Interview: Sheikh Waleed Khamis Al Hashar

In what ways is the banking sector supporting economic diversification in line with Oman Vision 2040?

SHEIKH WALEED KHAMIS AL HASHAR: Oman’s medium-term fiscal strategy continues to deliver results while economic diversification plans are gaining further traction with sustained focus on strategic sectors like manufacturing, tourism, transport and logistics, mining, renewables, and agriculture and fisheries. Overall, the banking sector is well aligned to further the sultanate’s development goals, and play a vital role in the next stage of growth and development, especially in financing projects of national importance. Thanks to strong partnerships with government institutions and the private sector, the banking sector will continue its efforts to create longterm value across the economy in line with Vision 2040.

By what means can the country help small and medium-sized enterprises (SMEs) secure financing amid rising interest rates and inflation?

SHEIKH WALEED: Proactive interventions implemented during the Covid-19 pandemic had a positive impact on the dynamics of lending to SMEs. Liquidity requirements soared owing to shortfalls in revenue, which were partially offset by lower expenses due to temporary closures, as well as relief measures such as tax deferrals and moratoria on debt repayments. However, there were cashflow gaps that had to be filled with new financing. As such, during the pandemic the sector’s emphasis changed from financing SME growth to supporting their preservation and sustainability.

In the post-pandemic era, the sector has recorded an increase in lending, supported by an accommodative monetary policy and government support measures. This included direct lending through banks and government lending institutions. The focus shifted towards innovation and the incubation of new businesses.

Going forwards, there is a need to provide ancillary services to help SMEs such as integrated enterprise resource planning and payment systems, accounting tools and marketplaces. The international emergence of new SME financing models like equity-based crowdfunding may also become popular in the region.

How is the banking sector approaching new technologies, and what opportunities exist for synergies with the financial technology (fintech) segment?

SHEIKH WALEED: Technologies like blockchain, robotic process automation (RPA) and big-data analytics are expected to provide substantial growth opportunities for banks. At the same time, banks still rely heavily on their core banking model due to the complex architecture and interconnectivity of different systems that support their processes and services. Due to these interconnectivities and the inherent need for security, the sector will likely start with newer technologies in a pilot phase, building up their confidence as implementation progresses. At Bank Muscat, RPA has been gathering momentum, and more than 25 functions have been automated over the past couple of years.

Innovation is key to the success of financial institutions. Customers now demand a seamless digital experience, and the banking sector is emerging as an important beneficiary of increased digitalisation.

Artificial intelligence is one area where financial institutions can improve customer experience and better utilise resources. For example, two-factor authentication and biometric solutions have become essential to enhancing customer security. Big data is another area that will benefit banks. As one of the largest collectors of customer data, banks will be able to provide a more personalised experience through smart services like bancassurance and investment and wealth management. Data analysis should also enhance the ability of banks to predict and manage risk.

When it comes to synergies, banks could enter into partnerships with fintech firms to leverage technology better, providing faster credit decisions, lower costs, greater efficiency and enhanced customer experience.