The financial services industry has evolved during the last decade. Digital transformation is well underway, amplified by the global pandemic and largely driven by shifting consumer expectations, increased competition, innovative technology, evolving legislation and regulation.
As we approach 2021, there are opportunities to be leveraged which will ensure stability and resilience for the financial sector whilst increasing digital agility and reimagine the future of finance. I strongly believe that the principles of collaboration and innovation have the potency to ensure long-term sustainable growth and enable the industry to emerge even stronger in 2021 and beyond.
Since the global financial crisis which was over a decade ago, we have seen a number of digital challenger models emerge. Whilst Internet Banking was the first real game-changer back them, research shows that mobile banking is swiftly becoming the preferred channel for consumers across the Middle East, Africa and South Asia region. Other payment platforms, collectively known as financial connectivity are experiencing substantial growth.
Central to the success of the financial services industry is delivering on the digital promise in a post pandemic world. We have already seen a huge amount of positive disruption and we know that the way end users interact with financial services firms will continue to change. For example, research showed that since March 2020, Europe saw a 72 per cent rise in the use of FinTech apps, whilst MENA saw digital payments double. Buyer behaviours and needs will continue to evolve at an even faster pace than ever before and the industry needs to be ready, willing and able to adjust, adopt and adapt.
Yet, despite the compelling evidence, there are inconsistencies across markets and sub-sectors. McKinsey reported earlier this year that corporate banks need to significantly transform the way they operate. This is especially important in the region given they account for nearly 75 per cent of total banking assets and contribute around 60 per cent of total revenues.
At Dubai International Financial Centre we continually try to anticipate the future requirements of companies and consumers. We are constantly seeking to engage with the changemakers and trailblazers who are at the forefront of innovation. The Centre is home to start-ups, entrepreneurs and FinTech pioneers who are conceiving the next generation of technology that end users do not even know they need yet.
Take Beehive for example, which is based in DIFC. They were the Middle East and North Africa’s first peer to peer lender to be regulated by the DFSA. Beehive is helping businesses connect directly with investors quickly and have started a regional expansion programme.
In 2020, the DIFC invested in Beehive along with four other firms as part of the Centre’s $100 million FinTech Fund to help establish and upscale FinTech companies. The investments reinforce our commitment to drive advancements in the financial services sector. Our position as one of the world’s top ten FinTech hubs is strengthened by making investments in start-ups which in turn, drives innovation across MEASA’s financial services sector.
Although Dubai and DIFC have made great advances in the digital and FinTech space, there is much more for the industry to do to given the digital space continues to gather pace. According to the McKinsey Global Survey of Executives, McKinsey Global Survey of Executives, companies have accelerated the digitisation of their customer and supply-chain interactions and of their internal operations by three to four years. The share of digital or digitally enabled products in their portfolios has accelerated by an average of seven years, pushing firms over the ‘digital tipping point’. The speed of acceptance and adoption is good news for all of us in the financial services and FinTech space.
Dubai is strategically positioned to continue to lead the development of digitally enabled financial solutions for the region and indeed to inspire global best practice. This was recognised when the Emirate was announced as the seventh FinTech location globally for economic potential, by fDi Markets – The Financial Times. However, we cannot rest on our laurels. We need to look beyond banking services and consider how people will want to engage with investment opportunities, manage their wealth and undertake payments in an increasingly cashless society. Could it be through smart home systems and AI? Google and Alexa might be able to turn your lights on and play your favourite music, but how about they do your banking and suggest investment opportunities for you? You++ has already asserted that AI could tap into information and expertise to provide high-end property investment advice. Whatever is done has to be safe, secure and regulated, but the sky is the limit.
With the region continuing to deliver innovative solutions, there is tremendous potential to unlock the economic potential of the MEASA region as we navigate towards post-pandemic recovery and the next chapter of growth. Now more than ever, digitalisation is a key driver for the economy, representing an avenue to transform the way the region does business and deliver sustainable financial solutions needed by companies and the future consumer.