The region’s banks are starting to experiment with innovative and disruptive fintech solutions
The recent FinX Awards – staged by digital crowdsourcing platform Fintech Galaxy – was an opportunity to showcase the Middle East and North Africa (MENA) region’s best fintech talent, but also another powerful reminder of the increasing global impact of digital transformation. Though the event’s theme was ‘Celebrating Excellence in Fintech’, the public votes and expert jury panel that determined the results were also informed by the contribution candidates had made to financial inclusion and the region’s economic development. As we’ve discussed before, digital is no longer simply a way to improve efficiency, productivity and product delivery – built into the core of a business it offers the potential to disrupt and revolutionize. When we employ systemic digital transformation frameworks, unprecedented non-linear shifts in business and society become available. Middle Eastern Banks innovating with Fintech is no longer just a slogan.
The fintech sector has seen massive investment interest in recent times with more than US$50 billion invested in almost 2,500 companies since 2010, with little sign of slowing down. According to KPMG, Global fintech investment in the first half of 2018 reached $57.9Bn across 875 major deals, exceeding the $38.1Bn invested in all of 2017. Though most of the news stories we hear are about startups, fintech development is possibly more important for established players and industry leaders. Whereas startups have the unique opportunity to build their cultures from the ground up, existing businesses have a different challenge of evolving by building digital transformation into their current way of being. This is easier said than done, and requires a shift towards Digital DNA, rather than digital operations.
Banking remains a key focus area for fintech investors, with major opportunities for disruption and market gains. Digital transformation in banking, however, is often misunderstood. Sustainable change that generates increasing returns requires more than digital products (the ‘What’ of its function), it demands that the business also revisit its ‘Why’ and ‘How’ from a digital perspective. First Abu Dhabi Bank, winner of FinX’s ‘Digital Transformation Leader of the Year’, recently rolled out a merchant-serving analytics portal driven by AI and machine learning capabilities, but the innovation is in the integration with the bank’s payment platforms and ancillary banking solutions that speak to the kind of systems-seeded approach that is necessary for ongoing success. In Synergy language this is a move towards the ‘4D+1′ Digital Transformation framework, the four pillars of which are:
The required adaptation to move into this way of thinking and being could be radical, which is one of the reasons that many large slow-moving banks are about to be left behind. Simply talking about innovation or fintech is not enough – it needs to become part of the business fabric. “The biggest challenge banks are facing is themselves,” says Aref Al-Ramli, Head of Digital Banking and Innovation at Mashreq Bank, FinX winner of ‘MENA Digital Bank of the Year’ – “We are not adapting as fast as we should.” Mahreq’s winning play has been Mashreq Neo, an innovative, fully mobile-resident bank that lives entirely on the customer’s phone. Ideologically, this creates a clear distinction between the traditional services of Mashreq and the mobile lifestyle services of Mashreq Neo, illustrating the powerful understanding that it is not enough in the age of digital disruption for banks in the Middle East to create innovative digital products, they need to create digital organizations that happen to facilitate banking.
Signs are good that this mindset is growing in the Middle East. Outcomes from Global Finance’s digital banking and innovators’ conference recently held in Dubai suggest that a culture of fintech entrepreneurship is already shifting the economic landscape of the Middle East. But in order for this tide to become a sea change, businesses will need to adopt structural and cultural reform that allow corporate digital transformation to go all the way to the heart of the enterprise.
For more information about our insight on digital transformation, download Synergy Consulting Group’s White Paper: The Digital Transformation Imperative
If you have questions about how Synergy Consulting Group can help you develop strategy – please