Technology and advanced analytics has rendered traditional banking systems obsolete, leaving them with no option but to adopt digital platforms if they hope to compete, the Fintech head for blockchain and emerging tech at PwC Legal has said.
Paul Kayrouz told Al Arabiya English that Big Tech and Fintech companies are closing in on the banking industry faster than ever. Mass digitization is no longer a choice but an inevitability, and finance houses must now embrace digital banking, he said.
“While purely digital banks do exist - for example Revolut in the UK or Anglo-Gulf Trade Bank in the Middle East - incumbent banks are also choosing to adopt a more digital approach, and quickly, with hopes to compete,” he explained.
“Tech titans like Google, Facebook, Apple and Amazon are offering banking and financial services products directly to the consumer, at the tap of a button,” Kayrouz said. “Big Tech firms leverage their vast user base and can build on existing infrastructure to offer a wide variety of digital products and services to consumers, posing a serious threat to traditional banks,” he added.
Dubai-based YAP launched the UAE’s first independent digital banking platform on Sunday. Without a license it has partnered with RAK Bank, allowing it to offer its users international bank accounts and secure their funds. The neobank aims to become a leader in the Middle East, Africa and South Asia.
“The Fintech revolution has become very popular in other parts of the world and we saw a gap and unique need for this service in the Middle East,” YAP CEO and founder Marwan Hachem said in a press statement.
Kayrouz believes that traditional banks need to follow a strategy that could appear to be contradictory.
“On the one hand, banks need to achieve the speed, agility, and flexibility innate to Fintechs. However, at the same time, they must continue to manage the scale, security standards, and regulatory requirements of a traditional financial-services enterprise,” he said.
Digital banking has different facets, which Kayrouz described as a spectrum where individual banks need to decide where to place themselves.
Yap’s platform does not offer all of the services a traditional bank will, such as mortgages and loans. Instead it focuses on other areas, including bill payments and remittances.
Despite new players grabbing pieces of the traditional banking market offerings, Kayrouz maintains that banks can maintain their dominance if they adapt.
“If they can combine the dependability associated with their names with new, innovative services and digital products, banks will place themselves ahead of the curve, and set themselves up for huge success,” he predicted.