Almost every field, every business, every minute thing in our lives has been disrupted by technology in some way or another. Companies are putting finances, human resource and research to discover cheapest, innovative and efficient ways of getting things done. The changes are visible in our daily lives.
Financial technology, also known as FinTech, is a usage of software to provide financial services. Major users of FinTech, all over the world, are banks.
In United Arab Emirates, banking industry is going through a wave of dynamic changes, thanks to FinTech. At Global Financial Markets Forum by National Bank of Abu Dhabi (NBAD), the chairman of Abu Dhabi Global Market, announced a plan for Abu Dhabi to become the FinTech capital in the Gulf. He said that “ regional governments are empowering banks to allow them to undertake some very ambitious expansive programs focused on innovation and digital transformation” .
FinTech investment has tripled worldwide from 2008 till 2014. With the advent of technology, users are demanding more and more from their banks. They as continuously asking ‘why can’t I do this on my mobile rather than going to branch?’.
To cater this, capture market share and make positive impact, banks are acknowledging that they need to shake out of merely relying on interest rate to survive. Embracing learning attitude, having collaborations and making smart investment in financial technologies, FinTech, will attract more customers, cut costs and generate profits.
Like most opportunities, application of FinTech in banking industry also comes with some challenges. The biggest problem are the regulations and regulatory bodies. While regulations are necessary, they affect the banks’ swiftness, innovativeness and ability to compete effectively. Another issue is data security. Regulators are continuously worried about hacking of sensitive consumer data and confidential financial records.
While mobile apps have been introduced and are being used, more innovative products and banking services are on the way. NBAD recently installed a modern ATM monitoring system, by Inetco Systems, to better track status of ATMs. It provides real time information to the bank for more security and reliability. NBAD is the first of many banks in Middle East to use Inetco technology.
In a research report by EY on GCC Digital Banking, they found out that only 34 percent of UAE residents who own a smart phone used the device for banking transactions. Although GCC’s adaptation of smart technologies is slow but one thing is for sure; FinTech is all set to revolutionize the banking industry the same way it already has in other parts of the world.
FinTech, with its challenges, has the huge potential to take the banking services to a new level; making products & services better, faster and cheaper. Now the future banking era depends on a bank’s ability to respond logically to the threats and opportunities of FinTech innovation. It is, no doubt, the key to unlock the real revolution in the way we bank.