The Gulf banking sector is waking up to the benefits of digital transformation and fintech and exiting the sandbox.
The $3.1bn acquisition of Dubai-based ride hailing company Careem by global leader Uber highlights the potential for the Gulf region in tech start-ups.
Exciting, disruptive, technology start-up companies bring investment, publicity and jobs to the GCC. That is why governments are putting so much focus on creating tech entrepreneurship hubs in Manama, Dubai, Abu Dhabi and Riyadh.
Supporting the development of a thriving industry of digital start-up companies is vital to the transformation agenda.
Most of these risk-taking enterprises will either fail or be gobbled up by larger, more established companies. But before then, they are the entities most likely to deliver transformation.
Governments and planners know that change will not come from ministries and powerful established entities.
It requires the maverick, unfettered spirit of the start-up to provide the disruption to the status quo that is needed to drive a more productive economy.
This explains why authorities are working to create ‘sandbox’ environments that will encourage the best tech entrepreneurs to develop their concepts before stepping out to find investors and industry partners.
Inside the sandbox, regulation is relaxed to enable exploration and concept development. Once the new entities step out into the real world, regulatory inhibitions are a major challenge.
Nowhere is this more pertinent than in the financial sector. Banking is being turned on its head by digital transformation. From online banking to crowd funding, the core business of banks is being undercut by fintech firms, and the only restriction on change is regulation.
The biggest challenge is to transform regulations to facilitate digital transformation, while at the same time safeguarding people’s financial and cyber security.