Tuesday 05, June 2018 by Jessica Combes

The future of Bahraini banking


Sael Al Waary, Chairman of AFS, sat down with Banker Middle East at the second Middle East & Africa Fintech Forum for a chat on Bahrain’s achievement in the fintech space

What is Bahrain’s biggest milestone in fintech thus far?
Two years ago, the scenario was totally different in Bahrain. We launched fintech about a year ago and there were disruptions everywhere because people did not know how to accept fintech. I am very pleased that the MENA region caught up in the past 12 months—regulators creating sandboxes and frameworks as well as initiatives such as the fintech Bahrain Bay consortium.

Banks cannot afford to sit around anymore and just keep watching—they have to collaborate. In the future I see more collaboration between fintech and banks as we have no choice. Fintech companies alone will not make money. There has to be collaboration and economies of scale. It all boils down to customer experience now. As most people in fintech are not bankers, they fairly have a better view of what customers want.

What is in the pipeline for AFS?
We are a pioneer in payments. Thirty years ago, we started with traveller cheques and now we have moved into fintech. In the past two years we have heavily invested in fintech. We will be launching a new company totally dedicated to fintech with a capital of $10 million just waiting for final clearance from regulators. This company aim to help banks with their digital journey. We will give the tools and apps to banks for SME solutions, analytics, new customer experience, and social media which they will only need to plug it into your structured system.

This team is specially dedicated to providing fintech solutions rather to banks instead off each bank having to buy their own tools and their own apps. It will then be our job to worry about cybersecurity and we have invested heavily in cybersecurity as we are in technology. We have to be certified every year by regulatory bodies, by security entities and US regulations, where otherwise we cannot be in the business.

How do you see the business of banking in the region changing over the next five years?
We are going to see target banking coming from challenger banks (which are probably start up banks) competing with the traditional banks. They require their own capital and their own systems, and they will be attacking three segments which are: the unbanked, under served and unsatisfied customers, which is already happening now.

Traditional banks on the other hand, will respond by leveraging technology and innovation. They will also leverage on the customer base and licences. Customers are becoming more sophisticated; bank transactions are all done either online on their mobile phone or iPads, and no longer going to bank branches. Today, Bahrain has a sandbox, and a lot of technology companies are already joining in to test their framework. I predict that there will be a global sandbox where technology companies in Bahrain, can tap into the sandbox in UK or the sandbox in Australia to test their solutions globally, because every sandbox have different frameworks. In the future the government will have to build bridges between the UK and Bahrain, and perhaps with New Zealand where these governments can collaborate. This will lower the cost as opposed to each country having their respective sandboxes.

This does not necessarily apply solely to banking; however banking is currently where the money is. I do not see companies in trading, for example, ready to involve themselves in this process.