Dubai: The Middle East is witnessing a big leap in banking sector digitisation and sustainable finance as the UAE moves closer to becoming a cashless economy, Sunil Kaushal, CEO of Standard Chartered Africa and Middle East told Gulf News.
A survey conducted by the bank found two-thirds of consumers in the UAE expect the country to become fully cashless by 2030. The shift will eventually spur a reconfiguration of physical branches, which are evolving from being transaction-oriented to focus on advisory services.
“From wealth management to personal banking, we have been experiencing a shift to digital," the official said. "It was a conscious choice for Standard Chartered to adopt a mobile-led digital strategy and to invest in an affordable, easy to roll out end-to-end digital bank offering but that choice was also driven by changing consumer behaviours and preferences.”
While the pandemic served as a abrupt test drive of these technologies, it has reinforced the importance of championing digital.
The banking industry in the region has evolved, underpinned by disruptive technologies. “Today’s consumer wants access to a highly personalised experience, as well as access to a wide variety of services from the comfort of their homes,” said Kaushal.
The bank sees great potential in disruptive technologies that make banking more accessible, efficient, and convenient. Keeping services in silos is no longer feasible. Open banking, for instance, allows the financial services sector to seamlessly integrate with that of the retail and lifestyle sector, providing consumers with a blend of services through a single platform.
“We vigorously monitor trends across our markets, in order to effectively address consumer demands. A great example of this is the launch of our digital banks across Africa, first launched in Côte d’Ivoire in 2018. Since then, we have rolled-out eight digital-only banks across key African markets,” said Kaushal.
Sustainable financing ways are becoming popular among governments, related entities and financial institutions in the region. Green bond issuances picked up over the second-half of this year, with Qatar National Bank and Saudi Electric Company coming to market with first ever 'green' transaction for the respective country.
A further surge is expected as banks continue to lend to sustainable projects and companies take advantage of opportunities presented by the energy transition.
“Even before the onset of the pandemic, sustainable finance had begun to gain significant traction, with sustainable and ESG considerations playing a crucial role in various national strategies, such as Saudi Arabia’s Vision 2030 and the UAE’s ‘Towards the Next 50’ strategy,” said Kaushal.
The volume of debt issuances has remained robust despite disruptions caused by the pandemic. “We initially saw a surge in social bond issuances in the first-half of the year, with the proceeds from COVID-19 response bonds going towards areas such as healthcare or other business support measures, such as the Islamic Development Bank’s $1.5 billion issuance in June,” said Kaushal.
International demand has been a significant driver for green bonds, with European investors in particular offering dedicated funds that are providing a new source of demand. Kaushal sees a significant number of investors in green bonds coming form from conventional funds, who are interested in the credit story of the company and see the green element as an added extra.
Globally, the Standard Chartered Group delivered a resilient performance in Q3-2020, despite challenging conditions. In the region, the bank continues to have a good operating performance, coupled with its strong capital position to help it weather the challenges resulting from low interest rates.
With over six decades in the UAE, the bank has committed its portfolio to reinforcing the country’s position as a thriving investment hub. “The UAE will always play a major role in achieving the growth strategy for the Bank,” said Kaushal.
“We won a banking license in Saudi Arabia in 2019, which enables us to offer commercial banking services, adding to the robust investment banking operations that we previously ran,” said Sunil Kaushal, CEO of Standard Chartered Africa and Middle East.
"The Kingdom is an attractive market given its ambitious diversification efforts, which directly translate to large-scale opportunities in areas that we are traditionally strong at. These include project finance, capital markets, trade finance and cash management.
“We take a longer-term view to assess key economic drivers whilst also unlocking opportunities for facilitating trade and capital flows. The bank is uniquely positioned to act as a bridge to facilitating inward and outward investments from Saudi into overseas markets and vice versa.”
The bank expects the opening up of Saudi economy should continue to encourage private sector participation, especially in sectors that were largely the domain of public sector funding.