Interview: Tahir bin Salim Al Amri

What are the expectations for inflation in Oman?

TAHIR BIN SALIM AL AMRI: Inflation has remained benign despite a sharp increase in prices globally, mainly due to the exchange rate peg, a cap on retail oil prices and tax exemptions on key items. Overall, we expect inflationary pressure to remain low, notwithstanding some risks from commodity price volatility caused by recent geopolitical developments. Potential inflationary risk would be linked to the US Federal Reserve policy response if the US enters a recession. If the Federal Reserve decided to lower its policy rate, resulting in depreciation of the US dollar, the result would be higher imported inflation.

In what ways can local banks adapt to leverage the growing popularity of cashless payments?

AL AMRI: Digital payments are designed to function seamlessly with mobile devices, apps and browsers, and have prompted wide-ranging innovation from banks, tech companies and financial technology (fintech) firms. Digital payments offer banks several benefits, including a reduction in operating costs, greater profitability, rich data based on digital transactions and increased transaction revenue.

To keep pace with market developments, banks should focus on four key areas: creating a seamless payment experience by using machine learning and robotics to enhance customer satisfaction; personalising payments using data analytics to tailor rewards, features and fees to encourage cross-selling and customer acquisition; collaborating with other banks on industry-wide digital payment solutions; and utilising customer data to better understand behaviour and identify commercial opportunities while improving fraud, underwriting, operations and IT processes.

Which measures can be taken to foster fintech?

AL AMRI: The Oman Fintech Framework and Roadmap focuses on adopting dynamic laws and regulations, developing and engaging national innovative talent, encouraging collaboration between academia and fintech, attracting sustainable investment and creating local demand drivers. The CBO has launched the electronic Know Your Customer initiative, a secure and reliable system to on-board new customers and meet compliance requirements digitally. It is also conducting a feasibility study on a central bank digital currency and its possible benefits for the financial system and markets, including enhanced efficiency and new tools for monetary and fiscal policy.

The Open Banking API, meanwhile, aims to develop an open banking framework and give relevant firms better access to data, which can be used to draw insights and create more innovative, tailored products. Furthermore, the CBO has announced several initiatives to support start-ups, small and medium-sized enterprises (SMEs), and entrepreneurs, such as a Fintech Regulatory Sandbox and a Fintech Innovation Hub to provide a test bed for ideas, and facilitate investment and market entry.

How can stakeholders expand financial inclusion?

AL AMRI: In addition to licensed banks, the CBO supports micro-enterprises and SMEs through the Oman Development Bank, and financial and leasing companies (FLCs). We have liberalised the branch-licensing framework and offered incentives to banks and FLCs to open branches in remote areas. Similarly, the availability of mobile banking units and onsite banking facilities allows the population to access banking services more easily.

The Financial Inclusion Policy from 2019 was strengthened by the issuance of Financial Consumer Protection Regulatory Framework in December 2021. The latter aims to protect customers from unfair terms, conditions and sales practices, as well as ensure product suitability. Among other things, we have provided instructions on disclosure and transparency, including the format and manner of disclosure, advertising materials, the issuance of key fact statements, and timely notification of changes in rates, terms and conditions.