Digest 8 | November 2023

What companies are telling us

• Abu Dhabi's financial center and free zone regulator ADGM has adopted rules to regulate cryptocurrency companies and introduced a new type of legal entity Distributed Ledger Technology (DLT) Foundation. Comment by red_mad_robot Market Research Center: the new system officially launches a regulatory framework for Web3 organizations, including DAOs and blockchain developers, allowing them to issue tokens legally.

• Kuwait International Bank announced a new partnership with Visa. The companies intend to create new business verticals and expand market reach in the Kuwaiti banking industry.
• BNPL provider Tabby raised $200 million in Series D at a $1.5 billion valuation, becoming a "unicorn."?
• Qatar Central Bank has launched the QFC Digital Assets Lab, which aims to explore and develop solutions in the field of CFA and distributed ledgers.?
• Abu Dhabi Securities Exchange (ADX) and HSBC Bank Middle East (HSBC) have partnered to develop digital fixed-income securities.
• Salt Edge has partnered with Access to Arabia (A2A), a banking technology provider, to support Open Finance in Jordan.
• Mastercard and Ottu are collaborating to expand available payments in GCC countries through the Mastercard Gateway payment gateway.
• e&money and Ericsson are collaborating to develop a fintech service in the UAE: Ericsson Wallet will strengthen e&money's infrastructure, making it more secure and sustainable.

New product launches and startups

Kuwait Finance House (KFH) has launched Kuwait's first Shariah-compliant digital bank Tam. Speaking about the factors that contributed to the creation of Tam, KFH executives talk about the importance of its digital transformation strategy and its advanced infrastructure. They emphasize the growing importance of digitalization in Kuwaiti society, especially among the youth. KFH should therefore become a financial legacy, associated with technological innovation and a commitment to customer satisfaction.

Comment by red_mad_robot Market Research Center:: it seems the bank aims to attract a younger audience to Islamic banking through the modern design, usability, and efficiency of the app, and the use of advanced technology that will be able to meet the desires of the digital-savvy audience.

First Abu Dhabi Bank has entered a strategic partnership with Mastercard to launch the Dubai First branded SlicePay card in the UAE. The card will allow customers to convert their purchases into four interest-free payments.

Al Etihad Payments (AEP), a subsidiary of the Central Bank of the UAE (CBUAE), has launched 'Aani', an instant payments platform designed to change the digital payments landscape in the UAE. Aani includes a suite of features that allow users to transfer money instantly using only the recipient's phone number. Aani also supports QR codes, enabling cashless payments at retail outlets.

Market Analytics?

Open Banking in Arab countries

The Arab Monetary Fund (AMF) has published a report in collaboration with 10 Arab central banks and Fintech Galaxy that provides recommendations for the implementation of Open Banking in Arab countries. The report examines the Open Banking landscape in the Arab region and highlights key developments and challenges in several countries including Jordan, UAE, Bahrain, Saudi Arabia, Iraq, Oman, Palestine, Kuwait, Egypt, and Morocco.

The report highlights the importance of a specialized Open Banking system that takes into account each country's specific conditions, digital financial infrastructure, readiness, progress, and regulatory framework. It also discusses various aspects of an effective regulatory framework for Open Banking: definition of Open Banking, data sharing requirements, consent mechanisms, data security, third-party provider (TPP) identification, service provider licensing, consumer protection, and governance schemes.

It is also mentioned that the Open Banking market in Arab countries will grow by 25% annually over the next five years. Growth should be driven by accelerating digital transformation and penetration of digital-savvy audiences.

UAE neobanks will complement traditional banks, not replace them

The main points from the article are:

• The adoption of neobanks and digital offerings of traditional banks in the UAE is growing, but mass migration from traditional banks to neobanks is unlikely due to customer loyalty, regulatory environment, lack of physical presence, and the comprehensive services offered by traditional banks.
• Neobanks offer customers convenience and low costs. Plus, neobanks are not burdened with outdated IT infrastructure and complex change management initiatives like traditional banks. However, local communities still prefer traditional banks for basic activities that require a higher level of customer service.?
• Non-banks in the UAE market are at an early stage of development. The range of products and services aimed at attracting deposits and issuing credit cards is limited.
• The regulatory environment in the UAE is somewhat conducive to the emergence of neo-banks.

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