The Banking Executive Magazine, Issue 154, October 2021

Banks should be Bold Abdulaziz Al Ghurair URGES BANKS TO BE BOLD AS FINTECHS ARE CHALLENGING TRADITIONAL BANKS Abdulaziz Al Ghurair, chairman of the UAE Banks Federation and chairman of Mashreq, has urged banks in the UAE to “be bold” and continue to invest in technology, as fintechs are posing a huge challenge to traditional banks. Speaking at the Future of Finance conference at Expo 2020 Dubai, the Emirati businessman noted that the banks’ traditional control in the field of payments, which provides them a valuable stream of revenue of $2 trillion globally, is now “under threat”, thanks to the entry of fintech firms and other non-bank players. “Fintech and [other] players are in- creasingly capturing a greater share of this profit. And the fact is that the payment segment is performing well, but not for banks,” he noted. In a customer-centric age, where people are becoming more accus- tomed to the ease, speed and per- sonalisation of service offered by the disruptors in the industry, Al Ghurair said banks must develop a new op- erational model that is “better suited to the changing times”. “Those who don’t will not succeed,” he said. “The largest platform… the technol- ogy company are the ones that stand to benefit the most. They own the customer and they address the cus- tomer needs beyond banking. We must consider, how long before Amazon launches Amazon bank? Imagine the scale of opportunity for company like that entering financial service.” An increasing number of consumers are turning to fintech firms for serv- ices and products traditionally of- fered by banks, such as payments and consumer loans. According to TransUnion data released in 2019, the unsecured personal loan market in the US reached $138 billion in 2018, up by 17 percent compared to a year earlier. Loans provided by fintech compa- nies in the same year represented 38 percent of all unsecured personal loan balances, the largest market share compared to banks, credit unions and traditional finance com- panies. Five years earlier, fintechs accounted for just 5 percent of out- standing balances. HOW BANKS CAN SUSTAIN With the existential threat that the banks are facing, Al Ghurair said it is important to acknowledge the value of investing in technology. Banks must also keep in mind that data and artificial intelligence will be the “core differentiator” in the rapidly changing industry. the BANKING EXECUTIVE 24 ISSUE 154 OCTOBER 2021 H.E. Mr. Abdulaziz Al Ghurair, Chairman of the UAE Banks Federation and Chairman of Mashreq