CNME Editor Mark Forker spoke to Yahia Alhami, CEO of IT solutions specialist Tahaluf Al Emarat, to find out how their suite of technologies are helping banks accelerate their digital transformation, the importance of delivering better ‘experiences’ for their customers – and why ‘open banking’ practices represent the future direction of the banking sector.
Like many other major global industries, the banking and finance sector has been forced to embrace new technologies in a bid to respond to the changing demands of their customers. However, some banks had already embraced digital transformation prior to the onset of the pandemic, whilst others had resisted change. In your expert opinion, are those traditional banks that are legacy-heavy in terms of infrastructure banks under threat, can they adapt quick enough to keep customers happy?
In the last few years banking ecosystems is heading towards a new era, as a result, in terms of digital transformation and social media you see the demand is heading towards a seamless and fully digital experience where human involvements in any banking transactions are reduced.
We saw the growth of paperless banking, and gradually the growth of e-KYC and now digital banking, those changes are massive and will give a facelift to the industry in a few years. Where the seamless and full digital banking will be the new standards.
We started to measure the success of any bank based on amount of digital and seamless services that banking is providing via e-services and mobile applications.
Automations and full digitalisation’s must be implemented in the front customer side as well as in the backend of banking systems to assure the quality of services and better service time for the customers, removing manual interactions will be key to success and essential to assure full journey digitalisation.
Banking systems are critical, and it transacts with the most important asset (the money) that’s why it’s always delayed when it comes to technology adoptions because of sensitivity of the industry, but many banks already started and achieved great shape in digital era. However, that is not enough due to big competitions, not only from local banks, but also from international providers which will be game changing.
We know that you can now open a bank account in other countries fully digitally, using eKYC, and you can use most of banking services without any limitations or delay, so the game now is not only to compete with local market, but also internationally, which is applying further pressures on all banks to adopt faster digital banking transformations, otherwise banks will be out of race.
I forecast any bank that is delayed in terms of adoptions for digital banking will be out of the game gradually in a few years. The lack of digitalisation will cause poor customer satisfaction, more time to serve the customer, which will result in a higher cost of operations inside non digital banks.
We know that with the advent of technology our expectations as consumers and end-users have skyrocketed, and that puts immense pressure on service providers such as banks to deliver great customer experiences in an era known as the ‘experience ‘economy. What technologies do you believe that banks need to harness and leverage to deliver these experiences?
Digital banking is considered as a market disruptor in this field; however, banks need to adapt to new growth and customer demands and heightened expectations. To be a digital bank you need not only the latest technology, which most banks today already have, but instead digital banking ecosystems must also include better processes, agile management, improved customer services via less customer interfacing and interactions, so my answer is that technology is not enough.
There is root cause for delayed full digital banking adoptions which I have listed below:
• Sensitivity of the industry, even if you have amazing technology, it will take time to make it safe and secure to adopt, so even if some banks are the first to adopt the technology, they run the risk of lagging behind in terms of security.
• Organisations structures of the banks are huge in most cases, and it contains not only retail banking but other departments, which maybe are less digitalised such as wholesale banking, or other types of banking. That absolutely will make it harder to manage hybrid banks by having half or more digitalised whilst other parts are not, that will keep the mentality somehow complicated and not 100% tuned in for further digitalisation of processes.
• The average age of the management within a bank is hidden, but why is that important you may ask? Well, it’s very crucial due to fact that most of the C-Level management in banks nowadays were born in the 70’s and 80’s, so it’s still very hard for them to digest the daily digital movement and the impact of social media. This mindset has led to many banks not investing heavily enough in digitalisation until it’s too late.
• Digital transformation is like a revolution where you need to get more than 60% out of your current human resources department. In addition to this, you need new fresh faces who believe in the change with the same passion as you do. This can be considered as a disturbance for any bank, but you need strong leadership and commitment to do it in a speedy manner that can compete with international providers.
• Regulations and policies sometimes can serve as a stumbling block for digital transformation programs, and this point is very important due to fact that regulations and policies may vary from country to country, so if you are operating in a supportive environment, then you can grow faster, however if you are operating in a non-supportive environment then that can be very challenging. We also encourage clients to always have open channels with regulators from the industry in a bid to push forward and to lead full banking digitalisation.
• Lack of competition in some markets may also lead to low digital adoptions. So, we see the accelerated growth of digital banks coming only after the first digital bank is open, so it’s a matter of being first and fast in terms of being a successful bank in the new digital era. Those providers will set the new standards for the market and digital banks will set the pace for everyone who will come to the party later. Customers in the experience economy will not accept poor services if better services are available.
• The adoptions of expensive technologies and tools is important. Traditional classic banks will adopt expensive tools and brands in terms of technology from Tier One providers, but this can be killer for digital banks, because you can’t grow digital banks if your tools are expensive. If you want a digital bank then you need to stop thinking like a traditional bank, so expensive technologies can’t be selected. We need to stop doing this – and start using open-source tools and best technical practices to decrease the cost of IT, because we can’t grow in IT investment if the cost of software licenses and tools are massive.
So, as I explained above its not only technology that is needed to do digital banking, but a full ecosystem of partners. If I need to look only at the digital banking side then I can say e-KYC solutions, such as digital identity, biometric solutions, PKI, business rule engines, flow management and many other tools will be needed to shape the success of my digital bank.
FinTech disruptors like Revolut and Monza are having great success across Europe, but many banks are working with those disruptors because quite simply they need the banks to be able to deliver their services. Do you see the banks adopting a collaborative approach towards FinTech’s in the UAE and across the Middle East in the next few years?
Of course, more banks will work with FinTech providers because they are ready and agile. The cost of digital banks if properly optimised is always much less than normal banks, which makes it much easier to use such platforms, instead of re-investing and doing it from scratch. It would be a wise choice to white label such services, however, that can be risky for the future of your banking services because your then dependent on another provider which can be risky.
Adopting FinTech solutions can be cheaper, faster, more successful, but it comes with cost in terms of a lack of service personalisation as the platform is owned by third parties, and the same platform is used by other banking providers, so customers will start feel bored due to lack of service personalisation.
Each bank must do evaluations for his current market share from customers demographics and characteristics such as age, background and target markets then based on that it can be decided if a third-party platform will be used or something must be tailored.
In your opinion, and given all what we have discussed, what do you believe the future of banking will look like – and what technologies are going to underpin it all?
Cross-border banking will be the new face of banking. We may use providers from other countries, and I see the financial systems going towards more open-banking and more integrated banking, which will lead us into an era of digital banking, and we will slowly see the end of traditional banks as we know them.
Digital banks will be new standard and it act as a domino effect for other providers, once digital banking and open banking practices is robust in one country, then you will quickly see it adopted in other countries. That adoption will be a little bit slow to begin with over the next few years, but then I forecast an acceleration of digital banks to eliminate classical banks. I project a timespan of five years to finalise the full ecosystem of the digitalisation required. Providers will be left with no other option but to become fully digitalised in terms of both their services and mindset of their operations, failure to do so, and they will be out of the market.
We will enjoy sending money in a few seconds internationally between bank accounts, which has already been started with pay send and other providers, but we will also entertain IBAN and banking services from overseas, credit scoring services will start to grow internationally, and it will be a brighter future, but we need to navigate carefully.
There is one drawback when it comes to credit scoring and that is that internationally operating this will become harder and harder to get any bank account if we do make a mistake with one local, or international provider. Data and scoring will be fully connected and linked, which is good for keeping the market healthy, but it might mean that a single mistake for any customers when it comes to bankruptcy or business operations could spell disaster.
Tahaluf Al Emarat have developed a reputation for producing first-class security solutions and smart services. Can you tell us how banks are leveraging your solutions to be more secure as cyberthreats and attacks continue to grow and become more sophisticated?
Our solutions now vary between industries, so we have developed our own products and are moving the company from horizontal system integrators to full products owners, where I reshape the sales from horizontal to verticals, so I have always three high level steps, which are sense the market, develop products, and then build vertical sales around it and operate.
I have the target to be active in seven industries in the upcoming two years that will include solid products practices in transportations, health care, law enforcements, immigrations, smart cities and IOT, environmental, AI and no code platforms, we are shaping the future of developments in the region.
We are passionate to see Tahaluf become the best IT software company in just a few years, and we are operating within a very supportive environment inside the UAE, where the ecosystems are ready to support such initiatives.
When it comes to banking industries, we are working hand to hand with many banks in providing multiple solutions such as anti-money laundering solutions, open banking, backend systems and digitalisation, and we also provide e-KYC solutions with our market leaders partners. In banking we developed many products which can make the transformations process easier and simpler for any banking provider.
Tahaluf Al Emarat is regarded as one of the most innovative companies in the UAE, innovation is in its DNA as a company, however, what differentiates you from your market rivals?
Agile, passionate, fast to adopt, we work not talk, working silently with loud results. We do IT with passion, that is our key feature, however, the long-term vision for our product developments and verticals sales practice is complementing the ecosystem of offering where you will find our team knowledgeable in the areas we serve.
We work hard and we hope that we will be able to achieve huge success.
As a final word for digital banking, we know it is a very big topic and I can write hundreds of pages and guidelines of how the market will be shaped, and how banks must act and pro-act, but we are optimistic that the future will be full of bright achievements and success in the banking industry.