Interview: Abdulrahman Ali Saif
Where do you identify gaps in the banking sector that could benefit from further innovation?
ABDULRAHMAN ALI SAIF: With traditional banking revenue streams under pressure – and with increasing competition from other banks and non-traditional players such as telecoms providers and social media companies – banks are seeking to boost income through innovative strategies. At the same time, they are looking to reduce costs via automation and diversify revenue sources by introducing new services.
The digital transformation of banks in Bahrain began years ago, thanks in part to robust financial IT infrastructure. The Covid-19 pandemic accelerated development in this area as stakeholders adapted to the rapidly changing situation. We now see interesting growth opportunities for fully digital banks, which offer new mechanisms to enhance the customer experience. We have been focused on digital banking over the last few years and are ready to open our fourth digital branch in the country.
Financial technology (fintech) companies bring fresh insights and new ideas to banking, and banks should be looking to achieve their objectives through collaboration with them. The cooperative model will depend on the size of the fintech firm, the nature of its innovation and the overall impact on the bank’s business, among other factors.
As more synergies with fintech firms are created moving forwards, cybersecurity concerns such as financial loss, reputational damage or data-privacy infringements will need to be addressed. Banks should therefore continuously invest in cybersecurity to mitigate potential risks in the digital domain.
To what extent can blockchain technology augment traditional banking operations, and in which segments do you foresee the greatest impact?
SAIF: Blockchain technology has the potential to be implemented for a variety of use cases in the financial world, opening up new segments of banking services by allowing faster, cheaper, more secure and more inclusive transactions. It will certainly alter domestic market dynamics, although it is difficult to know for sure the extent of such changes.
This would benefit both banks and their customers. Use cases may include crypto-assets, crypto-collateralised lending and blockchain process solutions, as well as existing uses in trade finance, and real-time transfer and settlement solutions. In addition, the distributed nature of blockchain architecture may increase the resilience of the industry to fraud and cyberattacks, which are a growing concern globally.
How would you evaluate the progress being made by local banks in implementing environmental, social and governance (ESG) strategies?
SAIF: The pandemic caused banks in Bahrain to focus on overcoming the challenges in the sector and wider society. Many of the mitigation measures implemented were orchestrated by the government and the Central Bank of Bahrain, which motivated most financial service providers to follow suit with urgency. These measures tested the resilience and coping mechanisms of many banks, not just to meet internal financial expectations, but also to manage operations and demonstrate their capability to continue to offer the same products and services without disruption. This spurred a transition in operations, whereby a wide range of e-channels were introduced and the digital migration of customers occurred much faster than it would have under normal circumstances.
These changes aligned with many environmental and social initiatives that – without the pandemic – would have been implemented as part of ESG efforts, but perhaps at a slower pace. The Bank of Bahrain and Kuwait was responsive to the changing needs of stakeholders and customers, and made decisions quickly and efficiently thanks to our governance structure.
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