Moderated by Hachem Mohanna, Founder of Palm Tree Venture, Capital Club Dubai hosted a panel discussion on Open Banking with diverse industry experts: Max Di Gregorio, Managing Director, Financial Services Middle East at Accenture; Mohammed El Saadi, Co-Founder, Mamo Pay, Jianggan Li, Co-founder, Momentum Works and Abdulla Almoayed, CEO, Tarabut Gateway
Hachem Mohanna: What problem does open banking solve?
Abdulla Almoayed: The question is about who owns my data? Who owns my financial statements? The bank or me? Financial data is extremely valuable and very underutilised. Your spending trends can be evaluated, and help you make better financial decisions to save and grow your earnings. Open banking is a framework that gives you ownership of your financial data back to you, to consent or deny permission for this to be shared with others. If data is the new oil, then Tarabut Gateway is the region’s modern pipeline, an infrastructure provider that connects all the various components.
Mohammad El Saadi: Mamo is a digital wallet and payment service based in the UAE, and our goal is to simplify the process for people to make payments and send money to friends and family. The customers no longer have a monogamous relationship with their bank, and they interact with multiple financial institutions, have multiple bank accounts and cards. They might be using digital financial services outside of traditional banking as well.
Hachem Mohanna: Is the customer now looking at the options of the financial services and no longer at the bank?
Abdulla Almoayed: Some banks see this as a threat to their business, and are concerned that giving up customer data, could result in losing business. In Europe, many digital banks have emerged, but their experience has revealed that most customers do not disengage from their primary banking relationship but use other digital financial services as added benefits.
Mohammad El Saadi: The future bank is going to be more of a ‘faceless’ entity. Loyalty towards a financial institution is not going to be a decision-making factor. Banks will continue being the main custodians of assets and issuers of credit, but the banks that will win are going to be the ones that adapt to issuing new types of credits and services required by people, as and when they need them.
Hachem Mohanna: What is the perspective from Southeast Asia and China when it comes to open banking and the ecosystem?
Jianggan Li: Our experience here in Southeast Asia, especially in Thailand, Indonesia, and Singapore, is that the government is nudging the banks who are reluctant to adopt open banking. However, the stumbling block is the way incentives are designed within the banks. First, you have multiple stakeholders, and each might have their own sub-KPIs and incentives. Second, lots of the incentives are designed towards fulfilling the bottom line, which raises the challenges of justifying the cost for investing more in customer service to shareholders.
In China, WeChat and Alipay are dominant platforms used for consumer payments and transactions, and people generally don’t use mobile banking or cash. This forces banks to think about how they will continue to be relevant. They no longer own the customer data; the apps own it and know what the consumers are buying more than the banks. Interestingly, the competitive pressure is more from big tech rather than fintech. Companies like Alibaba and WeChat will be the Shopee, Grab and Gojek in Southeast Asia, and they are also going into financial services; they have the users and customer data; in many cases, they own the relationships with the merchants as well. This will force banks to innovate – not the regulators or industry, but the competition.
Hachem Mohanna: What’s next?
Max Di Gregorio: In the next six months, there will be open banking regulations in Saudi Arabia. Unlike the UK and Europe where the banks can create their own open banking gateways, Saudi Arabia Central Bank is investing and creating the infrastructure platform to facilitate and integrate all the banks with central APIs; customer accounts will be integrated with all the banks. It would be good for the UAE to accelerate this regulation move and be a front runner in the financial market infrastructure, to keep pace with the rest of the region and world.
Abdulla Almoayed: In the MENA region, including Egypt, Morocco, Algeria, with an approximate population of 550million (almost the population of Western Europe) there are less than 350 retail banks operational banks (which are less than banks in Germany alone). And historically, they have been owned by the government and the private sector cannot get a license, nor are they incentivized to innovate or open up. But this is changing, with fintech becoming a top priority in every single jurisdiction, and regulations coming it should not take long to transform the banking sector in this region.