The Fintech Surge Advance Team is a group of Fintech leaders from around the world engaging in year-round activities from online discussions, closed-door meetings, webinars, interviews, and in-person meetups in Dubai.

Industry News


Financial industry turmoil caused by Challenger Bank

The continued turmoil in the financial and banking industry has led to a significant increase in digital and neobanks in the Middle East. However, despite the rise, there is still plenty of room for expansion, driven by changes and growth in millennial and GenZ customer behavior.

In an interview with Gulf business, Riddermark co-founder and managing partner Saqr Ereiqat and United Arab Bank CEO Ahmad Abu Eideh share insights from the industry.

Tell us about Fintech Surge and its vision.

Saqr: In today’s world, finance and technology are inextricably linked. Fintech Surge is at the crossroads of the most important technological breakthroughs and debates in the financial industry and can have immediate and significant impact. The event provides a platform for banks, insurance, technology providers and regulators to exchange ideas and ideas about the latest industry trends.

The global fintech market is valued at approximately $ 127.66 billion in 2018 and is expected to grow to $ 309.98 billion with an annual growth rate of 24.8% by 2022.

Accenture’s new analysis builds on datasets covering the 20 largest economies that account for more than 75% of global GDP, with $ 416 billion in revenue at stake when the wave of open data arrives. It suggests that it is on the verge. This revenue can be earned or defended by agile players who are aware of the opportunity early on.

Tell us about chatting by the fireplace at the beginning of the event.

Saqr: One of the main subjects of the conversation was the challenger’s bank. In Ahmad’s words, “[…] Banks need to continue to engage and joint venture with FinTech.

What are Challenger Bank and Neo Bank? And how is it different from traditional banks?

Saqr: Neobank is an autonomous bank that accepts payments but has no physical presence. Instead, use the normal physical banking process to provide credit from a commercial bank to the backend.

Users can communicate with the bank through the app and payments are usually immediate credit. Challenger is a hybrid of traditional banking and neobanking. Although highly digital, major branches and staff interact with customers. Customers can connect to the bank through the app and payments are usually processed immediately.

What will the bank of the future look like? Do you see traditional banks follow in the footsteps of the challenger’s bank?

Ahmad: Open banking must be considered the future of banks. Challenger Bank is building an infrastructure that supports open banking using a “plug and play” API that links to the network. Open banking is an important element that has not been discussed, but we need to be aware of its future potential.

What are the main challenges in the financial services industry? And what do you think is the most important change they need?

Ahmad: In my opinion, banks need to engage in ongoing collaboration and joint ventures with FinTech. Fintech companies are enthusiastic about what they offer, and banks need to get the most out of such talented individuals. Usually, the younger generation advises us.

In the Middle East, Challenger Bank’s outlook is aimed at the younger generation, as about 30% of the population is between the ages of 15 and 29. In addition, mobile banking and digital banking are very important to competitors in the region. , The majority offer digital-only services.

Challenger banks usually emerge in three different ways: selling from a group, bankruptcy, and new entrants. So where do you think the Challenger Bank will come from in this area?

Ahmad: In the case of a bankrupt bank, when a company buys a bank or a bankrupt bank, it usually does so to obtain a banking license that is generally lacking by regulatory agencies.

In general, central banks encourage potential investors to obtain existing bank licenses. Another option is divestment, but there is a fourth option. It’s about turning the current bank into a Challenger bank. From my experience, it’s easier to set up a new bank than to rebuild or modify the DNA of an existing bank. Therefore, in the future, I think that physical banks will be transformed into Challenger banks.

This interview is part of a series of discussions hosted by Fintech Surge at the Dubai World Trade Center from October 17th to 20th. Financial industry turmoil caused by Challenger Bank

Source: World Akkam