diversified and personalized portfolios of stocks, bonds and other asset classes using low-cost exchangetraded funds (ETFs).

These portfolios are tailored to a customer’s specific goals and risk appetite and are actively monitored and optimised based on changing market conditions.

The mobile app allows customers to start investing with just $500 and withdraw at any time without any charges and does not require a CBD bank account to fund their portfolios. CBD Investr users can make a local transfer from any bank account in the UAE.

Best Family Office Platform Provider BNY Mellon Wealth Management received the Best Family Office Platform Provider award in the region, in recognition of the bank’s Outsourced CIO and Custom Portfolio Solutions whose capabilities include portfolio design, asset allocation, manager research/ selection and trust and custody facilitation.

With over 50 years of family office expertise, BNY Mellon is the world’s 8th largest asset manager with $2.3 trillion in assets under management. The investment bank’s Regime-Based Asset Allocation (RBAA) provides an objective methodology to incorporate information about macroeconomic conditions into capital markets expectations.

Family offices require a nimble and adaptive OCIO partner to help them meet their investing goals and drive sustainable investment outcomes as institutional investing grows ever more complex. BNY Mellon’s expertise ranges from a global, highly collaborative, multi-disciplinary team to seamless end-to-end client experience and to sophisticated risk analytics and reporting.

mea-finance.com

77

WEALTH & INVESTMENT AWARDS 2022

Most Innovative Bespoke Investment Advisory Firm Century Private Wealth was the recipient of the Most Innovative Bespoke Investment Advisory Firm award, which was conferred to the wealth manager in acknowledgment of the strides that it has made in providing an agile approach to investing.

The independent wealth and asset management firm takes pride in its open architecture product platform, enhanced by bespoke investment solutions and backed by an exhaustive due diligence and research process. Century Private Wealth’s bespoke advisory provides macro analysis and asset allocation, instrument selection, portfolio implementation and ongoing monitoring.

The firm’s Century Global Infinity Open-Ended Fund endeavours to maximize risk-adjusted returns through a differentiated investment approach in an environment where traditional strategies have become commoditized.

Century Private Wealth’s discretionary portfolio management affords investors peace of mind as the firm’s team constructs a holistic portfolio that transcends the client’s objectives. Since its founding in 1989, Century Financial has striven to make investments across global financial markets accessible and easy for investors in the Middle East region.

Best Investment Citizenship and Residency Advisory Firm Next Generation Equity received the Best Investment Citizenship and Residency Advisory Firm award in the Middle East region. A part of Dubai-based Virtugroup, they have enriched over 500 families with the security of a second citizenship or residency in economically stable countries across Europe and the Caribbean, by comprehensively providing the expertise to service the numerous motivations for investment citizenship and domicile diversification in today’s world, whether it be the increasing international spread of families, relocation from geo-political hotspots or purely for wealth protection.

They have two investment options, real estate investment and government fund contribution, under its citizenship and residency by investment, with a minimum investment of $100,000.

Next Generation Equity’s led by global citizenship and residency by investment specialists with years of industry experience in C-level positions and in assisting HNWIs to obtain second citizenship or permanent residency.

78

Banking and Finance news in the MEA market

36 FORTUNE

GLOBAL 500 FINANCE COMPANIES DIGITALLY TRANSFORM WITH HUAWEI.

TOGETHER

ªTap into 100+ globally managed mutual fundsº Buy, sell, access performance history and track your portfolio anytime, anywhere with our Online Mutual Funds platform.

Find out how we can help you manage and grow your wealth.

Scan to book an appointment with our Wealth Specialists today.

Disclaimer: This information is neither an offer to sell, purchase or subscribe for any investment nor a solicitation of such an offer. This information is general and does not take into account a person’s individual circumstances, objectives or needs. Investments carry risk and values may go up as well as down.