Digitalization, Fintech Collaboration and Financial Inclusion – how do they all connect?

Get the latest insights from the panel discussion at GTR Mena 2022 Dubai including views from Finverity, VISA, Rakbank, Standard Chartered, Veefin & Zand

Finverity’s CEO & Co-founder Viacheslav Oganezov joined other key players in supply chain finance in MENA on the panel “The time is now: The new wave of digitisation (and what it means)” at GTR Mena, 15 February 2022, held in Dubai. We provide a summary of the main insights arising.

Covid-19: an “inflection point” for digitalization

The panel kicked off with a unanimous conclusion that Covid-19 had been an inflection point in digitalization, forcing banks to speed up and move away from manual and physical-based processes to digital ones.

The speed of change has intensified thanks to closer collaboration with fintechs. For Viacheslav Oganezov, CEO and Co-founder of Finverity, “digitalization has been the natural habitat for fintechs since inception”. Rather than tackling digitalization, fintechs are already riding the wave and spreading its benefits thanks to closer collaboration and partnerships with banks and regulators.

This received the endorsement of Motasim Iqbal, Managing Director, Head of Transaction Banking at UAE Standard Chartered. “Supply chain finance can be fully digitalised”, according to Motasim. “The challenge now is to continue digitalization across all processes.”

The tangible support of regulators in the UAE region as “enablers of digitalization” had also been evident, notably the approval of digital signatures in November 2021. Thanks to this, Standard Chartered had been able to digitalize its supplier enrolment process and reduce it from five to two days. He went on to encourage treasury departments to improve working capital provision by exploiting the greater processing efficiency that digitalization offers.

Making access to supply chain and trade finance easier

Digitalization was making access to supply chain and trade finance much easier and providing greater economies of scale. “The pandemic has increased demand from clients for working capital solutions and shifted expectations in terms of user-friendly digital delivery of services. It’s been a monumental shift. Many more banks are collaborating with fintechs and dropping barriers. We are seeing more banks joining our platform to partner on funding SCF & receivables so they can efficiently scale their books. Our white-labelled SaaS solution is also in great demand, as it helps banks optimize their internal processes and provide a better experience to their existing customers”, said Viacheslav Oganezov.

Olivier Crespin, CEO & Co-Founder of Zand, a soon to be launched digital bank in the UAE, was of the view that “acceleration is accelerating”, highlighting that technology is coming at the right time to support acceleration with blockchain and Web 3.0. “Building a data platform that reveals what the market wants is key to building the right solutions”.

A one-way march to digitalization

The practical benefits of digitalization were at the forefront of Saeeda Jaffar’s thoughts. The General Manager, GCC, Visa, provided examples of practical solutions devised by fintechs being brought to market, ranging from “tap to phone” services for merchants without the need for a device to rapid onboarding and the sharing of digital credentials. “Practical solutions are what really and truly excites Visa. We see lots of fintechs with which we see ourselves partnering.” Saeeda was vocal that “we are seeing a one-way customer march towards digitalisation.” Recent surveys conducted by Visa among individuals in the UAE region showed that digitalisation was here to stay.

A knock-on effect of increased digitalization was greater innovation in payment trends. 78% of people surveyed in the UAE by Visa were aware of BNPL (Buy Now Pay Later), of which 80% said they would be interested in trying it out. Over 80% were aware of crypto, of which 50% viewed it as a viable alternative to payments. These trends would also trickle over to the B2B side, said Saeeda.

Collaboration with fintechs: building a supply chain finance ecosystem

All the panellists agreed that collaboration and partnerships with fintechs was the way forward to provide win-win solutions.

Motasim Iqbal saw three legs to Standard Chartered’s collaboration with fintechs to improve finance availability to MSMEs. The first involved fintechs solving a specific problem, say, the onboarding of 1500 to 2000 domestic and cross-border suppliers for Standard Chartered’s supply chain finance offering. The second was the “plug and play” model, whereby a fintech company looks after one component of the supply chain finance chain, e.g., the e-invoicing segment. The third was the effort led by Standard Chartered Ventures, which focuses on fintech incubation and collaboration to quickly overcome legacy issues.

In addition to collaboration with banks, Viacheslav highlighted collaboration with regulators and corporates. Finverity is collaborating with ADGM (Abu Dhabi Global Market international financial centre) to enable mid-market companies to gain better access to financing. The collaboration centres on providing an API that directly pulls data from corporates’ accountancy packages to improve credit risk monitoring and assessment. “We are seeing banks, regulators and corporates increasingly working together. Our role as a fintech is in helping everyone get to their objectives faster and quicker so the entire trade finance ecosystem benefits.”

Choosing your fintech partners wisely

For Selima Mehiri, Head of Trade & Commodity Finance at RAKBANK, choosing the right fintech so that it meets a bank’s specific needs was fundamental. Different fintechs address different pain points and choosing partners that complement a bank’s business model was critical=. As an example, Rakbank’s collaboration with UAE Trade Connect (UTC), a national trade finance platform, has led to over 78,000 invoices being crossed-checked and reduced double financing to date by UAE Dirham 370m (USD 100m).

Raja Debnath, Co-founder, Veefin, underlined that banks and fintechs come in all shapes and sizes. In most markets, it is the top tier and some mid-size banks that are most active in supply chain finance. This provides significant opportunities for fintechs. Raja outlined three models for collaboration. First, the fintechs that provide asset origination dealflow to banks; second the “tech fins” (technology-first companies) that provide the right technology for a bank to digitalize and improve its operational processes; third the fintechs that don’t have their own balance sheet and instead aggregate demand for risk financing from multiple corporates by providing a bidding platform. Banks can then review requests and offer SMEs access to a wider range of competitive rates.

Raja went on to note that some banks are clearly taking a lead in digitalisation and boosting their “learning DNA”, in contrast to others that are largely using “fintech as a service” and are mostly reactive, adapting and changing only when others take a lead. As a result, he expected the digitalization gap between banks to widen considerably post-pandemic.

Economies that include everyone uplifts everyone

“Economies that include everyone uplifts everyone”, said Saeeda Jaffar, GM, GCC, Visa. One of Visa’s priority objectives over the next few years is to bring 50 million SMEs into the financial fold (out of approximately 200m SMEs that are currently outside the financial fold globally). To achieve this Visa is working with fintechs across the globe, from providing digital wallets to farmers to developing solutions for SMEs.

Oliver Crespin underlined that financial inclusion starts with financial education and that eleven of the nineteen UN development goals related to financial inclusion. Although 54% of the bankable population in the UAE has a bank account, there remains much work to be done, particularly among women, foreign workers and other under-served sectors.

In Africa and Pakistan, Motasim cited that Standard Chartered was funding mobile wallets directly for the likes of farmers and milk suppliers, thus bypassing the need for bank accounts with the support of fintechs. This was making a real difference to suppliers’ lives.

Looking ahead: what’s on the agenda

Finally, the panellists gave their snapshot views on key topics to look out for. Motasim underscored that standardization and interoperability between fintechs and banks would be critical going forward. David Jegersen, Executive Vice-President, Head of Customer Experience & Platform Development at National Bank of Fujairah (NBF) and panel moderator, stated that collaboration between fintechs and banks was fundamental in bringing the best possible service to clients. He underscored banks’ duties to promote financial inclusion, reminding the audience that 1.7 billion people globally still don’t have access to a bank account.

Selima underlined the opportunity for providing increasingly personalized services to clients thanks to greater digitalization and good use of data, whilst Raja highlighted the importance for banks to “retrain” within their organization and learn to live with the daily change that digitalization brings. Saeeda underscored that changes seen in individuals’ digital habits will push over to the corporate side, including BNPL, crypto and the metaverse. She stressed the importance of collaboration. “Don’t do it alone: collaborate, figure out what works best and repeat.” Olivier emphasized the importance of working together to meet clients’ needs.

In concluding remarks, Viacheslav echoed Olivier’s comments and foresaw an ecosystem model based on collaboration whereby each party plays to its strengths and specializations e.g., a bank may focus on underwriting whilst a fintech could focus on transaction servicing, to bring the best comprehensive solution to a client.

To view the panel video recording, click here


Moderator: Devid Jegerson, Executive Vice-President, Head of Customer Experience & Platform Development, National Bank of Fujairah

Selima Mehiri, Head of Trade & Commodities Finance, RAKBANK

Olivier Crespin, CEO & Co-Founder, Zand

Motasim Iqbal, Managing Director, Head of Transaction Banking UAE, Standard Chartered

Viacheslav Oganezov, Co-Founder & CEO, Finverity

Raja Debnath, Co-Founder, Veefin Solutions

Saeeda Jaffar, GM GCC & Board Member, Visa