FinTech CEO Committee
Meeting Minutes
Tuesday, July 6, 2021

Opening:

The fourth meeting of the FinTech CEO Committee was called to order at 4:00 PM Istanbul Time on July 6, 2021 on Zoom.

Present:

Dr. Safa Nassereldin, Vice President, Al-Quds University (Former Minister of Telecom and IT - Palestine)
Dr. Fatin Al Zadjali, Acting Assistant Dean for Academic Support and Student Affairs and Head of Islamic Finance, College of Banking and Financial Studies 
Mr. Mohammad Ridzuan Abdul Aziz, Advisory Board Member, FinTech Association of Malaysia
Mr. Mohamed Roushdy, FinTech & Digital Transformation Advisor
Mr. Mohammed Kateeb, Group Chairman & CEO, Path Solutions
Mr. Mustafa Kuğu, Founder, FASTER Community

Agenda:
Recent developments in the FinTech industry

Length of the Meeting:
1 hour

Meeting Highlights:
The axiom “Aviate, Navigate, Communicate” teaches pilots to fly the airplane first, then navigate, and once the situation is under control, communicate.

In today’s business climate, effective leadership is no different. Priority number one should be to ensure operations remain safe and efficient. Once established in a glide, it’s time to determine the best course of action to navigate through the current environment. And finally, comes communication. 

Faster Community, long considered as an active group in keeping up with the latest FinTech developments has received an invitation to collaborate and join as a network partner of the ‘Islamic FinTech Leaders Forum’ organized by Emnes Events and scheduled to be held on 24 & 25 August, with a special discount for Faster Community members.

This new business model of collaboration is a good opportunity for both Faster Community and its members, as it enables them to maximize on the knowledge and network of this cooperation to include new partners. It will also allow the company to become more valuable to its members, while increasing its visibility outside the Faster Community.

Palestine is now preparing for a hackathon scheduled to be held in the beginning of August covering FinTech, e-payments and online channels, to discuss the regulatory issues needed to facilitate e-payments and FinTech adoption. In addition to another technical workshop where young qualified people with technology knowledge will be competing to try to work out new technology applications that can solve the e-payments and FinTech problems in Palestine.

Furthermore, much collaborative research on FinTech have been initiated to see if Palestine is ready to develop a FinTech ecosystem to launch innovative products with value-added services, in addition to working on a FinTech index for the country.

The Higher Council for Innovation and Excellence is currently preparing for a new Innovation Forum scheduled to be held by next October/November under the title ‘Transition into Innovation’. This initiative will be a strategic platform to draft the country’s 2030 agenda around the new technologies needed to propel the FinTech industry forward.

Bank Negara Malaysia, on the other side, has received 29 applications for digital banking licenses under the Financial Services Act 2013 and the Islamic Financial Services Act 2013, following six-month application period which ended on the 30th June 2021. Up to five licenses may be issued in the first quarter of 2022, many of them interested in Sharia-compliant operations.

Building an Islamic digital bank that could really deliver value to larger stakeholders requires focus on rethinking on business models, infrastructure and responsible tech disruptions.

On business models, the revenue models need to include fee-based activities, i.e. subscription-based pricing models and transaction fees, on top of the typical deposit and loan revenues. Real Islamic economy revolves around the circulation of money in the economy by various stakeholders for values to be created. Islamic digital banks could play the impetus role of creating value via intermediation, trusted relationships and collaboration. They should move away from the conventional capitalistic banking model that focuses on ensuring unilateral goal of return irrespective of the circumstances of other stakeholders, especially customers.

As to infrastructure, the Islamic banking ecosystem needs to breakaway from relying on or sharing the conventional platform, because Islamic banking is positively associated with economic growth, hence money needs to be circulated and risks must be shared, with participation being a missing factor in conventional banking.

Disrupting responsibly is also a key factor to focus on, as it brings vibrancy through new innovations with a robust sense of collective responsibility to ensure stability, empowerment, and to democratize access. This is where Islamic digital banks should focus on sustainable livelihoods as a mean for alleviating poverty, achieving financial inclusion to MSMEs, and assisting those in the bottom 40 per cent, while considering financial literacy as the main foundation.

Unlike the main conventional banking objective of helping to maximize the profit motive and optimizing shareholders’ return, the Islamic finance activities focus on real economic value, and profit-loss sharing principle.

In UAE, Buy Now, Pay Later transactions are growing in popularity. TABBY has raised $50 million in debt financing in June, the largest debt facility raised by a FinTech in the Middle East & North Africa after its $23 million Series A in December 2020. While Australia’s Zip, a global Buy Now, Pay Later platform bought out Dubai-based BNPL provider Spotii for $16.3 million, first regional exit for BNPL.

Digital wallets and e-payments are gaining momentum in Egypt. MasterCard announced its partnership with Telda, an Egyptian digital banking startup, to offer the first e-payment application of its kind in Egypt. The partnership aims to promote digital transformation in Egypt, as well as involve new segments of society in an innovative customer experience.

Another significant development came to light with the announcement from the Central Bank of Saudi Arabia which is planning to go live with its open banking initiative during the first half of 2022. This move is expected to see the rise of various FinTech services, creating increased competition and choice for customers. Bahrain has also been very active in this regard, putting in place regulations to cover regulatory sandboxes, open banking, crypto-assets, and robo-advisory and payment services. However, the MENA countries have diverse challenges in financing SME projects that should be addressed.

When it comes to Oman, Path Solutions and IFAAS have jointly launched IFIN Services, the first of its kind real economy, automated Islamic financing platform. This secure technology enables to connect retailers and Islamic finance providers, permitting them to offer consumers instant access to Islamic financing for purchases, at the point of sale.

Alizz Islamic Bank is the first Islamic window in Oman to partner with IFIN Services to launch the first instant ‘Goods Financing’ product, with two more banks in the pipeline.

IFIN Services has shown a huge interest from seed investors, after finishing the Series A funding round, and the company will be available in 3 countries in the first 6 months of operations to reach 5 countries in one year.

Closing Remarks:

The global financial technology market is expected to grow gradually to reach a market value of approximately $324 billion by 2026, growing at a compound annual rate of about 23.41% over the forecast period 2021-2026. The conditions for FinTech growth in the GCC region are ripe. Smartphone penetration is at 96%, well above the global average of 58%. However, FinTech has not developed at a similar pace. The global share of mobile payments and digital banking in the GCC is growing, but still far behind other regions (such as Asia Pacific).

Written by:
Mrs. Danielle Karam
Manager - Corporate Communications
Global Corporate Communications & Marketing Department
Path Solutions