In The Middle East, Banks Embrace FinTech

Efforts in the Middle East by banks and other financial institutions to embrace FinTech are on the rise.

As reported from Daily News Egypt, a consortium of banks in the region expects a number of FIs, including those in Egypt, to embrace FinTech. The Union of Arab Banks (UAB) has said in a study that such a movement would change the way Arab banks provide financial services.

As pertains to Egypt banks, e-Cards (and, in tandem, electronic payments) have swelled to more than 30 million cards as of June 2018, as estimated by the country’s central bank. The bank has also estimated that the tally includes 4.4 million credit cards, 15.8 million debit cards and 10.8 million prepaid cards. The site also reported that the number of point-of-sale systems came to more than 72,000 for the same period, up from roughly 66,600 at the end of the year.

The site, quoting Ayman Hussein, sub-governor of the bank for payment systems and information technology, said the central bank is eyeing the creation of digital banks. The bank has a goal of achieving 30 percent growth in issuing digital wallets, and for such wallets to be 10 percent of the wallets issued by each bank. Hussein also said that the number of electronic portfolios focused on the Egyptian market that have been issued by banks has reached 12 million, tied to more than five million clients.

In one example of an omnichannel nature of bank offerings in Egypt, the National Bank of Egypt and Banque Misr this month issued a national prepaid payment card that also allows users to pay all government payments across electronic means.

Beyond the Middle East, a group of banks, investment firms and other stakeholders – spanning Accenture, SunTrust Bank and the trade group known as the American Bankers Association (which is focused on U.S. banks) – has joined a $30 million investment round that brings funding to Finxact. That company, in turn, makes technology that works with banks’ back-end systems to aid in transaction processing.

In an interview with Reuters, Finxact CEO Frank Sanchez said the company will use the funding to grow operations and technology. The newswire said the investment comes as banks grapple with legacy systems that are “ill-equipped” to grapple with the transition to digital services such as peer-to-peer payments, or where consumers expect real-time account balance updates. Finxact’s own offerings operate in the cloud.

“I have heard from bankers across the country who wish they had more nimble and agile core processing platforms that allowed them to keep pace with customer demands,” ABA President and CEO Rob Nichols said in an email, as quoted by Reuters. “We understand that a bank’s ability to innovate is highly dependent on its core processing platform.”

Outside U.S. borders, in an effort to further cross-industry efforts in financial services, a group of financial firms in Singapore have formed the FinTech Cooperation Committee. The membership thus far spans about 60 financial institutions, and includes insurance companies, banks and FinTechs.

The Straits Times reported that the group’s first meeting was earlier this month, laying the strategy for a work plan as well as code specifications for mobile payments. Singapore Business Review also said that funding for FinTechs in Singapore reached nearly a billion dollars in 2017. Technology infrastructure in the country is also strong, with outlets reporting mobile subscription penetration at more than 100 percent.