10 trillion dollars in digital financial services by 2027

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The challenges posed by the “Covid 19” pandemic have led to the emergence of the so-called “banks of the future” in light of the tendency to rely on services provided by new technologies that bridge their the future began to expand, at a time when banks around the world are trying to keep up with these rising technological trends to improve their operations, operational and upgrade its services.

Although banks around the world embarked on digital transformation journeys decades ago, the “Covid 19” pandemic accelerated banks’ transformation into the future by implementing well-studied digital transformation strategies, allocating billions of dollars to them, parallel to the modernizing regulatory and supervisory systems, and upgrading infrastructure, security levels and data. And the development of banking services platforms to provide secure and customized products and services based on the latest innovative technologies, including “blockchain”, cloud computing and the Internet of Things.

Many banks around the world are currently working on the development of digital banking services, including the transition to the establishment of digital banks, in view of the fact that many central banks are encouraging this trend to keep up with digital financial developments, develop services that more responsive to customers’ needs, and increases financial inclusion prices.. In addition to the possibility of monitoring the funds that take place in terms of receipt or transfer within the banking sector in real time.

It is estimated that the volume of digital financial and banking services worldwide exceeded $8 trillion during 2021, and is expected to exceed $10 trillion by 2027, according to the Arab Monetary Fund, which confirmed that the size of the digital banking market is estimated at more. than $12.1 billion in 2020. It is expected to rise to about $30.1 billion by 2026.

Banks of the future

What the banks of the future offer does not differ from what their traditional counterparts offer, but they launch their services in the light of new technologies, whether electronic, virtual or digital via the Internet, or through artificial intelligence techniques and metaverses and without the need to go to the bank’s headquarters, where their services include a range of products and solutions designed to improve the digital experience of banking, from seamless procedures and fast account opening mechanisms, to automated digital loan approval processes.

Future banks or digital banks face many challenges, the main ones being the expansion of their scope of work and the maturity of the technologies used, in addition to the governing legislative and regulatory frameworks, in addition to the need for supervisory authorities to harmonize and address. these challenges with the development of appropriate legislative and regulatory frameworks to provide digital banking services.

Cyber ​​security also poses a major challenge for this type of banks in the absence of regulatory rules and legislation, including laws on cyber crime, cyber security and artificial intelligence, in addition to clear policies regulating the work of cloud platforms, open application programming, and others. Therefore, efforts need to be stepped up worldwide to develop appropriate controls and policies to reduce cyber security risks and risks associated with digital banking, as well as to adopt AI-based regulatory compliance and fraud detection tools to quickly and resolve issues. scale.

With the expansion of investment in financial technology, artificial intelligence and metaverse, UAE banks were the first banks to adopt digital transformation a few years ago, as the “Local Al Maryah Bank” in the middle of last year as the first specialized digital bank launched. which provides its services through a digital services platform that provides integrated banking products. It operates within the best financial technology standards.

Zand also recently obtained a license from the Central Bank of the Emirates to conduct banking business as a commercial bank under the name Zand Bank, becoming a licensed and regulated commercial bank in the country, in addition to investment support from Franklin Templeton and a number of local and international investment groups. The “Wyo” platform has the necessary licenses from the Central Bank of the Emirates to launch and is owned by “Holding”, “Alpha Abu Dhabi Holding”, “Etisalat” and First Abu Dhabi Bank, with an initial capital of 2.3 billion dirhams.

rapid transformations

Jamal Saleh, Director General of the Emirates Banks Federation, told the Emirates News Agency, WAM, that the global banking sector is witnessing rapid transformations, represented in the entry into a virtual financial world that allows all banking operations anywhere and can be performed at any time.

Saleh added that with the leap in internet technology over the past decade, it was not surprising that the idea of ​​new digital banks has emerged that operate entirely in the virtual space and are characterized by easy access through mobile applications or visiting the website and achieving the necessary within moments.

Saleh continued: “There is no doubt that the need for more electronic services is clearly visible. It is certain that we will see more and more proliferation of electronic service packages and applications. We believe that digital banks will accelerate their development to provide more electronic services in the future.”

technical risks

The Director General of the Emirates Banks Federation believes that future banks or digital banks face several risks that can be divided into more than one category, such as technical risks that occur due to the possibility of loss due to a lack in the comprehensiveness of the system or of customer errors, as well as fraud risks represented in imitation of electronic computer programs Or falsifying information corresponding to electronic programs, or modifying certain information regarding electronic money, and there are also legal risks.

He emphasized the importance of banks providing all means and systems to reduce these risks and protect customers during their use of their banks’ programs and applications, explaining that there is no difference between traditional and digital banks in compliance with the applicable legislation and regulations, as most traditional banks have portals and applications to provide their services electronically, while Digital banks specialize in providing electronic services without the need for physical branches.

financial technology

For his part, Mohamed Waseem Khayyat, CEO of Al Maryah Local Bank, the first integrated digital bank in the UAE, told Emirates News Agency (WAM) that the mobile phone revolution over the past two decades has unleashed a new kind of financial. technology providers to change the banking industry by using existing technologies on mobile applications, noting that the arrival of new banking solutions based on mobile applications and financial technology companies has made it necessary for traditional banks to opt for digital transformation.

He said that digital and electronic banks have many advantages that traditional banks cannot offer, with the availability of access to the bank account from the computer and mobile phone, which means that the customer is not tied to banking hours to manage his money.

Khayyat added that digital banking systems are more flexible and allow banks to add and expand functions much faster than traditional systems that use the latest banking technology, noting that digital banks not only allow customers to make deposits and transfers remotely to the account, but also the opportunity to progress more easily To obtain loans and gain access to personal money management services including external transfers and investments in various asset classes such as shares, gold and mutual funds.

He pointed out that digital banking includes the digitization of all traditional banking products, processes and activities to serve customers through online channels, such as obtaining bank statements, cash withdrawals, money transfers, checking, managing savings accounts, opening deposit accounts, managing loans, payment of accounts. , managing checks and monitoring transaction records.

brave steps

For his part, Ali Sultan Rakkad Al Ameri, CEO of Commercial International Bank, said that the banking sector needs to take some bold and innovative steps to keep pace with the digital economy and reinvent the customer experience from a digital perspective.

Al Ameri added that to keep pace with the global digital transformation, we have worked to create our own metaverse experience to be the first UAE bank and one of the first in the Middle East to provide this experience in line with The UAE’s strong commitment to building a digital economy that includes the use of blockchain technology, virtual assets, artificial intelligence and augmented reality technology in both the business environment and the daily services of individuals.

digital banks

The first appearance of digital banks around the world dates back to 2015, as the British banks “Monzo” and “Atom Bank” are among the first digital banks, while the United States is the largest country that contributes to the growth of digital banking . market.

Digital banks provide remote banking services and operations through special applications, and the procedures do not require any branch to be reviewed, as they work through the Internet. These banks strive to facilitate banking operations and services for individual customers in an efficient and flexible manner and make it easier for them to terminate their services at any time they wish. They also seek to stay abreast of the latest developments in the financial and technical sectors. .

Digital banks are distributed in three models, the first includes fully independent digital banks, which are mostly affiliated with telecommunications or e-commerce companies, the second includes digital service units affiliated with traditional banks, and the third model is built on the partnership between an existing bank and a leading digital institution, while the Operational Responsibilities rest with the bank itself.

Metaverse Banks

Many banks around the world have begun to keep up with the metaverse technology by introducing their own worlds within a series of digital virtual worlds, allowing users to navigate, interact, discover and even access banking services by using images or symbolic characters of merchants called “avatars.” These worlds usually build Relying on advanced technology such as augmented reality, virtual reality and blockchain, it is the main link that connects the physical and digital worlds.

Metaverse enables customers to virtually visit their preferred bank, access banking information and take advantage of different products and services through multifunctional experiences using customized avatars across real-world, mixed reality and virtual reality environments, as well as digital AI-based customer interaction, portfolio analytics, and wealth management, syndication and corporate banking.

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