September 2024

ROADMAP TO EMBARK ON THE GLOBAL HORIZONS

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In The Moment

Right now, in this instant of real-time, you’re reading the September 2024 issue of MEA Finance

How often do we consciously give thought to the now? Probably not as much as we would think we do, and maybe not as much as we should. Yet, the world we are building at this time in our history increasingly requires our alertness and focus.

As our banking and financial lives become increasingly digitised, and we grow more expectant of, even impatient for instant financial services, so our vigilance in the moment must sharpen. To manage working at the speed of now, we have ever improving tools, the most heralded of which is AI - as do those to whom we have to stay wary of.

Among these pages, you will learn why attention to the now will become essential to our daily banking encounters, and of what is equipping up to keep pace with and stay secure in the

So, turn immediately to page 36, to our coverage of real-time payments and the progress being made in finessing this now essential component the economic engines of the region. “The region is rapidly emerging as a global leader in payment modernisation, particularly in real-time payments”, says Ali Al Najjar, Chief Operating Officer at Al Ansari Exchange. Then train your watchful eyes onto page 18 where we examine the challenging cybersecurity environment of the GCC, where among some of the more threatening trends at this time is a rise in supply chain attacks.

Now relax your guard with our cover feature. J.K. Khalil, Division President for East Arabia at Mastercard, details their new regional leadership structure and outlines how the power

of technology with expanding collaborative partnerships will bolster regional prosperity and inclusion. “There are exciting opportunities to show the strength of Mastercard’s technologies in the markets we serve”.

This month, our intrepid Editor at Large, Oscar Wendel reports from the Point Zero Forum in Zurich, where Yazeed Alnafjan Deputy Governor for Financial Innovation at the Saudi Central Bank, spoke on the state of CBDCs. Then read his interview with Paolo Ardoino CEO of Tether, who have recently launched a Dirham pegged stablecoin.

Your calming interlude extends as this month’s country focus alights on Qatar which, while remaining a world leading gas exporter, is working toward the goal of building a more knowledge and leisure-based economy. Then from page 14, recline with our look into the growing investment banking sector where, with additional input by Virtuzone Group from page 50, the factors behind the Middle East’s increasingly active capital markets are discussed.

Following your rest, visit our plentiful buffet of nourishing partner content. A wide selection of delicacies includes wealth management with Plurimi Wealth and Mashreq Private Banking, haifin with the evolving lending sector, Jaggaer offering procurement technology and Comviva with a helping of embedded payments, all providing mental refreshment before you’re thrust back into alert mode on page 26 with a look at risk management in the era of AI.

Also keeping you on your toes is Özgür Özvardar VP & General Manager at Verifone who, in his piece on consumer payments points out that, “Another factor fuelling the demand for Android, mobile and other modern POS solutions is the expectation for exclusiveness and highquality service in the region”.

So now, in this moment, take in the issue here before you to stay alert to the demanding, yet exciting regional banking and financial markets.

Crédit Agricole CIB and Kepler Cheuvreux expand Equity Capital Markets partnership to MENA, with Kepler Cheuvreux securing DFSA authorisation

The collaboration brought a local presence for Kepler Cheuvreux in the United Arab Emirates, initially focusing on equity research and distribution across the UAE, the Kingdom of Saudi Arabia and the broader Gulf

On July 26, 2024, the Dubai Financial Services Authority (DFSA) issued a license to Kepler Cheuvreux, allowing the firm to operate as an authorised entity providing equity research and distribution services in the United Arab Emirates. Kepler Cheuvreux has established a new office in the Dubai International Financial Centre (DIFC), staffed with a specialised team of research analysts and sales professionals.

Crédit Agricole CIB has a longstanding presence in MENA, with offices in the UAE, Saudi Arabia and Qatar. This partnership will enable Crédit Agricole CIB to strengthen its client offering in the region, with the addition of the equity capital markets activity. Crédit Agricole CIB will leverage the extension of Kepler Cheuvreux’s highly rated European research expertise to the MENA region and its unique access to 1,300 investors now extended to institutional investors in the Gulf region.

Crédit Agricole CIB’s partnership with Kepler Cheuvreux has proven to be highly successful in Europe with a number of flagship transactions. The extension allows us to further strengthen our client offering in the MENA region. We are fully committed to the success of this new initiative and are strongly convinced of the value-add we bring to MENA ECM issuers through our platform.” said Didier Gaffinel, Crédit Agricole CIB Deputy General Manager and Head of Global Coverage & Investment Banking.

The extension of our ECM partnership with Crédit Agricole CIB allows us to respond to the strong interest from institutional investors in the MENA region where ECM activity is booming. This new step in the history of Kepler Cheuvreux demonstrates the efficiency of our model and strengthens the group’s multi-local position” stated Laurent Quirin, Chairman of the Supervisory Board of Kepler Cheuvreux.

Kuwait Finance House sells entire stake in Sharjah Islamic Bank

The Kuwaiti

lender sold the shares to the Endowment of Sheikh Sultan bin Mohammed bin Saqer Al Qasimi the Sharjah Social Security Fund and Sharjah Islamic Bank

Kuwait Finance House (KFH) has sold its entire 18.18% stake in Sharjah Islamic Bank for $351 million (AED 1.29 billion).

KFH said in a bourse filing that it sold 588 million shares at a price of AED 2.20 apiece. The Kuwaiti lender sold the shares to the Endowment of Sheikh Sultan bin Mohammed bin Saqer Al

Qasimi, the Sharjah Social Security Fund and Sharjah Islamic Bank.

KFH said its Q3 2024 financial statements would reflect the financial impact of the deal, which is expected to have an immaterial effect on the group’s income statement.

Sharjah Islamic Bank reported a 25.8% increase in net profit for the first half of 2024, reaching AED622.4 million from AED494.6 million for the same period in 2023. The banking group’s total assets rose by 12.7% to AED 74.2 billion in the January-June period from AED 65.9 billion at the end of 2023.

Fitch Ratings said the recent increase in Kuwaiti bank mergers and acquisitions (M&A) is credit-positive for the sector as the market is overbanked.

Banks in the Gulf state have been increasingly turning to M&A as a strategic response to the limited organic growth opportunities so as to diversify their business models and strengthen their financial profiles.

Kuwait’s Burgan Bank received the approval of the Central Bank of Bahrain to acquire the United Gulf Bank (UGB). The Central Bank of Kuwait approved Burgan’s potential acquisition of the Bahraini lender in June.

Boubyan Bank and Gulf Bank, the country’s third and fifth largest, announced that they were considering a merger in July. The potential merger is set to create an Islamic bank with assets of about $53 billion (KWD16 billion) and about a 15% market share.

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Gas Giant

While remaining a world leading gas exporter, their determination to reach the goals set by Qatar National Vision 2030 sees the nation decisively moving away from being predominantly hydrocarbon-based, toward a more diverse knowledge and leisure-based economy

Qatar started an uncertain 2024 on solid footing after its real GDP exhibited modest growth last year to reach 1.6%, anchored by its hydrocarbon sector and, to a much lesser extent, nonhydrocarbon sector growth.

Earlier in 2024, the government in Doha launched the Third National Development Strategy (NDS3) 2024-2030, marking the final phase in the journey towards achieving Vision 2030. This strategy aims to accelerate economic diversification, increase North Field natural gas production, and position the Gulf state as a leading hub for foreign investment.

The World Bank forecasted that the country’s real GDP will strengthen marginally this year but remain modest at 2.1%. Non-oil growth is projected to continue to be robust at 2.4%, driven by a growing tourism sector.

The hosting of the FIFA World Cup boosted tourism and non-oil economic

activity to unprecedented levels, leading to new opportunities for Qatari businesses in the hospitality, real estate, retail and telecommunications industries.

Qatar has ample financial resources to support its ambitions. The Gulf state is one of the leading exporters of liquefied natural gas (LNG) and one of the wealthiest nations per capita. Demand for its natural gas has increased significantly over the years, with global LNG demand expected to surge by over 50% by 2040.

Qatar’s decade-long economic diversification strategy, which culminated in more than four million visitors in 2023, will continue to build a knowledgebased, stronger, more inclusive and greener economy.

The country’s $526.1 billion sovereign wealth fund is set to invest over $1 billion in international and regional venture capital funds in 2024. The investment, which will focus on the technology and

healthcare sectors, underscores its dedication to long-term economic growth and diversification.

Meanwhile, Qatar’s banking system remains relatively resilient, with regulations that are broadly in line with regional peers. “Banks remain well-capitalised, liquid and profitable,” the IMF said, noting that nonperforming loans increased slightly to 3.8% in Q2 2023 (from 3.6% at the end of 2022) but are well provisioned.

The coming years are crucial for Qatar as it advances its transformation journey by accelerating economic diversification and implementing high-impact sectoral strategies guided by NDS3.

Towards Vision 2030

Qatar continues to demonstrate significant resilience against global uncertainty and geopolitical tensions, according to the IMF. The Gulf state – among the world’s top LNG exporters – is expected to register an average growth of 5.5%, boosted by significant expansion in the production of LNG and implementation of fiscal and other reforms.

“The medium-term outlook is more favourable on the back of significant LNG production expansion as the North Field East and South projects complete,” the International Monetary Fund (IMF) said in May.

Qatar has significant resources at its disposal and its gas revenues are likely to swell further. With a two-phase mega-expansion already underway and an enormous new buildout on the horizon, the Gulf nation is poised to control about a quarter of the world’s LNG market

by the end of the decade, significantly increasing its share of global wealth.

Earlier in 2024, Qatar announced plans to expand LNG output from its North Field by 85%, increasing production from the current 77 million metric tonnes per year (mtpa) to 142 mtpa by the end of the decade, exceeding the previously anticipated 126 mtpa.

The Middle Eastern nation has been securing sales contracts for some of that capacity and is still seeking to place volumes in an effort that will ensure the country remains a key supplier for decades to come.

State-owned QatarEnergy said in October 2023 that it would supply Italy’s Eni with gas for 27 years, following similar deals to supply the Netherlands via Shell and France through TotalEnergies. The energy firm also secured two long-term LNG deals with China’s Sinopec and CNPC, each spanning 27 years.

“We’re a country that’s an exporter of gas. We have no other revenue really,” Qatar’s energy minister Saad bin Sherida Al Kaabi said during the unveiling of the LNG expansion plans in February. “We need to make sure that our kids and their kids are in better shape, hopefully than even people today.”

As Qatar grows its LNG exports, the country that already has one of the highest GDPs per capita will be raking in even more cash. Once it is all online, the additional supply will increase the emirate’s annual revenue by about $31 billion, according to Bloomberg calculations.

Though the country’s fiscal surplus is projected to narrow to 4.9% of GDP in 2024, economists expect it to retain budget surpluses until the 2030s as a result of the North Field expansion.

Global credit rating agencies Moody’s and Fitch Ratings both upgraded Qatar to AA ratings in early 2024, citing robust outlook and declining debt. “Qatar’s external balance sheet will strengthen from an already strong level,” Fitch said in a statement in March. “Budget surpluses will still allow Qatar to transfer new funds to the Qatar Investment Authority (QIA).”

QATAR’S BANKING SECTOR IS UNDERGOING A SIGNIFICANT TRANSFORMATION WITH THE ADOPTION OF DATA ANALYTICS AND CLOUD COMPUTING, WHICH ALIGNS WITH VISION 2030 AND MARKS A SHIFT TOWARDS A DATA-DRIVEN AND CLOUD-ENABLED FUTURE

– KPMG

New LNG earnings will primarily be funnelled into QIA – a common playbook for oil-rich Gulf monarchies, including Saudi Arabia and the UAE. Founded in 2005 to handle Qatar’s revenue from LNG, the state investor ranks as the world’s eighth-largest wealth fund and holds stakes in several European institutions, including Heathrow Airport, Barclays, Sainsbury’s and Harrods.

Sustainable growth

While Qatar’s vast oil and natural gas reserves have historically driven its rapid GDP growth, the country is now looking ahead to a more diversified future for its economy.

The Gulf state’s recent gains in key growth sectors, such as tourism and sports, renewable energy, artificial intelligence (AI) and logistics are a testament to the progress and potential that lie ahead.

The combination of sports mega-events and cultural experiences has showcased Qatar’s ability to host international spectators and contribute to its developmental journey. The hosting of the FIFA World Cup in 2022 significantly boosted tourism, with visitor numbers soaring to over four million in 2023, compared to just 600,000 in two years earlier.

“Following its mega-event hosting successes, Qatar embarked on a journey to enhance its tourism infrastructure and diversifying attractions, which included the Hayya visa platform, airport

expansion, and the development of destination resorts and cultural sites,” PwC said in a report.

Qatar commenced work on a new $5.5 billion (QAR 20 billion) tourism development that will be centred around a massive amusement park set to surpass the size of Walt Disney Co.’s iconic Magic Kingdom.

The Simaisma Project, which will span 8 million square meters along 7 km of beachfront, will include an 18-hole golf course surrounded by 300 villas, luxury resorts, a marina and a beach club.

Qatar has leapt to the forefront of becoming a new breeding ground for a flourishing sports events ecosystem following the hosting of the World Cup and other renowned global sporting events such as the FIP World Padel Championship, the Formula 1 Qatar Airways Qatar Grand Prix and Wanda Diamond League.

PwC said that Qatar’s investments in premier sports facilities such as Lusail International Circuit underscores the country’s dedication to leveraging sports and tourism as engines for national branding and economic diversification.

Qatar approved its state budget for 2024 last December, which forecasts a deficit of $1.7 billion (QAR 6.2 billion). The budget projects total revenues of QAR 202 billion, down 11.4% when compared to 2023 estimates and expenditure of QAR 200.9 billion, according to the Ministry of Finance. While non-oil revenue is expected to rise by 2.4% to QAR 43.0

billion, oil revenue is projected to plunge by 14.5% to QAR 159.0 billion from QAR 186.0 billion a year earlier.

Meanwhile, the anticipated introduction of value-added tax, expected in 2025, will offset the reduction in hydrocarbon revenue and bolster the fiscal surplus despite the possibility of a temporary impact on economic activity.

The Qatari authorities are using QIA’s financial firepower, big cash injection from the LNG bonanza and the new infrastructure to develop niche areas in sectors such as healthcare, energy, logistics and education.

Finance focused

Qatar’s financial services development goals, though ambitious, are well within reach, given the Gulf states’ increasing significance within the global emerging markets landscape. The government is strategically positioning finance and banking at the core of its economic diversification efforts, with a particular emphasis on fintech innovation.

The financial services sector is not only critical for driving diversification but also serves as a powerful magnet for attracting increased foreign capital, further solidifying Qatar’s standing in the global financial arena.

Moody’s maintained a stable outlook on Qatar’s banking sector in March, citing robust growth as businesses in the nonoil economy are poised to benefit from projects linked to the expansion of Qatar’s LNG production capacity.

THE MEDIUM-TERM OUTLOOK IS MORE FAVOURABLE ON THE BACK OF SIGNIFICANT LNG PRODUCTION EXPANSION AS THE NORTH FIELD

EAST AND SOUTH PROJECTS COMPLETE

– The International Monetary Fund

“Qatar’s banking sector is large with assets of 255% of GDP and net foreign liabilities of more than $105 billion (50% of GDP) in 2023,” said Fitch Ratings.

Though Qatar’s economic growth may be normalising in the post-World Cup era, the country’s banking sector continues to be buoyed by high interest rates and opportunities emerging from growing gas infrastructure.

The combined profits of Qatar’s top five banks - Qatar National Bank (QNB), Qatar Islamic Bank (QIB), Commercial Bank of Qatar, Masraf Al Rayan and Dukhan Bank – reached $3.63 billion (QAR 13.2 billion) in the six months ended June 30.

QNB Group, the Middle East region’s biggest bank by assets, reported a 7% jump in H1 2023 net profit to QAR 8.2 billion, while QIB, the country’s secondlargest lender, registered a 5.6% increase in profit to QAR2.1 billion.

Profitability in the Qatari banking sector will remain underpinned by higher net interest margins and non-interest revenues as assets grow and by lower loan impairment charges as economic conditions remain solid.

QATAR’S EXTERNAL BALANCE SHEET

Qatar Central Bank (QCB) followed the US Federal Reserve’s decision to keep interest rates unchanged to protect Qatar riyal against the US dollar, as the country’s currency is pegged to the greenback. The central bank said it would keep its repo rate unchanged at 6%, its lending rate at 6.25% and its deposit rate at 5.75%

“Monetary policy has been consistent with the currency peg to the dollar. QCB has improved liquidity management through carefully calibrated T-bill issuance, contributing to greater monetary policy transmission,” said the IMF.

Qatar’s banking sector has made significant strides in enhancing customer experience and embracing digital innovation. Digital transformation in the country’s banking sector is gathering pace, with most lenders overhauling their technology infrastructure and deploying innovative front-end services and products.

“Qatar’s banking sector is undergoing a significant transformation with the adoption of data analytics and cloud computing, which aligns with Vision 2030 and marks a shift towards a data-driven and cloud-enabled future,” said KPMG.

Qatar’s hydrocarbon sector is poised to reclaim its role as the primary engine of the country’s economic growth in the coming years, following decades of infrastructure investment and development in support of the FIFA World Cup. The central bank’s prudent policies have underpinned financial stability, and the IMF expects continued diligence to maintain banking sector strength.

Capital Gains

GCC investment banking activity is outpacing other global centres with strong performance in the IPO market and as the region emerges as a highly attractive destination for global banks, they are increasing staffing levels to make the best of this booming sector

The six-member GCC economies will grow at a faster pace in 2024 than last year, defying projections of weak global growth, geopolitical tensions, warnings of stagflation and higher for longer interest rates.

The World Bank projected that growth in the Gulf region will rebound to reach 2.8% and 4.7% in 2024 and 2025, respectively. The strong showing builds on the robust momentum of the non-oil sector, which is expected to continue to expand at a sturdy pace in the medium term.

GCC countries’ commitment to diversifying their economies underscores the region’s strategic approach to fostering resilience and sustainable development amidst a volatile global economic landscape.

The region’s approach to economic diversification and privatisation is reflected in its buoyant initial public offering (IPO) market. Global investment manager Franklin Templeton said the GCC’s IPO market is experiencing a standout year in 2024 amid strong economic recovery, a pickup in overall sentiment and a continuation of structural reforms.

The GCC’s robust performance is in stark contrast to other major capital equity markets from the US to Europe and Asia.

“Governments continue to support IPO markets in the GCC region both in terms of bringing suitable state-owned candidates to the market and initiatives such as the Abu Dhabi IPO Fund through which prospective companies are lining

up to reach markets by the end of 2024,” according to Kamco Invest.

Meanwhile, bankers have witnessed a hive of listing activity over the past four years and coupled with Russia’s exclusion from the MSCI EM Index and the axing of some Chinese securities from the MSCI global index – investors have increasingly shifted their focus to the Gulf region.

The strong performance of the GCC region’s IPO market is likely to keep investors coming back for more, especially as many deals come at attractive dividend yields and offer exposure to previously underrepresented non-oil sectors.

The dealmaking frenzy that has gripped the Gulf region while bankers elsewhere suffer a dearth of business has seen a surge in reverse roadshows for investors

over the past year as top Wall Street banks are bringing fund managers into the region to gain market share and meet with companies considering public offerings.

Continued momentum

Despite a global downturn in IPOs in 2024, the GCC region has had one of its best years on record as governments race to diversify their economies away from heavy reliance on oil and gas revenues.

The deals have continued despite ongoing geopolitical tensions and the oil-rich Gulf nations have barely been scathed.

“We have witnessed some volatility in the first half of 2024 in the performance of GCC stock exchange indices and oil prices. That said, the number of new IPOs in the GCC continued to remain strong,”

Muhammad Hassan, PwC Middle East’s Capital Markets Leader, said in a report, adding that Saudi Arabia continued to dominate the IPO market, with 19 IPOs compared to 17 in H1 2023.

MENA markets’ 14 IPOs in Q2 2024 raised $2.64 billion, a 45.3% increase in proceeds against the comparative quarter a year earlier.

Dr. Soliman Abdel Kader Fakeeh Hospital Company rose in its trading debut on Tadawul in June after the Saudi healthcare group attracted $91 billion (SAR341 billion) in investor

orders for its $763.4 million IPO that was oversubscribed 119 times.

Fakeeh’s IPO drew Abu Dhabi Investment Authority and Olayan Saudi Investment Company as cornerstone investors and contributed 29% of the overall IPO proceeds in Q2 2024.

Earlier in March, shares in Saudi Arabia’s Modern Mills Company jumped 30% in its trading debut in Riyadh after its SAR1.2 billion attracted $40 billion in investor orders, accounting for 27.3% of the overall proceeds in Q1 2024.

The GCC region has been a booming market for IPOs over the past three years, with high oil prices and increased international investor interest driving the sentiment even as share sales slumped globally amid high interest rates.

Parkin Company’s $429 million (AED 1.57 billion) IPO in March drew orders worth $71 billion after the Dubai Investment Fund sold 749.7 million shares, equivalent to a 25% stake of its paid-up capital. The

IPO, which was oversubscribed 165 times, accounted for 37.2% of total proceeds, with the highest first-day gain among the quarter’s listings at 35%.

Furthermore, Alef Education plunged in its trading debut on the Abu Dhabi bourse after the edtech’s AED 1.89 billion was 39 times oversubscribed and attracted AED 74 billion in investor orders. Alef’s IPO marked a significant departure from the usual trend in the GCC region, where new listings often see immediate price increases.

Meanwhile, Beyout Investment Group raised $147 million (KWD 45 million) on Boursa Kuwait, the Gulf state’s first listing since Q4 2019.

“Increased liquidity driven by higher oil prices, economic recovery and positive market sentiment has kept the IPO activity in the region buoyant with a strong pipeline for H2 2024,” says Brad Watson, EY MENA Strategy and Transactions Leader.

GOVERNMENTS CONTINUE TO SUPPORT IPO MARKETS IN THE GCC REGION BOTH IN TERMS OF BRINGING SUITABLE STATEOWNED CANDIDATES TO THE MARKET AND INITIATIVES SUCH AS THE ABU DHABI IPO FUND THROUGH WHICH PROSPECTIVE COMPANIES ARE LINING UP TO REACH MARKETS BY THE END OF 2024

- Kamco Invest

Data shows that eight of 14 MENA IPOs listed in Q2 2024 demonstrated a positive return share price as of June 30 2024, in comparison with their listing price, with Miahona Company achieving the highest gain of 90.4% within the period.

The IPO market in the GCC region is poised for continued activity in 2024. A total of 16 private companies and seven funds are exploring listings in the Middle East, with 14 of these companies based in Saudi Arabia, according to EY.

While bankers have been trying to develop secondary share sales in the GCC as a way to boost liquidity on local bourses, the market has not yet gained significant momentum. Secondary share sales are an essential part of the Gulf region’s equity capital markets as shareholders pare down stakes or companies themselves raise fresh capital after going public.

Saudi Arabia raised $12.35 billion from the secondary offering of Aramco in June, while UAE energy firm ADNOC Group netted $935 million after divesting 880 million shares in its drilling unit, ADNOC Drilling, in May.

INVESTMENT BANKING

An investment banking hub

The GCC region has emerged as a highly attractive destination for global banks and investors. The post-pandemic economic recovery, characterised by favourable macroeconomic conditions and cooler inflation, is fuelling the demand not only for individual needs but also for corporate banking and financial solutions.

The confluence of factors has solidified the Gulf region’s position as a thriving hub for international banking and investment activities.

“The GCC financial services sector has yielded healthy returns to shareholders over the past decade, outperforming the global average. While the gap has narrowed in recent years, return on equity among GCC banks continued to exceed the global average by three to four percentage points,” said McKinsey.

The GCC countries are leveraging deep financial-sector reforms to enhance their appeal to global investors. The privatisation programs in the GCC, together with the rules and regulations for equity capital markets issuance, particularly IPOs, are catalysing a surge in public offerings.

S&P Global said global banking giants, including Morgan Stanley, JP Morgan and Goldman Sachs, have bolstered their teams in the GCC region in a bid to take more share of the IPO boom.

Morgan Stanley expanded its presence in the Middle East by opening an office in Abu Dhabi in February. The move was followed by a flurry of global investment banks establishing a presence in the region, including Mizuho, Goldman Sachs, Rothschild & Co. and JPMorgan Chase, all of which have opened regional headquarters in Riyadh.

The allure of lucrative deals tied to Gulf states’ ambitious economic reform plans has been a major driving force behind these moves.

German lender Deutsche Bank reappointed its former CEO for the Middle East and Africa, Jamal Al Kishi, in April, and he will be based in Riyadh. Similarly, HSBC Holdings and JPMorgan Chase & Co. and

Citigroup have bumped up staffing levels, joining rivals seeking to take advantage of a red-hot Gulf IPO market.

Meanwhile, banks domiciled in the GCC region, including First Abu Dhabi Bank, Emirates NBD Capital, Al Rajhi Bank and Saudi National Bank, are beating Wall Street lenders at their own game.

GCC banks, flush with cash from the energy boom, are challenging the dominance of Wall Street banks. Offering terms that rival those of Goldman Sachs and Bank of America, these regional banks are disrupting traditional dealmaking dynamics.

Rewire investment banking

The lines between finance and technology are blurring as investment banks harness the power of artificial intelligence (AI) to drive innovation and efficiency. AI in banking has primarily focused on automating tasks

deep learning and natural language processing, to automate trading, risk management and research. However, despite significant investments, human capital remains crucial for many tasks.

Large language models (LLMs), AI systems that can understand and generate human language, offer the potential to automate further, reducing costs, enhancing worker productivity and freeing resources for innovation and client-focused activities.

“GenAI can help reduce the cost of content creation, enhance analytical capabilities, improve the electronification processes, and even reduce client call transfer rates,” said Deloitte.

GenAI can revolutionise trading by helping equities traders quickly analyse and summarise company and industry fundamentals, run valuation models and provide personalised recommendations to institutional and retail clients.

WE HAVE WITNESSED SOME VOLATILITY IN THE FIRST HALF OF 2024 IN THE PERFORMANCE OF GCC STOCK EXCHANGE INDICES AND OIL PRICES. THAT SAID, THE NUMBER OF NEW IPOS IN THE GCC CONTINUED TO REMAIN STRONG

- Muhammad Hassan, PwC Middle East’s Capital Markets Leader

or generating predictions, but the introduction of generative AI (GenAI) is expected to significantly broaden and deepen the new technology’s impact on the sector.

“GenAI could well be one of the most transformative technologies for the investment banking industry,” Deloitte said in a report while projecting that the top 14 global investment banks can boost their front-office productivity by as much as 27%–35% by using GenAI.

Investment banking has long leveraged AI, particularly machine learning,

GenAI can have a profound impact on trading. The new technology can assist equities traders by analysing and summarising company and industry fundamentals, running valuation models and providing tailored recommendations to both institutional and retail clients.

Going forward, the GCC’s equity capital markets are projected to maintain their activity, driven by government initiatives and the enhanced market liquidity stemming from recent IPOs. Saudi Arabia and the UAE are projected to continue their endeavours towards privatisation.

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Gulf Cybersecurity Challenges

Cybersecurity challenges in the GCC’s banking and finance markets are keeping pace with our digitised banking and finance sectors, and besides advancing technology to keep ahead of bad actors, counter-measures should include a culture of transparency and robust incident response plans

The Gulf Cooperation Council (GCC) region is emerging as a significant player in the global banking and finance markets.

The sector has seen unprecedented growth fuelled by economic diversification, digital transformation and an increasingly sophisticated consumer base. However, with this growth comes an array of cybersecurity challenges that are more complex and pervasive than ever before. As we move through 2024, the banking and finance sector in the GCC is grappling with a rapidly evolving threat landscape that demands urgent attention.

Digital Transformation and Its Consequences

Digital transformation has been a blessing and a curse for the GCC’s

banking and finance sector. On the one hand, it has enabled banks and financial institutions to offer more efficient, agile and customer-centric services but on the other, it has greatly expanded the attack surface available to cybercriminals. In 2024, the reliance on digital channels, ranging from online banking to mobile payment systems, has become further entrenched, underlining cybersecurity an ongoing, top priority.

Increased Cyber Threats

As financial institutions in the GCC have embraced digital technologies, the nature and frequency of cyber threats have evolved significantly. Traditional threats like phishing and malware continue to pose risks, but 2024 has seen a sharp rise in more sophisticated attacks such as ransomware, supply chain attacks and advanced persistent threats (APTs) - where attackers establish a long-term presence on a network.

Ransomware remains a major concern, with cybercriminals employing more advanced techniques to infiltrate financial systems. In 2024, these attacks have

become more targeted, with attackers meticulously planning their entry points, often exploiting vulnerabilities in third-party software used by financial institutions. Once inside, they can encrypt critical data and demand exorbitant ransoms, causing significant financial and reputational damage.

APTs have also become more prevalent and are typically carried out by well-funded and highly skilled attackers, often linked to nation-states. These attackers aim to establish a long-term presence within a network, allowing them to steal sensitive information over an extended period. In the GCC, where the banking sector is a key pillar of the economy, the consequences of an APT can be devastating, highly damaging for businesses and potentially undermining national security.

The Rise of Supply Chain Attacks

One of the most concerning trends in 2024 is the rise of supply chain attacks. Financial institutions in the GCC are increasingly reliant on a complex web of third-party providers for everything from cloud computing services to software development. Cybercriminals have recognised this as a vulnerability and are now targeting these third parties to gain access to the systems of banks and financial institutions.

In a supply chain attack, cybercriminals compromise a third-party vendor’s system, using it as a backdoor to infiltrate the primary target. These attacks are particularly dangerous because they can go undetected for long periods, allowing attackers to cause extensive damage before being discovered. The interconnected nature of today’s financial systems means that a breach in one part of the supply chain can have far-reaching consequences, potentially affecting multiple institutions.

Regulatory Pressures and Compliance Challenges

In response to the growing cyber threats, GCC countries have been strengthening

their regulatory frameworks. In 2024, regulatory bodies in the region have introduced more stringent cybersecurity requirements, aiming to protect financial systems from increasingly sophisticated attacks. For example, the Saudi Arabian Monetary Authority (SAMA) and the UAE Central Bank have both updated their cybersecurity guidelines, mandating that financial institutions adopt more robust security measures.

While these regulations are crucial for safeguarding the financial sector, they also present significant challenges for compliance. Smaller banks and financial institutions may struggle to meet these requirements due to limited resources, both in terms of finances and expertise. The rapidly evolving nature of cybersecurity threats means that regulatory frameworks are continually being updated, which can create a moving target for compliance efforts.

Moreover, the global nature of cyber threats necessitates that GCC financial institutions not only comply with local regulations but also align with international standards. This adds another layer of complexity, as institutions must navigate a patchwork of regulatory requirements across different jurisdictions.

The Human Element in Cybersecurity

Despite advances in technology, the human element remains one of the most significant vulnerabilities in cybersecurity. Social engineering attacks, where attackers manipulate individuals into divulging confidential information, have become increasingly sophisticated. In 2024, phishing attacks have evolved beyond generic emails to highly targeted spear-phishing campaigns that are personalised and difficult to detect.

The rise of remote work, accelerated by the COVID-19 pandemic, has also introduced new challenges. As employees access sensitive financial systems from home, often using personal devices, the risk of security breaches increases. In 2024,

ensuring the cybersecurity of a distributed workforce has become a critical concern for GCC financial institutions.

To mitigate these risks, financial institutions must invest in ongoing cybersecurity training for their employees. However, training alone is not enough; there needs to be a cultural shift where cybersecurity is ingrained in the daily operations of the organisation. This includes implementing strong access controls, regular security audits and encouraging employees to report suspicious activities without fear of reprisal.

The Impact of Artificial Intelligence and Machine Learning

Artificial Intelligence (AI) and Machine Learning (ML) are vital tools in the fight against cyber threats. GCC financial institutions are increasingly adopting AI and ML to enhance their defences. These technologies can analyse vast amounts of data in real-time, identifying patterns and anomalies that might indicate a cyberattack.

AI-driven systems are particularly effective in detecting and responding to zero-day threats—vulnerabilities that are exploited before the vendor has issued a patch. By leveraging machine learning, these systems can continuously learn from new data, improving their ability to detect and prevent future attacks.

However, the use of AI and ML in cybersecurity is not without challenges. These technologies require vast amounts of high-quality data to function effectively. If the data is incomplete or biased, the AI system may produce false positives or negatives, leading to either unnecessary alerts or missed threats. Moreover, cybercriminals are also beginning to use AI to develop more sophisticated attacks, an arm race between attackers and defenders.

The Role of Collaboration and Information Sharing

In 2024, collaboration and information sharing have become essential

ONE OF THE MOST CONCERNING TRENDS IN 2024 IS THE RISE OF SUPPLY CHAIN ATTACKS

components of cybersecurity strategies. Cyber threats are global, and no institution can tackle them alone. GCC countries have recognised this and are increasingly participating in regional and international forums to share threat intelligence and best practices.

Public-private partnerships have also gained prominence, with governments and financial institutions working together to strengthen cybersecurity defences. These collaborations can take many forms, from joint cybersecurity exercises to information-sharing platforms that provide real-time updates on emerging threats.

However, effective collaboration requires overcoming several challenges, including issues of trust and the reluctance to share sensitive information. Financial institutions may fear that disclosing a cyberattack could damage their reputation or lead to regulatory scrutiny. To address this, there needs to be a concerted effort to create a culture of transparency where information sharing is seen as a strength rather than a liability.

Preparing for the Future

As we move further into the decade, the cybersecurity challenges facing the GCC banking and finance sector will continue to evolve. Financial institutions must adopt a proactive approach, anticipating new threats and adapting their defences accordingly. This requires not only investing in the latest technologies but also fostering a culture of cybersecurity awareness and resilience.

One of the key areas of focus should be the development of robust incident response plans. In the event of a cyberattack, having a well-prepared response plan can significantly reduce

the impact of the breach. This includes clear communication strategies, predefined roles and responsibilities, and regular drills to ensure that the plan is effective.

Another important aspect is the continuous monitoring and assessment of cybersecurity measures. The threat landscape is constantly changing, and what was effective last year may not be sufficient in 2024. Regular security audits, penetration testing and vulnerability assessments are essential to identify and address potential weaknesses.

Finally, financial institutions in the GCC must recognise that cybersecurity is not just an IT issue but a business imperative. Cybersecurity should be integrated into the overall business strategy, with senior management taking an active role in overseeing and supporting cybersecurity initiatives.

The banking and finance sector in the GCC is at a critical juncture in 2024. The rapid adoption of digital technologies has brought about significant opportunities but also exposed the sector to unprecedented cybersecurity challenges. Financial institutions in the region must navigate a complex and evolving threat landscape, comply with increasingly stringent regulations and manage the risks associated with third-party providers and emerging technologies.

By adopting a comprehensive and proactive approach to cybersecurity, GCC financial institutions can protect their operations, maintain customer trust and ensure the continued growth and stability of the banking sector in the region. As the digital landscape continues to evolve, so too must the strategies and tools used to safeguard against the everpresent threat of cyberattacks.

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Tether Launches Dirham Pegged Stablecoin

Tether remains a dominant player in the rapidly evolving financial landscape, boasting a market capitalisation nearing $117 billion. Oscar Wendel Editor-at-Large for MEA Finance, sat down with Paolo Ardoino CEO of Tether, following the announcement of a new Dirham-pegged Tether stablecoin, to shed light on the motivations behind this latest initiative and the broader implications for global economies, particularly in emerging markets

Addressing the Needs of the Unbanked in Emerging Markets

Tether’s journey began in 2014 when it pioneered the concept of the stablecoin, a digital currency backed by traditional assets, offering the stability of fiat currency with the flexibility of blockchain technology.

“We created the entire stablecoin market in 2014; there was no stablecoin before us,” Paolo stated. Tether has subsequently positioned itself as

a cornerstone of the cryptocurrency ecosystem, with its USDT (Tether’s dollarpegged stablecoin) leading the market.

While Tether’s USDT might seem superfluous in financially secure regions like the US and Europe, Paolo emphasised that its true value lies in offering stability in regions plagued by economic instability.

“There are five billion people around the world who live in high-inflation countries. Three billion of them don’t have a bank account,” he noted. These individuals are often unbanked due to their low economic

status and are left vulnerable to the ravages of hyperinflation and currency devaluation.

For these populations, Tether offers a vital tool for preserving wealth. “Imagine you are a father. You work an entire year, at the end of which you are poorer compared to the beginning.”

This is the harsh reality for millions in countries like Argentina, where the peso has lost 90% of its value against the dollar in the past five years, and Türkiye, where the lira has depreciated by 80%. Tether’s stablecoins provide a means to safeguard earnings against such economic erosion, added Paolo.

The UAE Collaboration: A New Era of Financial Stability

The announcement of a Dirham-pegged stablecoin, developed in partnership with Phoenix, marks a significant expansion for Tether. The UAE, with its strong economy and relatively low debt levels, presents an ideal market for this new stablecoin. Paolo underscored the strategic importance of this move: “We believe, here in the UAE, with such a strong economy... is making a stronger case for an option, a new option for a Dirham-pegged stablecoin that will give people the comfort that they need.”

The new stablecoin is not just about convenience; it’s about trust—a key element in any financial product. The Dirhampegged stablecoin aims to complement the UAE’s existing financial infrastructure by offering the security of blockchain with the stability of a fiat currency.

Navigating Regulatory Scrutiny with Resilience

Tether has had its challenges, particularly in the realm of regulatory scrutiny. Over the years, questions have been

raised about the transparency of Tether’s reserves and its ability to meet redemption demands.

Paolo addressed these concerns head-on: “Tether is more than 100% backed. Right now, as of today, we have more than $100 billion in US Treasury bills.” This robust reserve strategy, which exceeds the US debt holdings of many countries, is designed to ensure Tether’s resilience in the face of market volatility.

In 2022, Tether’s resilience was put to the test when short sellers targeted the company, hoping to trigger a collapse. “In 48 hours, we were able to process $7 billion of redemptions,” Paolo recounted.

This was just the beginning. Over the next 20 days, Tether successfully processed over $20 billion in redemptions, equivalent to 25% of its reserves. Paolo contrasted Tether’s performance with that of traditional banks, many of which have failed under similar pressures. “There is no bank institution that can manage the risk in the way we do because we don’t take risks,” he asserted.

The Role of Phoenix Group and M2 Exchange in the UAE Expansion

Phoenix Group, a major player in the UAE’s cryptocurrency ecosystem, is a key partner in the development of the Dirham-pegged stablecoin. Its deep understanding of the local market and regulatory landscape makes it an invaluable ally.

“Phoenix is one of the most important, if not the most important player, here when it comes to Web3 and cryptocurrencies,” Paolo said. Its expertise and connections are critical as Tether navigates the complexities of launching a new financial product in the UAE.

Paolo hinted at the future involvement of M2 Exchange, in which Phoenix Group has an ownership stake. He stressed the importance of local partnerships in ensuring the success of such initiatives: “When you enter a new place, you should never have the arrogance to think, ‘Oh, I know how it works... I will do everything myself.’” This collaborative approach reflects Tether’s

THERE IS NO BANK INSTITUTION THAT CAN MANAGE THE RISK IN THE WAY WE DO BECAUSE WE DON’T TAKE RISKS

commitment to integrating seamlessly into new markets while adhering to local regulations and standards.

Tether’s Broader Mission: Disintermediation, Independence and Resilience

Beyond the immediate goals of expanding into new markets, Tether’s mission is underpinned by three core principles: disintermediation, independence and resilience. “Tether, with the USD and with the other stablecoins, is able to prove to the world that there are too many intermediaries... just milking fees from people,” Paolo stated. By reducing the number of middlemen in financial transactions, Tether aims to lower costs and increase efficiency, particularly in regions with limited access to traditional banking services.

Independence is another cornerstone of Tether’s philosophy. Paolo lamented how modern technology often restricts rather than liberates individuals. “We live in a world where I believe technology should make people more independent rather than putting them in a cage,” he said. Tether’s vision is to use blockchain technology to empower individuals, giving them greater control over their financial futures.

Resilience is also at the heart of Tether’s strategy. The company’s ability to withstand market pressures and regulatory scrutiny has set a new standard for stability in the digital currency space. “Technology should make us stronger, and instead, technology is actually making us weaker,” Paolo observed. Tether’s goal is to build financial tools that not only survive in a volatile world but thrive, providing users with a reliable and stable financial system.

The Road Ahead: Launching the Dirham-Pegged Stablecoin

Looking ahead, Paolo expressed optimism about the timeline for the Dirham-pegged stablecoin, though he emphasised the importance of thorough preparation. “Over the next months, we are going to work with the central bank ... to present all the documentation, every single detail,” he explained. This meticulous approach reflects Tether’s commitment to delivering a product that meets the highest security and stability standards. When asked about the expected launch date, Paolo was cautiously optimistic in his response: “If it takes months, that doesn’t matter... But within a year, do you think? I’m very optimistic on that.” This careful balancing of optimism with realism indicates Tether’s approach to its ambitious goals, focused on long-term success rather than rushing to market. Tether’s expansion into the UAE with a Dirham-pegged stablecoin represents more than just a new product—it is a significant step forward in the company’s mission to bring financial stability and independence to emerging markets. By integrating blockchain technology with the trust and stability of traditional fiat currencies, Tether is setting a new standard for digital finance. As Paolo summed up: “We want to empower people and governments alike, to become more independent, to become more resilient.”

As Tether continues to grow and evolve, its impact on global financial systems—especially in regions most in need of stability—will undoubtedly be profound. The Dirham-pegged stablecoin is just the latest chapter in a story that began with a revolutionary idea and has since become a cornerstone of the global digital economy.

Saudi Arabia Pioneering CBDCs to Meet Global Needs

Reporting from the Point Zero Forum in Zurich in July, organised in conjunction with the Bank of International Settlements (BIS), Oscar Wendel editor at large for MEA Finance was present to hear Yazeed Alnafjan Deputy Governor for Financial Innovation at the Saudi Central Bank, speak on a panel entitled ‘Global Policymakers’ Dialogue on State of CBDCs and Digital Money Regulations’

Alnafjan’s message was that Saudi Arabia recognises the specific global needs that these serve and is pioneering experimentation in wholesale CBDCs for cross-border transactions.He was joined by Dr. Antoine Martin, Member of the Governing Board, Swiss National

Bank and Peter Kerstens from the European Commission.

The evolving landscape of Central Bank Digital Currencies (CBDCs) is rapidly capturing the interest of global financial regulators, economists and central bankers. Among the countries pioneering this transformative initiative,

Saudi Arabia stands out with its innovative approach to wholesale CBDCs, particularly focusing on cross-border transactions. As highlighted by Yazeed Alnafjan from the Saudi Central Bank (SAMA) during a recent panel discussion, Saudi Arabia’s journey offers valuable insights into the broader application and potential of CBDCs to address specific global financial needs.

The Case for Wholesale CBDCs

Central Bank Digital Currencies have garnered significant attention for their potential to revolutionise both retail and wholesale financial transactions. While retail CBDCs are designed for use by the general public, wholesale CBDCs are intended for financial institutions and large-scale transactions.

Saudi Arabia’s experimentation with wholesale CBDCs, as explained by Alnafjan, is rooted in a solutions-based approach that addresses specific challenges in the financial sector. “We follow a solutionsbased approach,” Alnafjan stated. “We look at what are the issues, so how, what are the problems we’re trying to solve. For us, CBDC by itself is not a solution; you need the problem statement first.”

Cross-Border Payments: A Global Challenge

One of the most pressing issues in the global financial system is the inefficiency and high cost of cross-border payments. Traditional methods of transferring money across borders are often slow, expensive and fraught with risks, including counterparty and settlement risks.

Yazeed Alnafjan, Deputy Governor for Financial Innovation at the Saudi Central Bank, at the Point Zero Forum

Recognising this, Saudi Arabia has targeted cross-border payments as a primary area for CBDC experimentation.

“In our case, we have an issue with cross-border payments, and this is a common issue shared by everyone. Hence, we opted to start our experimentation with the wholesale CBDC on cross-border payments,” Alnafjan explained.

Saudi Arabia’s first significant experiment in this realm began in 2018 through Project Aber, a joint initiative with the Central Bank of the UAE. The project explored the feasibility of using a dualissued digital currency for cross-border transactions. The success of this initial experiment has paved the way for further collaboration and innovation in the field.

Collaborative Efforts and Global Initiatives

Saudi Arabia’s efforts are part of a broader global trend of collaboration among central banks and financial institutions to explore the potential of CBDCs.

Alnafjan highlighted Saudi Arabia’s active participation in Enbridge, a multiCBDC bridge initiative led by the Bank for International Settlements (BIS) Innovation Hub, which seeks to enhance cross-border payments using digital currencies.

“Countries should continue to experiment, research and collaborate with other central banks to gain an understanding,” Alnafjan emphasised.

“The Swiss experiment has been very interesting. It’s widely successful, and we’re very much interested in knowing more about it.”

The Importance of Legal and Regulatory Frameworks

A significant part of Saudi Arabia’s preparatory work for CBDCs involves building a robust legal and regulatory framework to support the issuance and use of digital currencies. Alnafjan noted the crucial steps taken by SAMA to eliminate legal uncertainties and provide a clear mandate for digital currency issuance.

“We updated the central bank law back in 2020, which gave SAMA the power to

ANY INTRODUCTION OF CENTRAL

BANK DIGITAL

CURRENCY, WHETHER IT’S AT A WHOLESALE LEVEL OR RETAIL LEVEL, SHOULD COMPLEMENT THE EXISTING REAL-TIME GROSS SETTLEMENT SYSTEM (RTGS)

issue any form of money, so we’re not restricted,” Alnafjan explained. “We are currently in the process of updating our banking law to include language that allows banks to issue tokenised deposits and to be treated as deposits.”

This comprehensive approach ensures that any future implementation of CBDCs in Saudi Arabia is backed by a solid legal foundation, thereby mitigating potential risks and ensuring financial stability.

Mitigating Risks and Ensuring Stability

While the potential benefits of wholesale CBDCs are significant, they also introduce new risks to be considered carefully. Alnafjan highlighted several critical focus areas: operational risks, financial stability concerns and cybersecurity threats.

“Any introduction of central bank digital currency, whether it’s at a wholesale level or retail level, should complement the existing real-time gross settlement system (RTGS),” Alnafjan stated. “You cannot have two separate systems operating simultaneously as that will lead to operational risks, fragment liquidity in the market and cause financial stability concerns.”

Cybersecurity, in particular, is a top concern for central bankers globally. Rapid advancements like quantum computing pose potential threats to existing cryptographic systems. Alnafjan stressed the importance of continuous investment in cybersecurity measures to protect the financial system from emerging threats. “Cybersecurity risk is one of the top risks, which will only grow in the future. As we invest and

experiment with CBDCs, similar research and activities must be conducted on how to protect the financial system,” he said.

A Path Forward for Global Financial Systems

Saudi Arabia’s pioneering efforts in wholesale CBDC experimentation serve as a valuable case study for other nations exploring the potential of digital currencies. By focusing on specific problem areas such as cross-border payments, building robust legal and regulatory frameworks and addressing potential risks, Saudi Arabia is setting a precedent for how to approach CBDC implementation thoughtfully and effectively.

Alnafjan’s insights underscore the importance of a measured and collaborative approach to CBDC development. As more countries embark on similar journeys, the lessons learned from Saudi Arabia’s experience will undoubtedly contribute to a more efficient, secure and inclusive global financial system.

Moderator - Chris Brummer, Agnes Williams Sesquicentennial Professor of Financial Technology, Georgetown University Law Center & Founder and Chief Executive Officer, Bluprynt

Speakers

Yazeed Alnafjan , Deputy Governor for Financial Innovation at the Saudi Central Bank

Dr. Antoine Martin , Member of the Governing Board, Swiss National Bank Hon. Caroline Pham, Commissioner at the Commodity Futures Trading Commission

Peter Kerstens, Advisor at DG FISMA, European Commission

Friend or Foe

While it is understood that AI will likely bring ample tangible benefits to banks, there are also substantial risks that need to remain top of mind for chief risk officers

The emergence of Generative AI (GenAI) tools represents a significant technological leap forward, with the potential to have a substantial impact on the banking sector. “Artificial intelligence (AI) technologies are increasingly integral to the world we live in and banks need to deploy these technologies at scale to remain relevant,” said McKinsey.

GenAI, a subset of deep learning technology or traditional AI, became a buzzword in 2023, setting the financial services industry on a path to experimentation while sparking

discussions around the promise and future of AI in the banking sector.

Artificial Intelligence can be your friend, but it may also be your foe. While it can revolutionise business, enhance efficiency and drive innovation, it also poses real threats that can lead to chaos and costly consequences.

“The pace and scale of AI, like any sweeping innovation, is likely to bring benefits but could pose risks for financial stability,” according to the European Central Bank’s Financial Stability Review.

GCC financial watchdogs have stepped up efforts to combat rising financial crime

risks by urging market participants to adopt technology-driven solutions. The regulators issued regulations and guidance in the recent past to help financial institutions bolster their defences against such cyber threats.

Cybersecurity remains at the top of the executive agenda, and banks are allocating more resources and investments to strengthen their cybersecurity defences. EY said the key AI/ML implementation focus areas for bank risk management teams are credit risk management and fraud detection.

Risk management is a fundamental, vast and fast-evolving part of a bank’s business that encompasses credit, market, operational, liquidity, technology and information risks. Similarly, AI/ML plays a crucial role in fraud detection by analysing vast amounts of data and detecting anomalies or suspicious activities.

Global banking chief risk officers (CRO) anticipate regulators will increasingly focus on the impact of digitisation and data integrity over the next five years.

The GCC banking sector is undergoing a significant transformation as AI technology gains momentum. The region’s growing interest in AI reflects its potential to revolutionise business operations.

AI potential risk management

As banks in the GCC region navigate the rapidly evolving technological landscape, they must carefully evaluate not only the benefits but also the potential risks associated with innovative technologies such as the cloud.

A balanced approach will ensure that financial institutions can leverage new technologies while mitigating potential vulnerabilities. Banks are inherently exposed to risks due to the nature of their business, which involves handling financial assets, investments and the liabilities that come with them.

A joint study by EY and the Institute of International Finance revealed that cybersecurity has remained at the top of the list of near-term risks for banks around the world for the second

THE KEY AI/ML IMPLEMENTATION FOCUS AREAS FOR BANK RISK MANAGEMENT TEAMS ARE CREDIT RISK MANAGEMENT AND FRAUD DETECTION

consecutive year amid unprecedented levels of volatility, geopolitical tensions and global uncertainty.

Cyber resilience continues to be a top priority for regulators in the GCC region and a key area of attention for financial institutions. GenAI has the potential to revolutionise the way that banks manage risks over the next three to five years.

The innovative technology has the potential to transform the role of risk professionals in the financial services sector. By automating task-oriented activities, risk professionals can focus on strategic risk prevention, partnering with business lines to integrate controls into new customer journeys.

McKinsey said the shift allows risk professionals to contribute more effectively to business decision-making, including new product development and strategic planning. By leveraging GenAI, GCC banks’ risk professionals can proactively explore emerging risk trends, strengthen resilience and enhance risk and control processes.

The Qatar Central Bank, in its ‘AntiMoney Laundering and Combating Terrorism Financing Instructions,’ mandates financial institutions to maintain sufficient resources, including technology, to combat financial crime risk effectively.

The Saudi Central Bank issued its ‘Counter-Fraud Framework’ in October 2022, where it mandates banks and other financial institutions to define, approve and implement a strategy for the sourcing/ development and implementation of counter-fraud systems and technology to manage fraud risks.

Similarly, the central bank of the UAE issued a guidance note in October 2022

encouraging financial institutions to use ‘Digital ID’ systems – technology that uses electronic means to assert and prove a person’s identity online and/or in in-person environments – to perform customer due diligence.

AI is transforming risk management in the banking sector by enhancing efficiency, productivity and costeffectiveness. KPMG highlighted AI’s potential to lower operational, regulatory and compliance costs for banks by efficiently processing and analysing large volumes of unstructured data with limited human involvement, leading to more accurate credit decision-making.

Digital banking channels have become hotbeds for fraudulent activity. The lack of robust controls and timely detection mechanisms enables fraudsters to take advantage of weaknesses, manipulate systems and use stolen personal information to orchestrate elaborate scams.

To effectively implement AI in risk management, industry experts say financial institutions must undergo a cultural and operational transformation. The transformation includes identifying and acquiring the necessary talent and integrating operating model changes into their business-as-usual processes.

A game changer

Financial fraud is increasing at an alarming rate. An INTERPOL report published in March revealed that financial fraud has increased globally as the public embraces new sophisticated technologies that create openings for online criminals.

The convergence of AI, large language models (LLMs), cryptocurrencies and phishing/ransomware-as-a-service

models has fuelled the emergence of more sophisticated and organised fraud campaigns. “GenAI is expected to significantly raise the threat of fraud, which could cost banks and their customers as much as $40 billion by 2027,” said Deloitte.

There is growing consensus among industry experts that AI will drive an increase in the volume and sophistication of fraud and scams. PwC said GenAI can be used to create tailored emails, instant messages and images in phishing and smishing attempts or fraudulent adverts.

Fraudsters are also leveraging elements of AI in chatbots to converse with potential fraud victims to manipulate them into making payments or money transfers. Chatbots have the potential to multiply fraudsters’ ability to contact victims without the need for extensive human involvement, according to PwC. Similarly, deepfake technology is being used maliciously to lure potential victims. These digitally altered and manipulated videos are used as clickbait to lure people to malicious websites that harvest credit card information for fraudulent purposes.

Deepfake techniques are also often used to modify, through the use of AI, publicly available video, sound or images of a real person to convincingly misrepresent them. Earlier in February, a finance worker at a multinational firm’s Hong Kong office was tricked into paying out $25 million to fraudsters using deepfake technology.

The interconnected nature of modern economies provide plentiful hunting grounds for bad actors. Incidents of fraud will attract the attention of regulators, will damage customer relations and reflect poorly on the image of the bank.

Fighting back with AI

The situation is not entirely bleak. While traditional fraud investigation methods struggle to keep pace with today’s complex schemes, AI’s ability to adapt and learn from evolving patterns makes it a powerful tool for detecting both known and unknown types of fraud.

ARTIFICIAL INTELLIGENCE TECHNOLOGIES ARE INCREASINGLY INTEGRAL TO THE WORLD WE LIVE IN AND BANKS NEED TO DEPLOY THESE TECHNOLOGIES AT SCALE TO REMAIN RELEVANT

– McKinsey

“While most financial institutions have reported that they have used AI systems for years, maturity in utilisation and deployment of AI systems varies by institution and continues to evolve,” said the US Department of the Treasury.

AI technology enables fraud detection systems to analyse vast amounts of data in real-time and identify unusual patterns of behaviour that are indicative of fraudulent activity.

Banks in the GCC region are leveraging AI to automate fraud detection and investigation processes, streamlining workflows and directing cases to the appropriate teams. Similarly, others are already using LLMs to identify potential fraud indicators proactively.

On a global scale, Mastercard is pioneering the use of its Decision

Intelligence tool to prevent credit card fraud. By analysing a trillion data points, this technology can accurately predict the authenticity of transactions.

For years, banks have harnessed AI/ML to analyse credit card portfolios, capitalising on the vast trove of transaction data available to train unsupervised learning algorithms. These models have consistently demonstrated exceptional accuracy in detecting credit card fraud, thanks to the ability to process and learn from massive datasets.

KPMG said credit card payment systems are embedded with workflow engines that monitor card transactions to assess the likelihood of fraud. The rich transaction history available for credit card portfolios presents banks with the ability to distinguish between specific features present in fraudulent and nonfraudulent transactions.

THE PACE AND SCALE OF ARTIFICIAL INTELLIGENCE, LIKE ANY SWEEPING INNOVATION, IS LIKELY TO BRING BENEFITS BUT COULD POSE RISKS FOR FINANCIAL STABILITY

– European Central Bank

Banks have been at the forefront of using innovative technologies to fight fraud for decades. However, a US Treasury report revealed in March that “existing risk management frameworks may not be adequate to cover emerging AI technologies.”

The adoption of AI in the banking sector presents a complex landscape where the technology serves as both a potential threat and a powerful defence mechanism. By embracing an integrated approach that emphasises security by design, ethical development practices and collaborative innovation, banks can harness AI’s full capabilities to bolster cybersecurity defences.

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Detailing their new leadership structure, J.K. Khalil Division President for East Arabia at Mastercard, explains how the power of technology and the importance of expanding collaborative partnerships will foster the strengthening of regional prosperity and inclusion

What prompted Mastercard to evolve its Middle Eastern leadership structure? Mastercard has been driving payment innovation and boosting financial inclusion across the globe for more than 50 years and has been powering economies in the Middle East for over 35 years. We believe in leading with agility in our fast-moving industry as we continue to fuel the future of the payments sector.

Earlier this year, we announced the creation of our East Arabia division, which spans the UAE, Qatar, Kuwait, Oman and Pakistan. The establishment of this division speaks to the phenomenal growth we have already seen in these markets, along with the limitless potential we see for this part of the world.

Our evolved structure is part of our efforts to further strengthen our regional presence, with a focus on fasttracking growth, deepening stakeholder engagement and enhancing our focus on the capabilities that we bring to key markets. It means we can continue to drive momentum for Mastercard’s successful digital transformation journey, combining the power of scale with our deep local market knowledge.

J.K. Khalil, Division President for East Arabia at Mastercard

How will your new leadership structure shape your business in this region?

In my new role as Executive Vice President and Division President for East Arabia, I look forward to working closely with our team to power more inclusive and sustainable digital economies in each of the division markets, so even more communities can continue to thrive thanks to the power of digital commerce.

We are committed to further advancing digital transformation and building a robust payments ecosystem. There are exciting opportunities to show the strength of Mastercard’s technologies in the markets we serve.

The golden thread that connects markets like UAE, Qatar, Kuwait, Oman, and Pakistan is an appetite for digital disruption driven by technology and innovation. These markets are all embracing a digital future, while a rise in fintech, the accelerated integration of AI to transform commerce, growth of Islamic finance and premium experiences are connecting people and businesses to new opportunities.

There are also differences in how each market grows with different technologies and different use cases. For example, we joined forces with JazzCash, the largest digital wallet provider in Pakistan, to introduce affordable contactless acceptance solutions to the 43 million accounts JazzCash serves as we continue to drive financial inclusion for all in that market. In the UAE and Qatar, where inclusion is already quite advanced, digital acceleration is the name of the game. It means we’re focused on accelerating access to next-level convenient solutions like Click to Pay and our Mastercard Move portfolio of money movement capabilities.

I see a promising future for our business, as Mastercard’s innovative technologies and solutions are not only catering to the needs of consumers, partners and organisations, but are also fostering sustainable economic growth and fueling the development of the digital payments landscape across the region.

Give us your perspective on outcomes of emerging technologies in the region’s payments market?

There’s a huge appetite for technology in this region and it’s positively impacting the payments landscape. Emerging technologies such as Artificial Intelligence, blockchain, 5G and quantum computing are contributing to improvements in many sectors – finance yes, but also healthcare, hospitality, retail and the advancement of smart and connected cities.

the inaugural AI Challenge with the UAE’s Artificial Intelligence, Digital Economy and Remote Work Applications Office and First Abu Dhabi Bank (FAB). In line with the UAE Strategy for Artificial Intelligence, the initiative seeks to fuel the growth of the UAE’s thriving AI landscape and foster new opportunities for AI-focused businesses and talent. It is a natural extension of Mastercard’s innovation-driven partnerships. Emerging tech also makes it easier to deepen connections with customers and elevate the user experience to new

THERE

ARE EXCITING OPPORTUNITIES

TO SHOW THE STRENGTH OF MASTERCARD’S TECHNOLOGIES IN THE MARKETS WE SERVE

In payments, these technologies enable us to enhance security, transparency and efficiency. They are advancing our problem-solving skills, and we are innovating daily to build these advances into our industryproven solutions.

At the moment, AI is at the heart of transforming commerce through personalisation, enhanced user experiences and advanced fraud detection. AI can identify trends and patterns, which makes it a handy tool in cybersecurity solutions. By applying a sophisticated AI engine, Mastercard protects more than 125 billion transactions from fraud every year at speed and scale.

We are collaborating with our partners to harness the power of AI to build a secure and inclusive digital future, bringing the benefits of AI to commerce. Last year, we unveiled the global Mastercard Centre for Advanced AI and Cyber Technology in Dubai, aimed at developing AI-powered solutions to fight financial crime, securing the digital ecosystem, and driving inclusive growth. This year, the Center launched

heights – in both physical, virtual and phygital worlds. Just think about how generative AI can offer personalised customer support, addressing paymentrelated queries efficiently. This is becoming even more mainstream as more companies outside of traditional finance turn their attention to payments as a way to drive diversification, engagement and loyalty. At Mastercard, we continue to tap into new technologies like AI to develop new value propositions that are personalised and contextual, shaping the future of commerce, solving real problems for businesses, and making people’s lives easier.

The potential for AI in this region is considerable as the region actively tries to invest in technological innovation for economic diversification. The Middle East is expected to generate economic gains of up to $320 billion by 2030 through the adoption of AI. The impact could be even larger if governments continue to push the boundaries of innovation and implementation of AI across businesses and sectors. Continued innovation, a balanced regulatory approach,

upskilling and knowledge sharing, are vital to ensure economies and people can benefit from the positive impact of emerging technologies.

What drives Mastercard to form key partnerships in our region?

Mastercard’s mission is to power economies and empower people. The ability to accept electronic payments has been critical to shaping the future of commerce and spurring the shift to digital – unlocking new use cases and enhancing expectations for speed, simplicity and safety. Mastercard is at the centre of this digitisation, bringing forth new ways to pay while fortifying trust across all payment forms and flows.

Strong partnerships with like-minded companies, fintechs, telcos, financial and academic institutions, nonprofits and public sector agencies, add to our innovations, scale and impact. Partnership truly is the name of the game. Working closely with key ecosystem players allows us to amplify each other’s innovation capabilities to keep up with the evolving needs of their customers.

solutions, aligning with Doha Bank’s ‘Himma’ roadmap that aims to redefine how it operates and serves its clients. In addition to expanding the size of its business in the field of cards and digital payments, Doha Bank will benefit from Mastercard’s expertise in the field of digital solutions to support the strategic transformation process at Doha Bank.

PARTNERSHIP TRULY IS THE NAME OF THE GAME

There are numerous examples - one such one is our strategic collaboration with First Abu Dhabi Bank (FAB), aimed at leveraging advanced technologies, including AI, to develop unique and disruptive products, services and solutions, driving accelerated growth and innovation in the UAE and scaling expansion plans in international markets.

In Qatar, Doha Bank and Mastercard have entered a long-term strategic partnership to deploy innovative payment

On the sustainability front, we’ve partnered with Commercial Bank to accelerate the transition to a sustainable and regenerative economy in Qatar. They became the first bank to introduce Mastercard’s Carbon Calculator and signed Mastercard’s Qatar Sustainable Cards Pledge, which mobilises the country’s banks to switch to cards made from recycled or bio-sourced plastics by 2026.

In Pakistan, we’ve collaborated with CARE International to launch the Strive Women program, an initiative that seeks to strengthen the financial health and resilience of women-led small businesses in the country.

In this rapidly evolving, technology led era, how do you assess the future of digital payments and financial ecosystems?

We continue to see considerable growth in e-commerce and cross-

border payments. A few years ago, a lot of the cross-border payments out of the UAE were related to travel spend, but today, they are a mix of travel, e-commerce, services and experiencerelated spends.

I truly believe the future for digital payments is bright and technology will continue to help develop and transform financial ecosystems so that the digital economy can benefit everyone, everywhere. Last year, electronic transactions comprised over half of all transactions and 95% of the transaction value in the Middle East.

Businesses big and small are seeing the positive impact. Organisations are looking for advanced B2B payment solutions and expense management tools, bringing innovation and efficiency to the forefront. One of the ways we’re addressing this is our collaboration with Pluto, a leading provider of financial corporate spend management solutions in the UAE.

On the other hand, digital payments acceptance and strong digital infrastructure are also advantages for small businesses, which are the lifeblood of communities and economies in most countries. We think it’s extremely important to empower SMEs. When you give them better access to technologies,

products and financial services, you improve the lives of not just the SME owners, but also their employees and related communities.

We are on track to achieve our goal to bring one billion unbanked and underserved individuals and 50 million micro, small and medium enterprises (MSMEs) worldwide into the digital economy by 2025. And we’ve already reached a milestone 37 million women entrepreneurs, by supporting them with the digital tools they need to thrive.

How is Islamic Finance making use of innovations such as digitisation and AI?

Mastercard prides itself on launching locally relevant products and solutions that focus on the local needs of each market. Islamic finance is a great example of how we innovate and collaborate to build robust and inclusive payment ecosystems.

The State Bank of Pakistan, for example, aims to increase the share of Islamic banking from 20% to 35% by 2025. A study by the State Bank of Pakistan noted that 62% of the banked population and 45% of the unbanked express a willingness to invest more in Sharia-compliant products. The majority (74%) of those already banked display openness to transition to Islamic banking, illustrating the allure it holds.

Across East Arabia, we have partnered with key players in Islamic finance. With Dubai Islamic Bank (DIB) in the UAE, we introduced cross-border payment services for P2P and B2B transfers, enabling real-time remittances across 40+ countries via their digital channels. In Qatar, our collaboration with Qatar International Islamic Bank (QIIB) enhanced their offerings with secure Mastercard credit cards, tailored to customer needs. In Kuwait, Boubyan Bank has been

recognised as the fastest-growing bank in the premium segment in the market. And in Pakistan, we recently launched Mastercard’s new cybersecurity service with Meezan bank.

We’re also collaborating with our partners to form a new Islamic Council, bringing together a community of experts and practitioners to exchange ideas, shape ethical standards and highlight best practices for the future of Islamic banking, setting new benchmarks for Shariah-compliant financial services worldwide.

In a region with an already very well-equipped hospitality sector, how are more affluent customers changing the current market?

Affluent consumers are seeking out premium experiences over material things, and this segment’s pursuit of special, unique encounters is also making a positive contribution to the travel and

hospitality industry. By 2030, the value of the Middle East’s luxury market is likely to be over $30 billion.

Our Mastercard report ‘Affluent travel: A Middle East perspective’ has highlighted the increasing role of high-net-worth individuals (HNWIs) in boosting the travel and hospitality industry. This discerning segment contributes approximately 36% of the global spend on travel and nearly 70% of the spend on luxury travel. Nearly a quarter of affluent travelers are willing to pay more for remote destination experiences, customised tours to connect with local culture and authentic eco-luxury experiences. Over a third of this discerning segment are willing to pay between 30% and 50% more for sustainable travel features such as energy-efficient solutions.

Luxury-seekers are digitally savvy, with 74% booking travel online. However, they also want their money’s worth in the form of exemplary customer service and pampering. Meanwhile, the combination of business and leisure, or ‘bleisure’, is resulting in more remote-work trips as digital nomads change the face of travel. And as wealth migrates to younger generations, Millennials now comprise the highest percentage of luxury-seekers, followed by Gen Z. Within the GCC, however, Gen X is expected to make the highest contribution to travel growth.

Mastercard continues to create meaningful connections with consumers through their passions, such as travel, sports, cuisine, music, entertainment, arts, shopping, nature and philanthropy. As example, through our Michelin sponsorship, we’ve been tapping into their passion for culinary excellence. Earlier this year, we also launched the Mastercard World Elite card with enhanced premium benefits with Marriott Bonvoy and Emirates NBD for consumers with a travel for passion.

Broadening Horizons

Vipul Kapur Head of Mashreq Private Banking, in his comprehensive overview of the regional wealth management market, he highlights the current and emerging priorities of the region’s high net worth individuals

What are the top wealth management trends that the region is witnessing now?

Wealth management in the region is experiencing significant transformation. A convergence of new consumer preferences, digital frameworks, along with demographic shifts has fundamentally reshaped the landscape for both clients and banks. Progressive banks, including Mashreq, have invested heavily in creating digital experiences centered around human needs, ensuring seamless integration between clients and relationship managers.

A notable area of expansion is Impact investing and ESG (Environmental, Social and Governance) considerations, especially among the next generation of family members. We observe younger generations exploring diverse investment avenues and with a strong focus on global sustainability, contrasting with their parents or grandparents.

Another emerging trend is the evolving landscape of family offices. Traditionally focused solely on investments and capital allocation, their role has advanced considerably. There is a growing emphasis on professionalising family offices, presenting opportunities for banks to provide support. Mashreq, being the first local bank to host Family Office Services within Private Banking, was first to catch on this requirement.

Lastly, with increased economic integration within the Gulf Cooperation Council (GCC) and broader Middle East, wealth management services are becoming more cross-border, creating the needs for addressing clients’ interests in multiple countries.

Why is there an influx of wealth management companies in the Middle East at the moment?

The region has been experiencing economic growth and diversification,

creating new opportunities for wealth creation and accumulation. Countries like the UAE and Qatar have positioned themselves as financial hubs with favorable regulatory environments, attracting wealth management firms to establish operations.

The region already had a significant population of high-net-worth individuals (HNWIs) and ultra-high-net-worth individuals (UHNWIs) who require sophisticated wealth management services. Post Covid, UAE has experienced highest inflow of HNWIs who have relocated base to the country, which presents opportunities for new entrants to innovate and cater to techsavvy clients. Furthermore, there is increasing demand for family office services, including wealth preservation, succession planning and governance, which attracts specialised wealth management firms.

These factors along with global connectivity have created a conducive environment for the growth of wealth management companies in the region.

What must UHNWI and HNWI look out for in the next 5 years in our region in terms of investment?

High-net-worth individuals (HNWIs) typically exhibit a higher tolerance for risk, longer investment horizons and reduced necessity for highly liquid assets. Their objectives often include wealth preservation and intergenerational wealth transfer.

With these attributes, in near future too, diversification will continue to be key for Investments with higher growth opportunities in sectors such as technology, healthcare, renewable energy and tourism.

Having said that, It will be important to stay informed about geopolitical

Vipul Kapur, Head of Mashreq Private Banking

developments in the region and globally, as they impact market stability, investor sentiment and business operations.

How are wealth management firms addressing the needs of the next generation of high-net-worth individuals (HNWI) in the region?

Wealth management firms in the region are adapting their strategies and services to meet the evolving needs of the next generation of high-net-worth individuals (HNWIs).

Recognising the digital-native nature of younger generation, Mashreq continues work on enhancing its digital platforms and capabilities. This means providing mobile apps, online portals for portfolio monitoring, digital wealth management tools and automated investment services.

There is also an increased focus on educating younger generation about financial literacy, investment options and wealth management strategies. Seminars, workshops and personalised informative sessions are often tailored to address the specific interests and concerns of the next generation.

At Mashreq, we have been proactive in adapting our offerings and services to meet the needs of the next generation. By leveraging technology, offering customised solutions, supporting family governance and fostering global perspectives, we aim to build lasting relationships and effectively manage the wealth of younger HNWIs.

How important is it for UHNWIs and HNWIs to have a global investment strategy?

For ultra-high-net-worth individuals (UHNWIs) and high-net-worth individuals (HNWIs), having a global investment strategy is crucial. A global investment strategy allows them to spread risk across different regions, asset classes and currencies, reducing dependence on any single market or economy. Global diversification provides access to a broader range of investment opportunities, including sectors and industries that may be more developed

or promising outside their local region. It also helps to hedge against geopolitical risks and economic downturns that may affect their local investments.

How can UHNWIs and HNWIs balance a global investment strategy with local opportunities in the Middle East?

However, balancing a global investment strategy with local opportunities

Infrastructure investments in the Middle East benefit from rapid urbanisation, and increasing demand for modern infrastructure such as transportation, utilities and telecommunications. Many infrastructure projects also receive strong backing from governments through funding, which can enhance project viability and investor confidence.

In terms of risk, investments are exposed to changes in policies, regulatory

FOR ULTRA-HIGH-NET-WORTH INDIVIDUALS (UHNWIS) AND HIGH-NET-WORTH INDIVIDUALS (HNWIS), HAVING A GLOBAL INVESTMENT STRATEGY IS CRUCIAL

in the Middle East is also important. Collaborating with local partners who have deep knowledge of the Middle East market can enhance investment decisionmaking and mitigate risks associated with unfamiliar territories. Besides, certain sectors, such as real estate, infrastructure and energy, may offer compelling investment opportunities locally due to regional developments and government initiatives.

Overall, ideal investment approach involves finding the right balance between global and local strategies and aligning investments with overall financial goals and risk tolerance.

What are the potential benefits and risks of investing in infrastructure projects in the Middle East?

While investing in infrastructure projects in the Middle East can offer attractive growth opportunities and diversification benefits, it is essential to conduct thorough due diligence, assess potential risks carefully and develop robust risk management strategies to mitigate uncertainties and maximise investment returns.

hurdles and geopolitical tensions, which can affect project feasibility and returns, just as in any other region.

What is the role of family offices in managing the wealth and investments of UHNWIs and HNWIs in the Middle East, and how can they adapt to changing market conditions?

Family offices in the Middle East play a pivotal role in managing and preserving the wealth of UHNWIs and HNWIs through customised wealth management solutions, tactical investment strategies and adapting to dynamic market conditions with agility, innovation and a focus on longterm wealth preservation and growth.

How can family offices adapt to changing market conditions?

Embracing Innovation is the key in adapting to changing market conditions. By leveraging technological advancements, data analytics and digital platforms, they can enhance management efficiency and client communication as it helps access specialised expertise, stay informed about market and optimise investment outcomes.

Here and Now

Real time payments in our region continue to make decisive headway, with one study concluding ours is the fastest market for this globally, and with almost all parts of the payments environment undergoing transformation

With nearly every aspect of the region’s payments ecosystem undergoing transformation, there is a unique opportunity for infrastructure providers and other players in the industry to shape how we make payments in the future.

“The rapidly evolving payments landscape is accelerating the pace of change in the banking industry, creating unprecedented opportunities for growth and innovation,” according to KPMG. Market forces, including real-time payments and regulatory mandates such as ISO 20022, are serving as watershed moments and proving a springboard for financial institutions

across the GCC region to deliver better payment experiences and value-added services for customers.

KPMG said these elements are catalysts for payments modernisation as financial institutions look to grow and strategically position themselves, now and in the future.

The modernisation of the payments sector is an important journey that economies around the world are either embarking on or experiencing right now. More than 85 jurisdictions on six continents support real-time payments, ensuring immediate fund availability to beneficiaries and can be used on a 24/7/365 basis, providing a reliable and efficient system.

Real-time payments initiatives such as FAWRI+ in Bahrain, SARIE in Saudi Arabia and Aani in the UAE, along with schemes launched in Oman, Kuwait and Qatar in 2023, demonstrate the Middle East’s commitment to instant payments and digital financial services.

A study by ACI Worldwide revealed that the Middle East is the fastest-growing real-time payments market globally, with transactions expected to grow at a CAGR of 28.8% from $855 million in 2023 to $3 billion by 2028.

The GCC’s payment landscape has evolved over recent years, spurred by market dynamics, driven by regulatory changes, innovative technologies and new market entrants. This trend is poised to accelerate the transformation of the payments sector while fueling disruptive business models across the sector.

Payments and AI

Generative AI (GenAI), made headlines in 2023, encouraging banks to study its possibilities and starting discussions about the potential of AI to revolutionise the payments landscape.

“AI presents many opportunities for treasurers and broader payments leaders. It can help automatically create insights such as cashflow forecasting while fortifying payments with account validation and fraud management,” JP Morgan said in a blog post.

The integration of AI technology in the payments industry offers businesses substantial opportunities, including streamlining operations, reducing costs and delivering personalised experiences to customers.

BCG said in a report that GenAI’s tremendous potential in the payments industry lies in operational efficiency. The innovative technology’s ability to handle high-volume, data-intensive tasks that are currently labour-intensive could significantly impact specific payments operations.

Furthermore, GenAI has the potential to significantly impact larger-scale operations, such as enabling virtual assistants for treasury tasks, supporting payments-related dispute resolution and providing developer tools.

While GenAI is still nascent, it could become a key differentiator in the coming years. However, strong governance is crucial and payments leaders should collaborate effectively to validate use cases and manage pilot projects.

The impact of the new technology on specific payments operations is expected to be profound as industry experts expect it to boost productivity by more than 20% at various stages of the development process.

AI PRESENTS MANY OPPORTUNITIES FOR TREASURERS AND BROADER PAYMENTS

LEADERS. IT CAN HELP AUTOMATICALLY CREATE INSIGHTS SUCH AS CASHFLOW FORECASTING WHILE FORTIFYING PAYMENTS WITH ACCOUNT VALIDATION AND FRAUD MANAGEMENT

– JP Morgan

Payments businesses have some unique characteristics. The risk profile, the regulatory scrutiny, the competitive intensity and the need to segment and engage closely with customers throughout the product lifecycle all mean that generative AI could have profound implications with potential opportunities to seize and new challenges to navigate.

Globally, some payments process giants have already started experimenting with cutting-edge technology. American Express is employing GenAI to speed up product development, while Visa and Mastercard are using it to augment fraud detection capabilities.

Visa expanded its product suite for business clients in March by adding three new AI-powered fraud prevention tools. The payments giant unveiled a $100 million investment in GenAI-focused companies and reported blocking $40 billion in fraudulent activity in 2023, nearly double the amount from the previous year.

THE RAPIDLY EVOLVING PAYMENTS LANDSCAPE IS ACCELERATING THE PACE OF CHANGE IN THE BANKING INDUSTRY, CREATING UNPRECEDENTED OPPORTUNITIES FOR GROWTH AND INNOVATION

– KPMG

GenAI holds the potential to revolutionise payments by advancing personalisation, security and efficiency. The technology’s multifaceted approach benefits both businesses and consumers. From marketing and sales to eKYC, customer service and risk management, it offers comprehensive solutions for the entire payments ecosystem.

Modernisation imperative

Payments modernisation is one of the highest-priority investment areas for financial institutions of all sizes. Banks in the GCC region are increasingly recognising the need for modernised payments infrastructure as a crucial step in fulfilling regulatory obligations and unlocking opportunities for scalable innovation.

“Banks cannot afford to view real-time payments and ISO 20022 in isolation. There is a much broader payments modernisation strategy in play: it is about knitting together these disparate yet interconnected elements into a comprehensive vision for a bank’s future in the payments landscape,” said KPMG.

More than a technology updating exercise, payments modernisation is a repositioning that will open new growth and innovation opportunities for growth, bringing competitive advantages. While real-time payments systems have been around for decades – Japan pioneered the first of its kind in 1973 – the

global push for instant payments systems has gained significant momentum in the past 15 years.

“Within the GCC countries and the wider Middle East, there has been significant collaboration between central banks and institutions such as the Arab Monetary Fund to lay the foundation for the implementation of regional payments systems aimed at further integrating Arab economies,” Parikshit Bhattacharya, Head of Cash Management Sales Middle East at Barclays said in a blogspot.

Real-time payments are transforming the GCC payments landscape, not only by streamlining inefficient processes but also by enabling entirely new business models.

Saudi Arabia leads the Middle East in real-time payments, while Bahrain boasts global consumer adoption. These systems, often based on ISO 20022 standards, facilitate two-way communication, allowing for faster settlements and improved cash flow. Companies can now receive payments instantly and pay employees more efficiently.

Deloitte said that real-time payments will add more transparency to the otherwise fragmented and unpredictable business-to-business payments landscape, in addition to driving business growth across borders.

Meanwhile, financial messaging provider SWIFT predicts that ISO 20022 will be the de facto standard for highvalue payments systems of all reserve currencies in the coming years, supporting 80% of global volumes and 87% of the value of transactions worldwide.

“With instant payments rails powered by ISO 20022, banks can realise enhanced payments insight and analytics for both institutions and customers and increased operational efficiencies, straight-through processing and error reduction,” said PwC.

Industry experts believe that these enhancements enable financial institutions, technology providers, and other stakeholders in the payments landscape to gain real-time insights

MOST

OF GENAI’S POTENTIAL IN THE PAYMENTS SPACE, IN OUR VIEW, RESTS ON THE OPERATIONS SIDE

– Boston Consulting Group

into how their payments impact cash balances and budgeting objectives. This allows for swift monetary decisions in response to opportunities or challenges.

With GCC banks working in unusual market conditions, payments modernisation becomes a catalyst for advanced payments experiences and value-added services. The transformation is fostering growth and innovation within the industry while emphasising the importance of a future-proof payments infrastructure.

Open banking and data

Payments are a critical component of open banking. With GCC countries laying the payments rails, the time is ripe for banks to leverage the benefits that open APIs bring. Over the years, the concept has emerged as a cornerstone of financial services digitalisation in the Gulf region and continues to reshape the payments landscape.

By adopting open banking frameworks and APIs, banks in the Gulf region are fostering ecosystems that seamlessly integrate services, augment customer experiences and drive innovation.

Analysts at Accenture describe open banking and real-time payments as a perfect match for financial institutions. They identify four key areas of interest: customer-facing services, payments service providers, technology providers for merchants and other corporations and request-to-pay solutions.

Open banking is revolutionising traditional financial services models in the GCC region as more specialised and targeted offerings emerge. It empowers consumers and small businesses at the centre of where and how their financial

data is used, ensuring they control it and that they benefit from it through more choices in the way they pay, manage their money, access credit and more.

“For banks and other financial institutions, the data provided by open banking could help generate a wide range of financial services, including enhanced insights and analytics,” McKinsey said earlier this year, noting that consumers will likely benefit from potentially lower costs and improved customer journeys.

Banks and other financial institutions can leverage data from ISO 20022 messaging, open banking and APIs to identify new revenue streams while delivering added-value services to customers.

Saudi Arabia, Bahrain and the UAE have been at the forefront of open banking implementation in the Middle East. PwC projected that open banking has the potential to reshape the financial services landscape and several financial centres in emerging markets, including the GCC region, are making considerable moves in this space.

The GCC’s varying levels of open banking implementation and regulation present distinct opportunities for the financial service sector.

With ongoing technological advancements, consumers and businesses are clamouring for faster, more efficient and secure payment methods. Payments modernisation encompasses the entire payments journey, and banks in the GCC region are adapting to the evolving landscape by transitioning to adaptable platforms that can accommodate modern payments trends.

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Real Time, Real Benefits

Real time payments bring clear benefits to business and society, says Jagadeshwaran Kothandapani Managing Director, Head of Payments for Treasury and Trade Solutions, Middle East and Africa at Citi

How does our region rank against other world markets in term of payments modernisation?

The Middle East and Africa (MEA) region is making significant strides in payment modernisation, particularly through rapid technological adoption of digital payments and significant government initiatives. Digital payments, with a marked shift towards e-commerce

transactions, contactless payments and mobile wallets, have become a crucial part of the financial landscape in many MEA countries, such as ‘Aani’ in UAE, the use of M-Pesa in Kenya, facilitating financial inclusion. The COVID-19 pandemic accelerated this transition as both consumers and businesses sought safer and more convenient payment methods. The development of real time payments in MEA also continues to grow rapidly, and although Europe was an early

Jagadeshwaran Kothandapani (Jags), Managing Director, Head of Payments for Treasury and Trade Solutions, Middle East and Africa, Citi

adopter with Single Euro Payments Area (SEPA), and Asia currently sees the largest volumes, MEA stands as the fastestgrowing market globally.

Embracing this shift, regulators in the region have launched digitisation initiatives as part of their national payment strategies, like South Africa’s Vision 2025 and Kenya’s National Payment Strategy 2022-2025. We have started to see Real Time Payment schemes being rolled out across the region, such as ’GIMACPAY’ in West and Central Africa and ‘Aani’ in the UAE, with the goal of simplifying and speeding up payments. However, Europe in comparison remains ahead of the curve in terms of regulatory-driven payment modernisation, with developed frameworks like Payment Services Directive 2 (PSD2). The MEA region is also witnessing increased collaboration and innovation between traditional financial institutions, like banks and FinTechs, although this is still in its earlier stages as compared to the landscape in Asia. The rise of open banking, blockchain technology and cross border solutions contribute to a dynamic and competitive market. However, parts of the region continue to be challenged by fragmented infrastructure and lower financial literacy levels, which can slow down the pace of modernisation.

How will real-time payments benefit the economies of our region?

Real-time payments provide substantial benefits to the economies of our region by enhancing financial inclusion, improving business efficiency and stimulating economic growth. At its simplest level, real-time payments are valuable because they make it smoother for parties to initiate payments and collect payments in a more productive manner. Real-time payments enable instant settlement which boost cash flow management for businesses and reduce transaction and operational costs in cash handling and processing expenses. Small and medium-sized

enterprises, which form the backbone of the MEA economy, can particularly benefit from faster transactions that enhance liquidity and reduce uncertainty associated with delayed payments. This can lead to increased business efficiency, higher productivity and stronger economic growth. Real-time payments can additionally facilitate faster and more secure cross-border payments, boosting trade and economic integration in the region and with global markets.

Real-time payments also aid in integrating the underbanked and unbanked populations into the formal financial system and foster greater

and security can attract more foreign investment , further stimulating economic development in the region.

How can banks maintain a competitive edge in the era of real-time payments?

To stay competitive in the era of real-time payments, banks should modernise their technology infrastructure, such as by upgrading legacy systems and embracing cloud-based or API-driven architectures, to support larger volumes and quicker processing times. Banks should also look to develop real-time analytics and reconciliation solutions to enable them to offer personalised services, quickly

REAL-TIME PAYMENTS REDUCE A GREAT PORTION OF THESE BURDENS THROUGH IMMEDIATE RECEIPT OF FUNDS

economic participation. For the unbanked, real-time payments can serve as a gateway to a wider range of financial services, such as savings, credit and insurance. Mobile money platforms, which are already popular in parts of Africa, allow users to store and transfer money, pay bills and access microloans directly from their phones. By integrating real-time payment capabilities, these platforms can offer faster and more reliable transactions, reducing the risks associated with carrying cash and enabling saving on a more secure level. Hence, real-time payments can contribute to economic empowerment.

At a macroeconomic level, the adoption of real-time payments can enhance stability and resilience in financial systems. By modernising payment infrastructures, countries in the MEA region can reduce risk associated with fraud and money laundering, while improving transparency and efficiency. This increased financial transparency

detect fraud and financial crime and optimise operational work streams. By providing faster and more efficient payment systems, banks can meet the growing demand for real-time payments, both from consumers and corporates, who increasingly expect immediate access to their funds. Additionally, banks should focus on enhancing client experience through seamless digital platforms and channels.

Furthermore, partnerships with FinTechs can open new doors to plug gaps and offer new solutions. Collaborating with FinTechs allow banks to leverage cutting-edge technologies and create new and innovative products to cater to evolving client needs. For instance, banks can partner with digital wallets, mobile banking apps and blockchain-based payment solutions to provide a border range of payment and collection methods. With the increase in digital and realtime transactions, the risk of cyber threats also rises. Banks that prioritise robust security standards, such as

advanced encryption and biometric authentication, can build trust and confidence among clients. Finally, banks should maintain strong regulatory compliance and keep a strong level of risk management and controls to stay ahead of the ever-evolving payments landscape. By positioning themselves as trusted, secure and complaint payment service providers, banks can safeguard their client base and reputation in an increasingly digital financial ecosystem.

Can real-time payments have inclusivity benefits for lower earners or the unbanked?

One of the greatest components of real-time payments is the inclusivity benefits it offers, seeing how it provides a more attainable method of carrying out transactions. This is beneficial for individuals with lower income or who receive salary in irregular or unstable cycles. To enumerate, there are certain requirements some banks establish, such as a minimum deposit. Additionally, with less control over personal cash flow, these individuals frequently tend to overdraw from accounts. Non-sufficient funds charges were found to be imposed more on people from lower economic background and payday loans are often not a practical option given the relatively high cost of borrowing. Consequently, many of these individuals prefer to not have a checking or savings account, thereby adding to the huge number of unbanked individuals in the region. However, real-time payments reduce a great portion of these burdens due to immediate receipt of funds. To emphasise, one can get paid immediately after a shift, instead of waiting for the end of the week. This will motivate unbanked individuals to open bank accounts to reap the instant settlement benefits. Those who already have a bank account can also access their money faster, thereby reducing the likelihood of having to pay overdraft or non-sufficient funds fees. Real-time payments can also allow lower earners or the unbanked to send and receive

funds through alternative platforms such as mobile wallets and digital payment systems. By reducing transaction fess typically associated with traditional banking methods, the burden on lower earners is substantially eased.

In addition, real-time payments enhance the efficiency of social programmes and aid distribution, enabling nonprofits and government organisations to deliver emergency support, benefits and subsidies quickly and directly to those in need. The immediacy ensures timely assistance in financial support and beneficiary can receive funds when they need it most. For example, unemployment benefits can be swiftly distributed, helping individuals cover essential expenses without waiting for traditional banking processes, such as cheques, to clear. Real time payments also support small businesses and the gig economy, by facilitating faster compensation to workers, thereby increasing employment and creating more economic opportunities. Overall, real-time payments streamline financial support systems, making them more responsible reliable and equitable to those who depend on them.

What are the possible drawbacks of real-time payments?

While the speed and convenience of transaction are the most emphasised advantages of real-time payments, they also come with notable drawbacks. The immediacy of transactions increases the risk of fraud and financial crimes, as there is less time to detect and prevent malicious activities. Banks must also maintain 24/7 system availability and reliability which may bring operational challenges as it can be costly and demanding, particularly for smaller financial institutions. Furthermore, given how money sits in the beneficiary’s account immediately, reversal of wrong transactions become more complex, which could consequently lead to client dissatisfaction.

The need to meet stringent regulatory requirements on system availability and service levels can also add complexity and

increase burden on financial institutions. Differences in payment systems and infrastructure across the region and global markets can lead to challenges in cross-border transactions, causing interoperability issues and affecting the universality of real-time payments. Therefore, institutions should examine the structural implications that accompany real-time payment products to ensure all potential drawbacks are well addressed.

What are the leading benefits of the use of AI in real-time payments?

AI significantly enhances real-time payments by improving security, efficiency and client experience. AI is well established in advanced fraud and AML detection and can analyse transaction patterns in real-time to identify and block suspicious activities. With AI, risk profiles can be adjusted continuously with realtime transaction data, allowing more dynamic and nuanced decision-making. Since real-time payments are irrevocable, AI’s role is crucial for risk mitigation, as its speed allows it to interpret a tremendous amount of data. Automated reporting and monitoring, backed by AI, can assist in ensuring regulatory reporting requirements are met with minimal human error.

Additionally, AI can forecast trends and client needs, enabling banks to offer proactive services and mange liquidity more effectively. In particular, AI-powered chatbots and virtual assistants can provide instant support for payment service inquiries and reduce turnaround time, enhancing client experience and taking the burden off human agents. Al can also automate transaction processing tasks and reduce humanerror, leading to more reliable payments. AI can also aid in personalisation process to tailor product and services to clients, providing a more seamless and satisfying user experience. AI can play a crucial role in maintaining the integrity and efficiency of real-time payment systems, while fostering innovation and client trust.

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Payments Ahead

Noting that our region is ahead in the race towards payments modernisation, Ali Al Najjar Chief Operating Officer at Al Ansari Exchange highlights the benefits and opportunities that real time payments promises to offer now and into the future

How does our region rank against other world markets in terms of payment modernisation?

In comparison to other global markets, the Middle East Region is not just keeping pace but is outstripping many in the race towards payment modernisation. The region is rapidly emerging as a global leader in payment modernisation, particularly in real-time payments. The Middle East is home to the fastestgrowing real-time payments market in the world for the second successive year.1

Transactions in the Middle East are projected to grow from 855 million in 2023 to 3 billion by 2028, representing a compound annual growth rate of 28.8%.2

As a key player in the industry, we at Al Ansari Exchange have not only expanded to over 260 branches by H1 2024 but are also setting the standard in omnichannel integration. Our digital channels, including the Al Ansari Exchange App, smart counters and eExchange portal, now account for 22% of our overall outward remittances. Our omnichannel approach seamlessly integrates our extensive

branch network with advanced digital solutions, delivering unmatched speed, security and convenience. Our approach, supported by a robust fintech ecosystem and API-driven solutions, highlights our commitment to evolving with the financial landscape.

How will real-time payments benefit the economies of our region?

Real-time payments are rapidly becoming the foundation of modern economies, with governments across the region rolling out real-time payment systems that offer benefits to both businesses and consumers. The adoption of realtime payment systems by all six GCC member states marks a critical step in the widespread adoption of these systems. Due to the adoption of real-time payment systems by GCC countries, transaction value in the Middle East is projected to rise from USD 230 billion in 2023 to USD 903 billion by 2028.3

If we talk about the benefits of realtime payments, I believe one of the most immediate advantages is the elimination of payment friction, which in turn accelerates the flow of funds across the economy. This increased liquidity can boost economic growth by enabling businesses to manage their cash flow more effectively, invest in expansion and respond swiftly to market opportunities. Moreover, real-time payments can play a crucial role in promoting financial inclusion. By providing instant, secure payment options, these systems can bring underserved populations into the financial fold, empowering them with the tools to participate fully in the economy.

How can banks maintain a competitive edge in the era of real-time payments?

Given that real-time payment systems are in place across all GCC countries,

Ali Al Najjar, Chief Operating Officer at Al Ansari Exchange

banks or any financial institutions (FI) must seize this newfound opportunity to drive innovation through technology. By modernising and future-proofing their infrastructure, FIs will be betterequipped to fully realise the potential of real-time payments and pave the way for innovation. Likewise, a strong real-time payment ecosystem also necessitates active partnerships to advance in a competitive market. As a result, banks may face the challenge of striking a balance between collaboration with competitors and driving innovation to advance the existing framework.

Can real-time payments have inclusivity benefits for lower earners or the unbanked?

Real-time payments can significantly enhance financial inclusivity by allowing underserved populations to send and receive money without needing a traditional bank account. For unbanked customers, payroll solution cards, prepaid cards and digital wallets are popular solutions. In fact, it is projected that the number of digital wallets in the Middle East and Africa will rise significantly from 564 million to 969 million by 2028, making this infrastructure essential.

In line with the Wages Protection System (WPS) initiative, Al Ansari Exchange has developed and launched a corporate payroll solution in the UAE. This includes PayPlus and PayRoll cards, which contribute to financial stability and inclusion for lower-income workers by enabling employers to efficiently and securely disburse salaries.

In addition, Al Ansari Exchange Prepaid Cards, namely the TravelCard and FlexiblePay cards, offer versatile solutions for financial management. The TravelCard is ideal for secure international transactions, while the

THE REGION IS RAPIDLY EMERGING AS A GLOBAL LEADER IN PAYMENT MODERNISATION, PARTICULARLY IN REAL-TIME PAYMENTS

FlexiblePay card caters to everyday spending and budgeting needs.

Additionally, we are advancing financial inclusion through our upcoming Al Ansari Digital Pay, an innovative digital wallet that will offer secure, user-friendly transactions, including P2P transfers, bill payments and micro-financing, supporting the UAE’s cashless society and financial inclusion goals. Users will be able to send and receive money via payment links, QR codes and payment requests, further bridging gaps for the unbanked.

What are the possible drawbacks of real-time payments?

Even though real-time payment systems have a lot of potential benefits for businesses, they also present certain challenges. Due to the instant settlement of real-time payments, any errors made during the payment process cannot be corrected. This indicates the need for increased caution, in addition to the fact that reconciliation of these errors can be stressful and time-consuming.

Another consideration is the transition cost. Shifting to a real-time payment system often involves substantial investment in new technology and infrastructure. Businesses may face high initial expenses related to system upgrades and integration. This financial burden, coupled with the need to overhaul existing processes, can be a considerable hurdle, especially for smaller businesses.

References: 1https://www.arabianbusiness.com/industries/banking-finance/middle-east-leads-global-real-time-paymentsgrowth-for-second-consecutive-year-report 2https://www.finextra.com/pressarticle/100591/aci-worldwide-publishes-prime-time-for-real-time-report 3Ibid.

What are the leading benefits of the use of AI in real-time payments?

Artificial intelligence (AI) is positioned to transform the payments industry, as its transformative features are being adopted across all facets of the payments ecosystem. With its ability to offer customised, streamlined and secure transactions, the technology promises smart and seamless financial interactions between users. The impact of AI is multifaceted, encompassing AI-powered chatbots for support that can improve customer satisfaction while lowering operational costs, placing a strong emphasis on efficiency and customer experiences. By analysing transaction data in real-time, identifying anomalies and proactively stopping fraudulent activities, AI-powered tools can further ensure intelligent fraud detection within transactions.

Moreover, it can expand the scope of existing biometric authentication features to include more secure and convenient payment verification, providing users with an additional layer of protection. Gen AI’s flexible strategies will also allow for a more effective and personalised payments risk management framework that operates in real time. This can benefit businesses of varying sizes and capacities by providing valuable operational security. Similarly, AI systems have the ability to create customised financial products and services, such as loan proposals or investment advice, based on a user’s past payments and transactional data. With an emphasis on efficiency, security and personalisation, these components point towards a future where AI will reshape the payments landscape.

Underpinning Market Progress

The lending industry is rapidly evolving, with new fintech players like Finneva and CredibleX emerging to address the unique needs of SMEs. These alternative lenders are introducing innovative products that utilise data and technology to validate financial assets, offering a fresh approach to financing that complements traditional banking services. Amid this transformation, haifin serves as a neutral platform, enabling secure and risk-mitigated lending, which allows the banking community to confidently engage with new fintech entrants and supports a more resilient financial landscape.

MEA Finance talks with the CEOs of Finneva, CredibleX, and haifin about the evolving lending industry and technology’s role in shaping it.

How are the regional and international lending and financing markets changing at this time?

Response from Finneva:

The global business environment is undergoing profound changes due to various macro-economic factors which are impacting supply chain dynamics. Lenders and Financial Institutions, globally as well as regionally are actively working to adapt their financing model to suit the changing business models. The changes are primarily around how financing is structured and how the same can be delivered in a cost-effective

manner. This change has created a need for Lenders and Financial Institutions to partner with Fintechs. Fintech, leveraging on their agile and innovative technology can deep dive and have ability to dis-intermediate complex granular process in efficient and cost-effective manner and enhance traditional banking models.

This transformation in the financial landscape is expected to offer significant benefits to businesses and consumers alike, making financial services more inclusive and accessible, and fostering growth across various sectors.

At Finneva, we partner with Banks and alternate lenders to offer end to end

services across transaction life cycle ( origination, due diligence, processing, monitoring and reconciliation services). While services are fulfilled digitally, we also provide local offline support to meet business and lenders requirements.

What are the main factors driving the growth of fintech businesses in this space?

Response from Finneva:

The main driver is change in business models and supply chain due to changing macro- economic and geopolitical factors. Post Covid, businesses have become more digital friendly, and regulators globally and regionally facilitate guidelines, policies and regulatory sandbox for fintechs and traditional lenders to innovate and offer these solutions to Business. Banking regulators in UAE and several global and regional market have published their road map on how to facilitate open banking which will further enhance the partnership between Lenders (Banks and alternate) as well as Fintechs.

Vikas Jha - Managing Director, Raman Taneja- Chief Product and Technology Officer, Saurabh Gupta - Chief Risk Officer, Ramesh Guhaprasad - Chief Operating Officer

Various market studies suggest that a SME finance gap of USD 250 Bn exist in UAE. At Finneva, we are focused on addressing the working capital gaps faced by SME’s in the MENA region. Through our digital credit solutions and frictionless processes, we empower Clients to access to cash flow linked financing. The solutions offered are tailored, industry specific and can support clients in optimizing working capital to changing business environment. SMEs can access these solutions through our proprietary Digital Platform.

Our Digital Platform provides Lenders a new age toolkit to connect, compute and commercialise proposition faster and in a more inclusive manner. The operating companies of Finneva are regulated and have therefore have strong governance model with regulatory oversight.

How successfully is lending adapting to fast developing technology and the newly emerging demands of banks and businesses?

Response from CredibleX: Lending is adapting remarkably well to the rapid advancements in technology and the evolving demands of banks and businesses. This success is largely driven by the strategic collaboration between traditional banks and fintech companies. This partnership allows banks to modernise their services rapidly, keeping pace with the growing demand for digital solutions.

Fintechs on the other hand, excel in creating user-friendly digital interfaces and

innovative products that simplify financial processes, making them more accessible and engaging for customers. This focus on enhancing user experience complements the traditional strengths of banks, resulting in a comprehensive and attractive financial service offering. The synergy between banks and fintechs is transforming the lending landscape, combining the security and regulatory strengths of traditional banks with the innovation and customercentric approach of fintechs, leading to a more dynamic, efficient and user-friendly financial ecosystem that benefits both businesses and consumers.

This ongoing evolution promises to continue benefiting both businesses and consumers, meeting their demands for faster, more flexible and secure financial services.

With their well understood importance to regional economies, how are the needs of SMEs being catered for in the new commercial environment?

Response from CredibleX:

In the new commercial environment, the needs of SMEs are being catered for through a synergy of fintech innovations, traditional banking support and governmental policies, with platforms like haifin playing a crucial role in mitigating risks and enhancing lending opportunities. Fintech companies offer tailored financial products such as peer-to-peer lending, digital payment solutions, and automated credit assessments, providing SMEs with easier access to funding and financial services. These solutions complement traditional banking services by addressing specific challenges that SMEs face with greater flexibility and accessibility.

How do haifin’s role and solutions fit into the current and evolving lending landscape? With growing demands for speed and flexibility, how are risk and underlying assets evaluated by the new entrants to the lending market?

Response from haifin:

The financial sector is experiencing a significant transformation, fueled by advancements in technology and AI. The growth of fintech, especially in providing services to the SMEs, has become a key driver of economic growth and has greatly improved financial lending in the UAE.

haifin, the national derisking platform, supports the UAE banking industry by acting as a central registry and yet decentralised to mitigate risks and prevent fraud, specifically in trade finance . Our consortium model fosters industry-wide collaboration, addressing challenges that single lenders cannot overcome, and promotes transparency and trust in the banking ecosystem. With new entrants, bridging the trade finance gap poses a challenge to undertake risks in underwriting a transaction and with our consortium and technology we enhance lending confidence in real time.

haifin is a multi award winning platform built on Distributed Ledger Technology , Artificial intelligence and Machine Learning l, serving 15 commercial and Islamic banks and 4 fintech’s in the UAE. Through the synergy of collaboration and cutting-edge technology, haifin continues to set global standards for secure and transparent risk mitigation. The consortium’s focus on industry-wide adoption of the latest technologies and its success story, haifin aims to share their knowledge and experience to regions such as APAC, MEA, and GCC.

Anand Nagaraj, Co Founder & CEO, CredibleX, Ahmad Malik, Co Founder and CRO, CredibleX

Zul Javaid, CEO, haifin

Acquiring Improved Outcomes

Hany Mosbeh Senior Vice President, Middle East and Africa, JAGGAER talks about the increasingly important role of procurement technology and the efficiencies brought to bear by payments automation

As Jaggaer nears 30 years since putting its founder’s recognition of the potential of procurement technology into practice, what potential do you see in our region for your services?

Many organisations in the MEA region are still in the early stages of digital transformation. As such, we believe our advanced procurement solutions can, and in many instances already have, play a pivotal role in helping companies streamline their processes, increase efficiency and provide better data insights. These capabilities are crucial for businesses looking to modernise their operations and remain competitive in today’s market.

As global uncertainties continue to impact supply chains, businesses are increasingly focused on building more resilient systems. Our solution offers real-time visibility, risk management and strategic sourcing capabilities, enabling companies to effectively navigate and mitigate supply chain disruptions.

Another top priority for companies is cost management with the ultimate goal of reducing expenses without compromising quality. Our spend analysis, sourcing and procurement tools help companies identify savings opportunities

and optimise their spending, contributing to their overall financial health.

Similarly, with the growing complexity of regulations and compliance requirements, the solutions we provide companies with are more than just assistance. They are a guarantee that businesses can maintain compliance and manage supplier risks effectively, ensuring that they meet all necessary standards and regulations.

Sustainability and ethical sourcing have become more than just buzzwords in today’s business environment. They are now crucial pillars of responsible business conduct. JAGGAER’s solutions support companies in tracking and managing

their sustainability goals, ensuring that their supply chains align with these key environmental and social objectives. This commitment to sustainability is not just a choice, it’s a responsibility we all share.

Finally, by leveraging advanced technologies such as AI and machine learning, we provide businesses in the region with innovative solutions that provide a competitive advantage. These cuttingedge tools help businesses stay ahead in a rapidly evolving market, driving growth and maintaining their leadership position.

How does the automation of payments benefit and improve efficiencies for banks and businesses?

Ultimately, payment automation benefits both banks and businesses by enhancing efficiency, reducing costs, improving accuracy and providing better financial control and security.

For banks, there is increased efficiency by streamlining payment processes and reducing the time and resources required for manual tasks. It enhances accuracy by minimising human errors, which is crucial for maintaining financial integrity. Additionally, automation results in cost savings, as it reduces the need for manual processing and associated administrative expenses.

The improved accuracy and efficiency also translate into a better customer experience, as transactions are processed more quickly and reliably. Furthermore, automation facilitates better data management and analytics, enabling banks to gain valuable insights into payment trends and customer behaviours.

Automation also simplifies the payment process for businesses, allowing companies to focus on core

Hany Mosbeh, Senior Vice President, Middle East and Africa, JAGGAER

activities rather than manual financial tasks. It improves cash flow management by ensuring timely payments and better forecasting of financial needs. Enhanced security is another critical benefit, as automated systems are typically more secure than manual processes, reducing the risk of fraud and errors.

It supports scalability, enabling businesses to handle increasing transaction volumes without a corresponding increase in workload. Moreover, it fosters better supplier relationships by ensuring that payments are made promptly and accurately, which can lead to more favourable terms and stronger partnerships.

What risk mitigation benefits do Jaggaer’s services bring to regional businesses?

We provide a range of benefits that enhance the stability and resilience of businesses in the region. Our tools enable businesses to proactively evaluate and manage supplier risks by offering

In contract management, JAGGAER provides a centralised repository and automated monitoring to ensure compliance and reduce legal risks. The platform’s data-driven insights and predictive analytics further empower businesses to make informed decisions and address risks before they escalate.

Can payments automation incorporate flexibility that allows for changed or unexpected circumstances often faced by businesses?

Payment automation can incorporate significant flexibility to address the changing or unexpected circumstances that businesses often face.

Automated systems can adapt through dynamic payment scheduling, allowing businesses to customise payment terms and adjust workflows in response to changes in cash flow or supplier agreements. Real-time adjustments are another key feature, enabling instant updates to payment

AS GLOBAL UNCERTAINTIES CONTINUE TO IMPACT SUPPLY CHAINS, BUSINESSES ARE

INCREASINGLY FOCUSED ON BUILDING MORE

RESILIENT SYSTEMS

comprehensive supplier information and automated risk assessment tools. The platform also ensures compliance with evolving regulations through automated alerts and audit trails, supporting transparent record-keeping.

Advanced security features like encryption and fraud detection bolster security, reducing the risk of financial loss. Our tools also improve financial controls by enhancing spending visibility and enforcing internal policies through automated workflows. Additionally, realtime supply chain visibility and scenario planning help businesses anticipate and mitigate potential disruptions.

instructions and providing alerts that allow businesses to respond quickly to new circumstances.

The scalability of these systems ensures that businesses can handle fluctuations in transaction volumes without additional manual intervention. In contrast, flexible integration with financial and ERP systems allows seamless process adjustments as business needs evolve. Automation also enhances exception handling by flagging discrepancies and urgent payments for prompt attention, and many systems offer manual overrides for situations requiring human intervention.

Another advantage is customisable approval workflows, which allow businesses to tailor processes for different scenarios, such as expedited approvals for urgent payments.

Automated systems also integrate dynamic risk management, adjusting controls based on changing risk levels and incorporating advanced fraud detection to address emerging threats. Finally, these systems can be integrated with business continuity plans, ensuring payment processes remain functional during disruptions and offering adaptive reporting and scenario analysis to help businesses quickly respond to unexpected events.

How do SMEs and startups, important pillars of regional economies, benefit from procurement platform and payments automation technology?

SMEs and start-ups, which account for more than 90 per cent of registered businesses in the UAE alone, are vital to regional economies. Through procurement platforms and payments automation technology, they can achieve significant cost efficiency and savings through automation, which reduces administrative costs by streamlining procurement and payment processes. It also minimises the need for manual data entry and paperwork and decreases the likelihood of human errors. Additionally, these technologies provide valuable data insights, enabling SMEs to negotiate better terms with suppliers and further driving cost savings.

As businesses grow, automated systems can scale effortlessly, handling increased transaction volumes without requiring additional administrative resources. This scalability ensures that SMEs can expand efficiently while maintaining low operational costs. Furthermore, timely payments facilitated by automation help avoid late fees and improve cash flow, enhancing financial stability.

THE MIDDLE EAST GOLD RUSH

Global Investment Banks

Tap into the Region’s Rapidly Growing Investment and Capital Markets

Detailing stellar growth in capital markets and investment activity, George Hojeige CEO of Virtugroup underscores the emphatic moves being made to decisively establish the region as a leading global financial hub

Amidst uncertainty in the United States, fluctuating markets in Europe and limited growth in key Asian markets like Japan and China, the Middle East has emerged as a fast-growing financial and investment hub, attracting global investment giants to establish operations in the United Arab Emirates and the Kingdom of Saudi Arabia.

With a strong IPO performance, a growing debt capital market, an increasingly diversified economy and reduced reliance on oil and gas, the Middle East has solidified its position as the world’s leading capital destination.

In the second quarter of 2024 alone, the Gulf Cooperation Council (GCC) raised 13 IPOs worth a total of USD 2.6 billion, a 62.5% increase from the USD 1.6 billion raised in the same period last year. Following its outstanding market performance, the outlook for the region remains positive, with significant IPOs underway, enhanced liquidity and improved investor confidence from both regional and international firms.

The UAE upholds its status as a global financial centre

As the UAE further cements its reputation as an international financial powerhouse, its capital, Abu Dhabi, has revealed that 14 financial institutions collectively representing

George Hojeige, CEO of Virtugroup

USD 452 billion (AED 1.6 trillion) will set up offices in Abu Dhabi Global Market, the emirate’s international financial centre.

These world-renowned financial institutions include NinetyOne, a global investment manager; Rothschild & Co., one of the world’s largest independent financial advisory groups; GQG Partners, an investment firm focusing on global, emerging markets and US equities; and The Children’s Investment (TCI) Fund Management, a British hedge fund management firm.

In addition, major players such as Morgan Stanley, JP Morgan, Goldman Sachs and The World Bank have reinforced their commitment to investing in the country and expanding their operations in the UAE.

The UAE has also sustained its strong IPO market momentum, generating USD 1.3 billion from three major IPOs: Alef Education, which raised USD 515 million; Parkin, which secured USD 427 million; and Spinneys 1961 Holding, which gathered USD 375 million in funding.

These milestone IPOs have added AED 21.3 billion (USD 5.7 billion) to the UAE’s stock market capitalisation, further fuelling its drive to double its stock market value to AED 6 trillion (USD 1.6 trillion) in the foreseeable future.

In terms of debt capital, the UAE has witnessed an 11.8% year-on-year growth by H1 2024, which brought its debt capital market (DCM) to USD 281 billion. Observing this trend, experts anticipate the UAE’s DCM to exceed USD 300 billion between 2024 and 2025, making the UAE one of the biggest issuers of US dollar debt in emerging markets.

Saudi Arabia accelerates capital and IPO growth

In recent years, Saudi Arabia has noticeably amplified its efforts to improve its Foreign Direct Investment (FDI), in line with its Vision 2030, which aims to expand the contribution of FDI to its Gross Domestic Product (GDP) from 3.8% to 5.7%.

IN TERMS OF DEBT CAPITAL, THE UAE HAS WITNESSED AN 11.8% YEAR-ON-YEAR GROWTH BY H1 2024, WHICH BROUGHT ITS DEBT CAPITAL MARKET (DCM) TO USD 281 BILLION

In a bid to increase its non-oil revenue from USD 43.4 billion to USD 266.5 billion in the next six years, Saudi Arabia has turned its focus on developing its investment and venture capital markets, quickly becoming a dominant player in the GCC’s IPO landscape. It has recently recorded a total of USD 1.6 billion in IPO funding, accounting for 61% of the region’s IPO activity in Q2 2024.

As part of Vision 2030’s initial phase, Saudi looks to multiply the assets under management of its Public Investment Fund (PIF) to USD 1.7 trillion, boost cumulative non-oil GDP contribution to USD 320 billion, and create 1.8 million jobs by the end of 2025.

One of the world’s largest sovereign wealth funds, PIF manages a range of gigaprojects which include NEOM, a massive USD 1.5 trillion urban development, lifestyle and sustainability project and Red Sea Global, a USD 17 billion luxury tourism and hospitality venture.

Business-friendly regulations and large-scale projects draw major investors to the Middle East

One critical factor propelling global investment firms to look into the Middle East is the region’s favourable regulations and business climate.

Complex laws and compliance requirements in the United States and prominent European countries have long posed significant challenges to businesses, slowing down their growth, limiting innovation and creating inefficiencies.

In comparison, the economic openness, ease of doing business and solid infrastructure of the UAE have presented global banks and financial institutions with prime opportunities to invest in high-growth economic sectors. Backed by favourable

tax incentives, business-friendly legislation and visionary leadership, the UAE has not just attracted investors and businesses alike, but also a plethora of ultra-high-networth individuals (UHNWIs).

According to a report by Henley & Partners, an international investment migration advisory firm, there are now 116,500 millionaires, 308 centi-millionaires and 20 billionaires living in the UAE. Additionally, the firm forecasts that 6,700 millionaires will relocate to the UAE by the end of 2024, citing the country’s golden visa program and tax-free income as the main draws for the elite.

On the other hand, Saudi Arabia recently reformed its business laws to attract local and international investors. Scheduled to take effect in 2025, the revised executive regulations include fostering fair competition, implementing equal treatment for both domestic and foreign businesses, providing best-inclass dispute resolution, simplifying regulatory requirements and procedures and improving transparency and clarity.

Unveiling high-yield investment alternatives to traditional Western markets

While international markets are starting to recover this year, the Middle East has successfully demonstrated its resilience, long-term value and stability as an investment hub, especially in the face of uncertainty and volatility that characterised the previous years’ financial and market performance.

With an optimistic market outlook, a booming start-up sector and a robust pipeline of upcoming IPOs and largescale ventures, the Middle East is set to retain its spot as a global investment magnet in the coming years.

Forward Payments

Özgür Özvardar VP & General Manager at Verifone provides a detailed look into the regional consumer payments scene, highlighting its rapid growth and development

How does MENA region rank against other world markets in terms of payments modernisation?

MENA has been a major center of digital transformation in payments in recent years, by deploying cutting-edge payment infrastructure models across the region. UAE, KSA and Egypt are the top 3 countries that lead advancements in the payments industry by pioneering new technology adoption in the region, like acceptance of e-wallets, BNPL, or contactless payments, tokenisation, omnichannel POS payments, P2P, blockchain and cryptocurrencies. Growth in digital commerce and crosschannel consumer buying, coupled with shoppers’ growing needs for convenience and personalisation and increase in spending, all supported by comprehensive government initiatives and payment provider innovation have all contributed to the development of techdriven payment ecosystems in the region.

On the other hand, some MENA countries continue to suffer from digital divides, as some parts of the region are still more reliant on cash and have few developments in the digital transformation processes by using legacy payments infrastructure. With the investments to Fintech industry and updates to regulatory compliance, MENA’s fintech revolution is set to

continue surging and will likely become the Payments Hub for digitisation of banking, finance and e-commerce. As public and private sectors’ collaboration fosters cashless economies in the space, unique opportunities in the region will be developed, leading to potentially outperforming other global counterparts.

Recent World Bank data estimates that continued development in the region that drives toward a fully digitised economy could generate GDP per capita increases of up to 40%.

How has the region adopted new consumer payment technologies, such as online payments, e-commerce, android POS solutions etc.?

Most institutions are seeking instant payment solutions whether online or in-store as a result of increased use of smart phones, e-wallets and rising preference for online shopping. Young consumers in the region are pushing traditional merchants and retailers to adopt new payment technologies quickly, as their shopping appetite increases. For example, in 2018 only about half of young adults in the Middle East and North Africa regions were reporting shopping online, whereas in 2022 almost 90% of youth in the region engaged in digital commerce. Corollary, while mobile POS payments value in MENA (payments made with mobile at the Point of Sales) was barely exceeding US $9 billion in 2018, this year the same market is expected to have grown tenfold, to over US $98 billion. As a result of these shifting consumer preferences, demand towards contactless payments, digital wallets, BNPL solutions and similar technologies are increasing rapidly, leading to institutions investing significant amounts for modernisation of their payment infrastructure. We are seeing new digital commerce deployments, increased orders of modern Point of Sale technology and increased APM adoption, and we expect these trends to continue growing in the region as they drive frictionless commerce, modern payments and user experiences forward.

Özgür Özvardar, VP & General Manager at Verifone Türkiye, Middle East and Northern Africa

Can you describe the role of in-person payments in the ongoing transformation and digitisation of retail and commerce industries?

In-person payments continue to take up the largest slice of the payments industry in MENA, as digital commerce has not yet reached full adoption, and large groups in many countries in the region are still underbanked. But it is these types of payment scenarios that encourage consumers’ transition to more digital routes and means. Think of advanced in-person payment experiences like selfcheckout or paying through digital wallet or authenticating yourself at the POS device for loyalty schemes. It is these types of touchpoints that fuel shoppers’ appetite for smooth digital transactions, inspire them to prioritise convenience and alleviate any potential security concerns.

This is why in recent years we have been witnessing expansion of availability of Android, Mobile POS or SoftPOS among many retailers and vendors in the region. As modern consumers more often than not expect frictionless flows during the payment process, whether in-store waiting at the cashier line or at a restaurant to pay the bill without any interventions, sellers are expediting their efforts to meet these expectations of an ever-changing payments eco-system.

Another factor fueling the demand for Android, mobile and other modern POS solutions is the expectation for exclusiveness and high-quality service in the region. Hospitality focus, such as generosity or respect for guests, has always been a priority in MENA, it is essentially a virtue for us, deeply rooted in our rich cultural heritage.

What kind of digital advancements in payments technology will shape e-commerce industry in the MENA region?

Innovations like one-click payments, BNPL, digital wallets and AI powered fraud detection technologies are the major directions for the development of e-commerce in the MENA region. Payment

ANOTHER FACTOR FUELING THE DEMAND FOR ANDROID, MOBILE AND OTHER MODERN POS SOLUTIONS IS THE EXPECTATION FOR EXCLUSIVENESS AND HIGH-QUALITY SERVICE IN THE REGION

companies are merging their hardware and software lines to provide their customers an omnichannel experience with a robust security and enhanced services. Today’s merchants are looking to deploy combined payment services, enabling customers to shop and pay however they like, whether with cash or by digital wallets. This requires a comprehensive payments infrastructure that supports multiple solutions such as in person payments, POS terminals, online payment gateways and additional services to streamline all types of sales and experiences.

What are the challenges for the region in implementing modern payment technologies?

These kinds of updates and optimisations require a lot of investment, strategic planning and focused approaches to replace legacy systems with modern payments solutions throughout institutions. Enterprises and large retailers are early adopters to new payment technologies whereas SMEs and startups often face more challenges during this transition. With the proper amount of investment, training and even governmental support, companies can achieve secure transition to new payment systems by partnering with right technology provider on whom they can rely. Another important factor to consider is how regulatory advancements in the space will impact such projects. While some countries in the space have already published comprehensive data frameworks, others are still in the process of doing so. Retailers need to be nimble and adapt to these evolving regulatory ecosystems, to ensure compliance on top of delivering optimised consumer experiences.

Verifone’s vision, tech updates on CX and POS, and e-commerce and upcoming technology in the region.

Verifone has been the pioneer in the payments industry for over 40 years now, with a portfolio that spans across robust point of sale terminals, android POS devices, e-commerce solutions and payment processing gateways and services, everything to provide an endto-end payment experience. Our offering covers all commerce verticals: retail and grocery, bars and restaurants, hotels and accommodations, and even high traffic locations like ticketing vending machines and gas stations, with solutions designed specifically for each industry to upgrade the shopper experience. Our partners can access alternative payment method acceptance, the newest payment hardware for each use case, digital commerce integrations that streamline their checkouts, and classleading reporting features, managed services and support options. As a leader in the Fintech space, we provide turnkey payment eco-systems and flexible solutions that drive revenue growth for stakeholders and user satisfaction and loyalty for their users.

Our presence in the region develops year after year, as our local teams grow and we launch new solutions to cater to specific MENA needs. In the near future, we are planning to expand in the region further by providing more combined solutions that will support even more payment alternatives and omnichannel solutions. These initiatives will be driven by our latest technology and address the needs of the evolving MENA payments landscape.

By Your Side

Introducing Plurimi, Taimur Satti Senior Executive Officer, United Arab Emirates, highlights the ongoing maturity of the regional wealth market, detailing how their attention to clients and distinctive range of offerings and advice forms productive partnerships

Please give us an introduction to Plurimi.

Plurimi is a holistic, all-inone wealth management platform that provides clients with the infrastructure, services and ideas to efficiently manage their assets. We provide a bespoke service, taking advantage of our extensive custodial network and array of experienced talent, to support our clients as comprehensively as their own family office would.

Plurimi Dubai now sits part of the Plurimi Group of companies with regulated offices in London, Dubai and Monaco.

Based on your extensive experience, how has the UAE’s status as a wealth booking centre developed over recent years?

Over the years the UAE’s status as a wealth booking centre has evolved from being primarily a regional hub to becoming a global player attracting wealth from around the world. Due to its strategic location, political stability and regulatory improvements the UAE is able to attract UHNWI from all over the globe. The UAE has actively worked to diversify its economy by focusing on sectors like finance, technology and tourism which has made the country a more attractive destination for global wealth. There has also been a significant increase in family offices in UAE. Many ultra-high net worth families both local and international are establishing family offices in the UAE, attracted by the supportive infrastructure and regulatory environment. The introduction of various visa programs to attract talent and entrepreneurs has further bolstered its appeal as a global wealth hub.

Taimur Satti, Senior Executive Officer, United Arab Emirates, Plurimi

Additionally, economic shifts such as the global rise in ESG investing has seen the UAE adapt by incorporating sustainable finance into its offering.

As an established international wealth management firm, what drew Plurimi to set up in the Middle East?

We have established ourselves as a leading independent wealth and asset management firm, with the majority of our client base coming from the UK and Europe. Our leadership team recognises that a natural progression for the firm would be continued development in the Middle East and positioning ourselves to efficiently cater to local client needs. There is clearly a lot of activity and a continuation of wealth moving into the region from across the world. With this rapid move of people, businesses and innovation, also comes the need for a greater degree of sophistication towards wealth management services.

Historically, wealth management in the Middle East was transactions focused. However, we believe a gap exists in the market, warranting a more holistic and solutions approach to wealth management and planning. Plurimi is not a bank but over our seventeen years, we have built a strong ecosystem across the market, allowing us to capture the best parts of what the large global institutions offer. At the same time, being a boutique, we are able to remain independent, client led and flexible, while continuing to harness the best of those institutional partners.

In our increasingly competitive regional wealth planning market, what distinguishes Plurimi?

Our platform, developed over a 15-year period, is designed to cater to a variety of client needs. We pride ourselves on our flexibility and our ability to integrate into a variety of structures. Despite our scale, being nimble and adaptable is one of our core values, setting us apart from competitors.

In general, clients in the region tend to be overbanked, making it challenging to efficiently manage assets. One of our core traits is the personal relationship we build with our clients, creating a tailored experience – we consider ourselves to be the main access point across all banking relationships, which allows us to advise on the best products across the entire market. As a result, we offer our clients full transparency via consolidated reporting and analysis of all their accounts, portfolios and assets.

In terms of our own internal ecosystem, we offer clients exceptional performance by our Group CIO, Patrick Armstrong, supported by his investment team and unique investment process. Additionally,

In the UAE, for example, we want to be entrenched in the community, positioning ourselves to cater to local clients, with Emirates NBD and FAB Geneva being custodian banks in our network. We offer our clients full transparency, visibility and control of their assets that are held by the banks they are familiar with and trust. Crucially, we sit next to our clients - not across from them.

Can you give us a glimpse of Plurimi’s future plans in the region and internationally?

In terms of our products, our focus is on the continued expansion of our internal ecosystem, namely our alternatives and private equity offerings and our

IN GENERAL, CLIENTS IN THE REGION TEND TO BE OVERBANKED, MAKING IT CHALLENGING TO EFFICIENTLY MANAGE ASSETS

our burgeoning alternatives and private equity offering provides clients with additional exposure to an otherwise hard to access segment of the market.

Lastly, at over $9bn AUM/AUA, our scale sets us apart from many other players in the region. Our strong partnerships allow us to offer our clients competitive pricing across all product suites and services.

What currently are the top concerns for HNWIs in the Middle East?

Transparency and trust have always been a challenge for HNWI and UHNWI in the Middle East and globally. Large, household names do carry weight, but we believe that clear education on what our platform has to offer, and crucially, on how we collaborate with private banks, can be extremely eye opening to potential clients.

discretionary services provided by our London office. As previously mentioned, our investment team’s exceptional performance sets us apart from the rest of the market, with CIO Patrick Armstrong – a frequent guest on Bloomberg and CNBC – considered to be one of the top money managers in the UK with 11 of his 12 strategies ‘A’ rated by ARC Private Client Indices. We are looking to continuously educate the market on our performance and investment process, supplemented by our AI screening tool.

In terms of our wealth management business our people are our most important asset, and we are continuously looking to grow the team by attracting talent in London, Dubai and Monaco, requiring us to consistently engage with local markets and relevant stakeholders.

Positive Growth Trajectory

Srinivas Nidugondi EVP and Chief Operating Officer, FinTech Solutions at Comviva expects the growth of embedded payments to increase in momentum and despite some challenges, the future for it is bright

What are the key trends in the embedded payments market, especially in the MEA region?

The region is witnessing rapid adoption of digital payments and financial services. As digital payments ecosystems mature, embedded payments are gaining momentum with businesses across sectors integrating payment solutions into their platforms, offering seamless payments experiences. We are also seeing a growing demand for embedded wallets, merchant payment solutions and other innovative financial products.

How do you see embedded payments evolving in the next 5 years, both globally and specifically within the MEA market?

Globally, embedded payments will gain momentum, with more businesses recognising its potential to enhance customer experience while driving incremental revenues. In the MEA region, we anticipate significant growth in the adoption

of embedded payments across sectors, particularly e-commerce, quick commerce, travel and fintech being early adopters. As digital sales become a larger contributor to the overall sales of businesses, the importance of providing seamless sales experiences through embedded payments will become indispensable.

What are the biggest challenges and opportunities for businesses adopting embedded payment solutions?

One of the key challenges include data security concerns, effective orchestration of payment types and integration complexities. Apart from this, removing friction from the payment processes, making them more seamless and arriving at the right user journeys will be a key success differentiator. Alongside, the opportunities in the field are immense. As embedded payments remove frictions in the payment process, it helps businesses expand their customer base, increase revenue and differentiate themselves from competitors. The growing digital economy and rising smartphone penetration provide fertile ground for embedded payment solutions.

How are your platforms helping merchants to leverage embedded payments to enhance its product offerings and customer experience?

Comviva’s commitment to innovation drives us to develop solutions that address the evolving needs of our clients and their customers. Our comprehensive suite of

products empowers businesses to create seamless and engaging experiences, fostering customer loyalty and driving growth. With a global footprint spanning 50 countries and over 90 successful deployments, our platforms handle vast transaction volumes with unmatched scalability. By leveraging our embedded payment solutions, merchants can unlock the full potential of digital payments, transforming their interactions with customers and ultimately enhancing their bottom line.

What are the key factors that businesses should consider when choosing an embedded payments partner?

When selecting an embedded payments partner, businesses should prioritise factors such as:

• Cus tomer Experience: The partner should be able to eliminate obstacles in the payment process and provide conversion boosters which helps in enhancing customer experience, minimising failures and abandonments.

• Scalability: The partner should be able to handle growing transaction volumes, customer base and at the same time offer near 100% uptime.

• Securit y: Robust security measures are essential to protect customer data and prevent fraud.

• In tegration Capabilities: A seamless integration process is crucial for a smooth implementation.

• Customer Support: Excellent customer support is essential for addressing any issues or queries.”

What are your predictions for the future of embedded payments in the MEA region and globally?

The future is bright. We expect to see continued growth and innovation in this space. In the region, the increasing adoption of digital payments and the growing focus on financial inclusion will drive the demand for embedded payments. Globally, we anticipate further consolidation in this market as larger players acquire smaller fintech startups.

Srinivas Nidugondi, EVP and Chief Operating Officer, FinTech Solutions at Comviva

Rewards in Real-Time

Johnson Sasikumar

Deputy CEO, Paytabs

Group outlines the positive effects of real-time payments across our region

How does our region rank against other world markets in terms of payment modernisation?

The Middle East is fast catching up with leading global markets in payment modernisation. Regulatory bodies and frameworks like Saudi Arabia’s SAMA and the UAE’s Central Bank’s efforts to create real-time payment infrastructures are propelling the region forward, making it a competitive player. The region’s key fintech players like PayTabs provide exceptional real time payment solutions that are simple, secure and scalable to drive local commerce and power financial inclusion across the region via our modernised payment orchestration platform which is capable of processing payments worth billions in split seconds.

How will real-time payments benefit the economies of our region?

Real-time payments have the potential to significantly boost the Middle East’s economies by enhancing liquidity, reducing transaction costs and facilitating smoother cross-border trade. The instant availability of funds allows businesses to manage cash flow more effectively, pay suppliers promptly and reinvest capital without delays, thereby driving economic efficiency. Consumers, too, benefit from faster, more reliable transactions, which can improve financial stability and access to funds. Moreover, the reduction in transaction costs— particularly important for SMEs—enables broader participation in both domestic

Johnson

Deputy CEO, Paytabs Group

and international markets. Real-time payments also support financial inclusion by reaching underbanked populations, integrating them into the formal economy and contributing to poverty reduction. Additionally, by promoting innovation in the financial services sector and aligning with government initiatives such as like PayTabs does across the MENA region, real-time payments can foster a more competitive, transparent and resilient economic environment across the region. For PayTabs, this presents an opportunity to lead in shaping the future of payments, driving both economic growth and financial inclusion.

How can banks maintain a competitive edge in the era of real-time payments?

Banks can maintain a competitive edge by investing in advanced payment

technologies, enhancing customer experience and offering value-added services such as personalised financial advice and fraud protection. Collaborating with fintech’s and staying agile in adopting new innovations will also be key.

Can real-time payments have inclusivity benefits for lower earners or the unbanked?

Real-time payments can promote financial inclusion by providing instant access to funds for those in the lower income brackets and the unbanked. This can be particularly impactful in regions where traditional banking services are limited, enabling more people to participate in the formal economy. In fact, one of PayTabs’ goals is to challenge the status quo to build a world class financial platform out of Saudi Arabian soil to elevate into a regional service entity that transforms people’s everyday paymen t habits to foster financial inclusion.

What are the possible drawbacks of real-time payments?

The main drawbacks include increased exposure to fraud due to the speed of transactions and potential challenges in dispute resolution. Banks must ensure that robust security measures are in place to mitigate these risks while balancing the need for rapid, seamless payments.

What are the leading benefits of the use of AI in real-time payments?

AI can enhance real-time payments by improving fraud detection, optimising transaction processing times and providing personalised insights to users. AI-driven analytics can also help banks better understand customer behavior, allowing for more targeted offerings and improved service delivery.

Sasikumar,