Adel Al-Majed’s Talk at the International Banking Conference
Adel Al-Majed: Currently, Majority of the Banks Place FinTech As a Top Priority
Imminent Announcement of the Digital Wallet Collaboration between Boubyan Bank and Zain Telecom
FinTechs Are the Future, Better for Banks to Cooperate and Integrate with Them Than Fight a Losing Battle
Today’s Battle Is For Acquiring the Best Talent. We Must Improve Our Learning Programs to Match Actual Labor Market Needs
In 2011, 2.7 Billion People Could Not Perform Any Financial Transaction. Now, the Number is Down to 1.5 Billion Thanks to E-Payments
Mr. Adel Abdul Wahab Al-Majed, Chairman of Kuwait Banking Association, and Vice-Chairman & Chief Executive Officer of Boubyan Bank confirmed that innovations and FinTech are growing at a rapid pace with a lot of investment opportunities as seen in the growth of total investments therein from USD 9 billion in 2012 to USD 120 billion approximately by the end of 2018.
During the International Banking Conference, Mr. Al-Majed stated that one of the biggest FinTech-related challenges is identifying and implementing these technologies in the form of services and integrating them into existing conventional systems in addition to the necessity to establish a new culture for business-management, which means new skills in all areas and, accordingly, an investment in human resources by qualifying and training them and uplifting their skills.
Al-Majed attributed the great success of FinTechs to a group of factors, the most prominent of which were:
- Providing remarkable services to all customers’ segments,
- Distancing themselves from conventional banking models,
- Allowing customers to experience the developed digital services through user-friendly mobile Apps, etc.
Al-Majed went on to add: “By reviewing venture capital investments that have been injected by investment companies’ capital around the world in FinTech startups, we will find that the U.S.A. is in the forefront with USD 31.6 billion during the past year, followed by the U.K. with USD 5.4 billion, and Europe with USD 4.4 billion.”
A New Lifestyle
Mr. Al-Majed stated: “Technology has made our lives much easier above and beyond, however, we are yet to see more. Digital technology is growing constantly at a huge pace to the extent that economists are now calling this the 4th Industrial Revolution.
“It is crystal clear that the world as we know it is not only changing, rather, it is fundamentally disrupted by technology. Many conventional sectors such as healthcare, retail and many other sectors have undergone a total transformation due to modern technology.”, he added.
He went to add: “Upon considering the witnessed developments, one can confidently see where the future is going. A good example here would be e-payment solutions, data analysis, AI, block chains, cryptocurrencies, and mobile banking services.”
Banks of the Future
Al-Majed went on to elaborate: “These developments had an impact on the users of financial transactions; in 2011, 2.7 billion persons were unable to perform financial transactions but owing to the remarkable growth of non-bank e-payments, this number is now down to less than 1.5 billion persons. This means that e-payments helped attract one billion persons to the financial system within 7 years.”
“Banks must get things in order to be more flexible, to think outside the box, and to steer away from strict official procedures which were set in the past. The need of the hour is to acknowledge the changes in technology and in customers’ expectations for quicker and more convenient services and products.”, Al-Majed stated.
He went on to add: “Speaking of the integration of technology in banks, the majority of banks say that they are actively acting towards adopting FinTech as a main priority as per regular surveys.”
Al-Majed also confirmed that banks should have the ability to win such battles at all fronts since any failure in such fields could risk the very going concern of any bank.
Boubyan Bank's Third-Party Collaboration
On the other hand, Al-Majed spoke during his lecture about the bank’s collaboration with Zain Telecom with regard to the Digital Wallet, whose details are yet to be announced soon after obtaining the necessary approvals.
He added: “The expected agreement and collaboration is an example of bank’s cooperation with telecom companies in an attempt to mutually benefit from the customers base of both entities.”
Speaking of Boubyan Bank’s efforts towards facing such variables, Al-Majed elaborated: “We have restructured some of the bank’s departments, activities and our internal work mechanism to be aligned with such developments. We have also created a new department with new responsibilities that may have not existed before, not in their current form at least. To give you an example, the bank has established Boubyan’s Innovation Center.”
“Our digital journey did not start from a design perspective, rather, it started by focusing on customers and innovating banking products and services which suit them and meet their expectations. Moreover, we at Boubyan Bank see FinTech as the future, hence, we believe that cooperation with FinTech and integrating it with banks is better than competing with it. Accordingly, Boubyan Bank showed increased interest in innovation and in partnering with FinTech companies.”, he added.
He went on to explain: “The bank is actively involved in the startup community in Kuwait, and it has been working with startups in collaboration with “Plug and Play”, the international innovation platform, in order to give us access to FinTechs around the world.”
It is worth-mentioning that Global Finance has recognized Boubyan Bank by naming it the Best Islamic Digital Bank in the Middle East for the second year in a row in addition to the bank's receipt of another four awards by Global Finance, namely, the Best Islamic Digital Bank in Kuwait, the Best Mobile Banking App, the Most Innovative Digital Bank, and the Best Innovation in IMAL Technology.
The Battle for Efficiency & Talent
Furthermore, Al-Majed pointed out that despite engaging in possible battles, he deems the battle for efficiency the most significant one since studies show that banks could save USD 400 billion per year globally, which are incurred in direct costs. He explained that such costs could be saved should conventional customers become digital ones, thereby reducing the cost of service by 80% to 90% as per McKinsey.
He added: “This is a great opportunity that can be utilized and highlighted by banks since by participating in the efficiency battle, banks can multiply their advantages as they will have a better ability to interact more with customers and not only receive better satisfaction rates, but they will also have the ability to improve cost-cutting operations.”
Al-Majed stressed: “The efficiency battle is very significant for banks in the way of winning through leveraging of technology and data. Banks need to use available data to improve their predictive analysis, not just for operational efficiency and planning, but also for insights into customer behavior and preferences.”
“The second is the battle of “Talent” which is of equal importance. As the banking industry goes through its radical transition, banks will need to widen their pool of recruits and attract new types of talent. They will need new skill sets for the future in line with their shifting business models and to better understand their customers.”, Al-Majed added.
He concluded: “Banks will need data scientists, researchers, Artificial Intelligence specialist, visual designers, digital marketing and media experts, developers and customer experience professionals. They will also need to recruit psychologists, philosophy majors and other diversified skills that can bring in new perspectives.”