Archive for July 2017

In a brief interview with Abu Dhabi Chamber of Commerce and Industry, Tahseen Consulting’s Wes Schwalje talks about Abu Dhabi’s race to become a global FinTech hub. This race is not just about superlative bragging rights, though Abu Dhabi Global Market’s Reglab is the first FinTech regulatory sandbox and framework in the MENA region. The economic stakes are real and significant with FinTech having the potential to become a key pillar of the Arab World’s socio-economic development.

Abu Dhabi Chamber of Commerce and Industry: Why is Abu Dhabi so attractive to FinTech companies?

Schwalje: In 2016, the Financial Services Regulatory Authority published a consultation paper seeking industry views on a FinTech legislative framework. This consultation led to Abu Dhabi Global Market establishing the Arab World’s first FinTech regulatory regime and regulatory laboratory. The initiative follows in the footsteps of similar competing FinTech regulatory sandboxes in countries such as UK, Singapore, Hong Kong, and Australia which are all vying to become FinTech hubs. These cities are all providing a safe space for FinTech businesses to test innovative products, services, and business models without having to initially comply with more traditional legal and regulatory requirements for the financial services sector.

The more recent commitment Abu Dhabi has shown to embracing FinTech as well as its traditional role as a strong player in the regional financial services sector make it a very attractive base for more established financial institutions exploring Fintech as well as startups experimenting with innovative financial products or services. The embrace of FinTech in the UAE is an evolution of the initial vision to position the country and its constituent Emirates as a unified international financial services hub offering a full spectrum of financial services comparable to other leading global financial centers. Abu Dhabi provides the regulatory framework, safe space to innovate, strong government support, and commitment to a long-term vision that financial services companies look for when it comes to pushing the innovation frontier. Additionally, there are several regional factors which make Abu Dhabi attractive. Though estimates vary significantly, the unbanked population in the Arab World is estimated at upwards of 80%. Traditional commercial banks continue to dominate lending with weak service provision for small and medium sized businesses which make up more than 90% of most Arab economies. Estimated at $7 billion, e-commerce across the Arab World is booming with a youthful, technology embracing demographic which are first movers when it comes to embracing technological innovation.

Abu Dhabi Chamber of Commerce and Industry: How could FinTech help improve the Middle East and Abu Dhabi?

Schwalje: It is not clear at this time what the full range of possible use cases for FinTech will be in the region, but a few macro trends are emerging based on the startups in region and competitive pivots of more established financial services firms. The payments industry is becoming more competitive with FinTech players challenging traditional payment firms’ intermediary role by offering more direct, faster, and cheaper services. We are seeing significant innovation in mobile wallets, crypto-currencies, and block chain technology as well as mobile banking surging. Digital and mobile-based payments will likely replace traditional card-based payments and make some traditional payment channels like ATMs and point of sale technologies obsolete. Block chain-driven payment infrastructure, which Dubai is pioneering, have the potential to significantly reduce payment processing costs. Web-based insurance aggregators are challenging the dominance of more traditional market players. We will see the increased use of big data by financial institutions to more effectively serve SMEs and previously unbanked populations with tailored deposit and lending facilities. Online platforms have already caught on as an alternate funding platform for entrepreneurs seeking early-stage finance to counter the lack of risk capital and commercial loan options for startups and SMEs in the region. Right now we are at very interesting stage in the evolution of FinTech regionally in which there remains significant big addressable markets that are currently untapped.

In a brief interview for Computer Weekly, Tahseen Consulting’s Wes Schwalje talks about the future of IoT and the need for regional stakeholders to get a lot more serious about personal data privacy and connected device security.

Computer Weekly: Which GCC sectors could benefit most from IoT – and why?

Schwalje: Due to the concentration of economic activity in the GCC in a handful of sectors such as the extractive industries, manufacturing, government services, construction, and utilities we will likely see a concerted effort to disrupt and digitally transform these traditional industries with IoT. Specific sub sectors of focus will likely be oil and gas, petrochemicals, aviation, and, pharmaceuticals as well as government services such as healthcare, education, and utilities. In these traditional sectors, industry incumbents will either take on new roles or be displaced by new industry structures due to digital disruption. A good example of this adaptation in the private sector to avoid digital disruption is Mashreq Bank’s recent announcement about its new digital only spin-off unit. In terms of government services, several GCC governments are deploying IoT as part of smart city initiatives to enhance government service provision, we are seeing interesting connected healthcare pilots emerging like telehealth systems in Saudi Arabia, and there is a significant push to leverage IoT to address transport challenges regionally. At the same time, increasing economic diversification in the GCC, driven primarily by growth in the services sector, is likely to lead to innovative IoT applications in emerging services sectors such as transport and logistics, telecommunications, financial services, and tourism. In the very near future, IoT will become a key aspect of GCC economic diversification strategies and ultimately global and regional competitiveness.

Computer Weekly: How might life in the GCC look different in ten years, due to IoT technology?

Schwalje: The data gained from IoT is the foundation for a range of emerging technologies such as machine learning, robotics, automation, 3D printing, artificial intelligence, and augmented. For this reason, we will see a significant uptake of IoT over the next decade. Data is quickly becoming vital to the profitability and success of GCC businesses as well as enhanced efficiency and effectiveness of government service delivery. In terms of specific applications of IoT, we are likely to see smart asset monitoring, employee tracking, energy consumption monitoring, product usage and monitoring, business process automation, smart security, and wide area control systems. While the potential of IoT in the GCC is promising, more effective, consumer-oriented laws and regulations on data in the GCC and throughout the Arab World are needed to address how data can be obtained and used, how long data can be kept, and limits on access by third or other government related-parties. A modern, harmonized GCC data protection framework is a critical requirement to maximize the benefits of the IoT.