Interview: Jean-Christophe Durand

In which ways can small and medium-sized enterprises (SMEs) be better supported?

JEAN-CHRISTOPHE DURAND: It was necessary for banking institutions to forge closer relationships with SME customers, who needed guidance on how to mitigate the sudden challenges brought about by the Covid-19 pandemic. Some SME clients are still in the early stages of development, and as much as they need financing when everything goes well, they likewise need advice and support during demanding times. Aid from banks sometimes means deferring reimbursements, but perhaps more importantly, it means guiding the SMEs and spending time helping them to navigate the uncertain future.

Which emerging financial technology (fintech) solutions have the greatest potential to address challenges in the Bahraini market?

DURAND: Bahrain’s digitalisation journey has been greatly accelerated by the pandemic. Banks have had to facilitate many more digital transactions and less in-person interactions while maintaining a close relationship with clients.

The innovation environment has completely changed and requires a constant upgrading of the client relationship by facilitating easier transactions. The demands of the younger Bahraini generation are evolving very quickly, in line with developments in other markets around the world. As such, innovation is crucial in attracting this demographic to participate in the banking sector. To that effect, fintech innovators can partner with banks and help them to meet customer demands.

Innovation in fintech is having a big impact in areas such as loan origination and online on-boarding, particularly when it comes to know-your-customer requirements. Being able to perform these checks digitally makes the process more efficient and minimises the risk of human error. Data is key for banking institutions; it allows us to understand our clients and potential clients more in depth, and tailor our services accordingly.

What impact is the increased focus on environmental, social, and governance (ESG) standards having on Bahrain’s banking sector?

DURAND: It is having a significant impact on the way banks do business, with whom they do business, what type of projects they are financing and what kind of financial instruments they are developing. For example, at NBB we are now including ESG criteria in credit applications. We are in a region that is still somewhat reliant on fossil fuel production and exports, so banks have to be very careful. Even so, the ESG journey is under way across all industries and wider society. Our ESG journey began in 2019, and since then we have been integrating sustainability into our core strategy and business practices.

In terms of governance, we have a well-established board structure and see good governance at every level as a business imperative. In terms of social priorities, we are targeting further development in education, health and social services.

On the environmental front, the central bank has established a sustainability committee at the board level. We are prudent in selecting our partners, the type of projects to finance and what kind of final instruments to use. Environmental considerations will be influencing product development in the financial services sector. At NBB we are analysing products and services in our development pipeline from an ESG perspective. We have not seen sustainability bonds take off in the surrounding region, but it is an area – among others – ripe for development that we are watching carefully. In Europe, for example, a lot of the government debt is linked to projects with a positive environmental impact, and that is something that could be applied here.