By: Kartik Taneja, Executive Vice President and Head of Payments at Mashreq Bank
FinTech start-ups are becoming increasingly important in our markets, taking advantage of the great opportunities inherent in the digital economy, and with the exception of large and mega-institutions, small companies and new ideas often face challenges related to with trust and customer acquisition. Sometimes we find that the assumptions we made were too optimistic, and that the solutions we assumed were not good enough to be viable. Some banks are also beginning to realize the seriousness of competition and competition imposed by these new enterprises, which often offer clever solutions to real and specific problems.
The introduction of new plans and proposals in times of great economic uncertainty, amid high inflation rates and increased borrowing costs, may not be suitable for the faint of heart. Contributing to ease the affairs of the client and alleviate his suffering, she will be worthwhile and gain additional momentum, thereby ensuring the continuity of the enterprise that provides it with value and growth, which is extremely important.
Today, there is a huge opportunity for fintech companies to innovate in the area of payments and lending (including buy now, pay later), a subsector showing signs of accelerated growth, along with other areas such as wealth technology, insurance technology, regulatory technology, and cyber security, and data. In order for technology companies in these sectors to succeed, capture interest and attract customers, they must have access to the broader business ecosystem.
Cooperation is the solution
Fintech companies must fully focus on achieving growth through partnership building, proactive tactics, market segmentation, advertising and collaboration. To obtain and maintain its position in the markets, it has a valuable opportunity to participate in the open banking system, at a time when many banks offer many opportunities for cooperation and partnership building, and other banks, which look forward to the future, looks forward to weaving collaborative relationships with dozens of financial technology companies in various fields, from payments to lending and cybersecurity.
Conventional banks also have the ability to provide innovators with a safe environment for development and testing by offering proprietary platforms to test their solutions, develop the revenue stream from their operations, and in some cases also secure equity and debt financing. Here, Mashreq Bank is at the forefront after launching the region’s first developed API portal in September 2021 with the aim of encouraging and developing new and innovative digital journeys and experiences for consumers, which is at the heart of the “ banking as a service” revolution.
Fintech companies, like small businesses, must make sure to invest in their employees as well, and this may be necessary given the accelerating pace of change and the increasing saturation of markets. The difficulty facing the emerging financial technology company is the lack of a sufficient number of people with the right expertise and skills. Perhaps the best advice for those who succeed in recruiting highly qualified talent is to invest in their owners and develop their capabilities with the same vigor that is put into achieving the future success of their institutions. For example, a senior engineer can solve a problem faster than many junior engineers, and a seasoned finance officer can work on something faster and more effectively.
Planning and preparing for disruption
Without a doubt, investing in people and all other aspects of building a successful company, fintech startups must have a clear view of the rate of financial loss, and an understanding of when and where the next round of funding is coming, and here it is strongly recommended to develop appropriately developed strategies to mitigate it (Second and Third Plans) Considering the nature of the financial technology world. And there are broader and more influential forces in the field that can quickly neutralize and derail startups. These forces include; The uncertain nature of the post-pandemic recovery period, geopolitical forces and major economic uncertainty.
As for the good news for startups in the UAE and the GCC in general; This is what these countries witness a steady return to stable economic growth, and their highly cultured demographics, dominated by youth and digital fluency, and here is the opportunity for companies that can use these factors to their advantage and overcome risks, to to expand in the medium term, and build a strategy and a sustainable position during the period It can extend from 5-10 years to come.
Nevertheless, we find that the emerging companies in the field of financial technology, especially those operating in the field of open banking, also suffer from the protectionist policy shown by some banks, which still treat these companies with a kind of suspicion and suspicion regard. and that they are a source of potential threat; Not an opportunity at all. We believe that working with innovators and entrepreneurs to support the thriving FinTech ecosystem will elevate the overall customer experience at all stages.
We at Mashreq Bank are fully aware of this, but we emphasize the role and importance of collaboration to join efforts with financial technology companies to keep up with the latest technical developments, and we have always been keen to support the financial technology work system and to sponsor in the region, and the FinTech fund we recently launched has already implemented a number of Strategic Investments in financial technology companies in the UAE.
We can say that fintech companies that are reluctant to chase many opportunities and resist their temptations, focusing entirely on specific solutions within their plans, have the ability to participate in what may be the beginning of the golden age of fintech may be, as some estimates suggest that more than 800 will be established. A startup company in the UAE in 2022, and there may be an opportunity to double these numbers in the near term.
This promising future enjoys steady support from national and regional organizational ideas and concepts; It recognizes that financial technology is needed to give life to the financial sector, that small businesses must have a chance to experiment, and there are increasing indications of regulatory enactment and supportive policies that enable experimentation and the development of new businesses. Regulatory hedge funds are an essential part of the equation. The UAE prides itself on embracing carefully curated and exceptionally managed environments including ADGM Legislation Lab and DFSA Innovation Testing License Program.
In conclusion, I can say that the cooperation of FinTech startups with governments, the joint efforts of peers in the industry, and above all the focus on customer happiness, will give them valuable opportunities to become one of the biggest companies in the future.