Fintech is one of the business world’s most popular buzzwords. It is referred to as the integration of technology into products offered by financial services companies in order to improve their use and delivery to consumers. But what does this really mean?
A lot of banks and financial institutions are still using technology developed at the end of the last century, so how are companies involved in the fintech sector embracing innovation in order to stimulate these improvements and push the banking sector into the 21st century?
In order to find out, we speak to the head of Finastra, one of the largest fintech service providers in the world.
“Fintech stands for financial technology companies and these are companies that provide financial services and financial solutions to the financial industry,” says Serge Tohme, managing director, Middle East, North Africa and Turkey at Finastra.
“It is definitely a global phenomenon that is happening and specifically here in the Middle East we are seeing a transformation that’s happening,” he adds.
Into the cloud
Finastra is the developer behind the FusionFabric.cloud, the world’s first enterprise-level app exchange in financial services. Described as a virtual playground for developers and start-ups to create game-changing applications in days, the company has a large base in Dubai and works with over 70 percent of the region’s banks.
“We have come up with something called a platform for the financial community. Traditionally, the fintech companies or the software companies used to provide a specific product and then they moved into a solution and now we are moving into a platformification kind of concept,” Tohme says.
“So by platformification we mean we give a cloud platform that can be accessed by multiple consumers, whether it is retailers or corporates or integrators or others.”
Many of the banks in the region are still using technology developed decades ago, so the providers within this space are tasked with the challenge of updating this for the demands of the modern digital age.
“In the 80s I would say, when Finastra started selling properly in this market, we used to approach banks and provide them with a deployed solution and on-site solution. Now, all of these clients, all of these institutions are moving into the cloud and therefore Finastra is trying to shift that service from an on-premise service into a cloud service by upgrading them and making their solution and technology less costly and more accessible and more efficient.”
One bank Finastra has worked with to find an innovative fintech solution for is United Arab Bank, which is headquartered in Sharjah. “United Arab Bank has decided to move into the digital transformation when it comes to serving their corporates and Finastra has been a key in this in providing them with the right technology that is a financial corporate technology that allows them to service their clients in a digital way,” says Tohme.
Fintech investment boom
The fintech sector is certainly booming. The number of fintech start-ups in the Middle East and North Africa is forecast to reach 1,845 by 2022, a 230 percent increase since 2015, according to a report by the Khaleej Times in October. The UAE alone is home to a third of these companies.
In terms of investment, $517m of funding was pumped into 354 financing deals for start-ups in the MENA region in the first three quarters of 2019, an increase of 30 percent, according to 2019 MENA Venture Investment Report.
The report found that the fintech industry continues to dominate demand for start-up funding, accounting for 14 percent of all new deals, an increase of 3 percent year-on-year. With this boost in investment and development, Tohme believes this will help to push innovation within the wider banking sector.
“Traditionally, banks are used to having a constant no change kind of a situation and they prefer to stick to what they have, keep it as it is, ‘if it’s not broken don’t change it’. We are now in a new era. If you don’t catch up with the technology and the innovation that is happening in the market you will be left behind and changing that mindset is our biggest challenge,” he says.
The UAE is the focus for the much of this regional development, which is no surprise seeing as it will be home to Expo 2020 Dubai next year, a physical manifestation of the innovative ideas, inventions, insights and advancements the emirates is aiming to embrace during the six-month event when it opens on October 20, 2020.
Ahead of the launch of Expo 2020, the Arabian Business Enterprise Innovators Series aims to showcase a great range of innovations that are already taking place across the UAE and beyond.
“The Enterprise Innovators Series will run across print, digital and video and we are looking for companies, large and small, who have seen the rewards from taking risks, who are rethinking and disrupting traditional models and who are developing new ways of operating,” says Shane McGinley, editorial director of Arabian Business.
Logistics partner
The Arabian Business Enterprise Innovators Series is being developed in association with global logistics company UPS, the official logistics partner of Expo 2020 Dubai. While UPS is a company that is more than a century old, has a global remit and has more than 481,000 employees, it has always been a catalyst for change and innovation.
“It’s hard to say what the single greatest innovation has been. Being in the midst of the technology revolution, there are so many. UPS is a vast organisation so areas like alternative fuel vehicles to healthcare drones come to mind but then there’s technology improvements in how our drivers capture package / shipment details have a massive impact on customer information and satisfaction. They improve the system significantly,” says Hussein Wehbe, managing director for UPS in the Middle East.
Click here to check out the latest episodes in the Enterprise Innovators Series.
Get involved: What are you and your company doing to innovate?
The Arabian Business Enterprise Innovators Series, in association with UPS, is looking for local companies to get involved in the initiative. Our coverage will run across print, online, social media and video and we are looking for organisations to tell us about the programmes, ideas and practices they are working on and the impact and improvements they have witnessed across some of the sectors below:
Healthcare: This sector was previously all about treatment and less about prevention. Healthcare professionals are now increasingly developing new devices to predict illnesses and ailments and to bring the sector out of the hospital and into the home.
Facial recognition: Speed and security are two key considerations for many companies. Technological advances such as facial recognition are providing answers to these challenges.
3D printing: Dubai is already at the forefront of this technological journey, but beyond construction, what practical applications does this new trend offer?
Artificial intelligence: More than just robots replacing jobs, many companies are using AI to reduce mundane work practices.
Electric vehicles: While the region has a high percentage of car usage, it has been slow to embrace electric models. What are doing to be more sustainable in their transport strategies?
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