Finance Sector Insights
by Zaid Kamhawi, CEO, Qarar

As we’re about to head into a brand-new year, I’m a firm believer in reflecting on what we experienced over the past months.   So, what did we learn in 2022?  Plenty! 

One thing’s for sure, our industry is constantly evolving and influenced by a wide range of factors.  So, with that in mind, we plan to be even more nimble and always be prepared for the unexpected — whether it be integrating the latest tech into our product portfolio or anticipating what our clients need … essentially creating an upgrade in our clients’ own customers’ journeys!  

Looking ahead to 2023, while it’s difficult to accurately predict specific trends that will emerge in the consumer finance industry in 2023 in the GCC region, here’s my pick of the top 5 potential trends that could well shape the industry over the coming year.  In no particular order …

    We are definitely immersed in an increased adoption of digital and mobile financial services, driven by the big changes in the way we do business and communicate since 2020.  I envision this will likely grow even more in the coming years as consumers become more accustomed to using these channels.

    Open Banking is a trend that is gaining a lot of popularity in the financial services industry.  Based on open application programming interfaces (APIs) it allows third parties to develop financial applications and services that can access and use data from banks and other financial institutions.  What I find exciting about open banking is its convenience and options — customers have greater control over their financial data and use it in new and innovative ways.  I predict that Open Banking will really shake up the financial industry by allowing new entrants to offer innovative products and services that are built on top of existing financial infrastructure.   It’s all about innovation!

    SME lending is another trend that is expected to gain regional traction in 2023.  SMEs play a crucial role in the economy – for example, the Saudi Arabian General Investment Authority (SAGIA) report that SMEs account for around 95% of businesses and 45% of employment in the country — so there is a growing recognition of the need to support and finance these businesses.   I believe the government and financial institutions in Saudi Arabia are likely to be focusing on increasing access to credit for SMEs.  This might involve the use of innovative financing models, such as Islamic finance and crowdfunding, as well as the development of new lending products and services specifically tailored to the needs of SMEs.  We’re also playing our part in pushing for more SME lending — we’ve developed specific SME Scorecards for lenders to make informed decisions when providing access to financing for SMEs.

    It’s not uncommon for businesses and financial institutions to face challenges when it comes to managing their collections processes —especially as more finance companies are licensed and interest rates go up.  We’re well aware we’re living in times where it can make it more difficult for some individuals and businesses to afford their loan payments … and that’s why I am convinced an effective collection management strategy will be of utmost importance for businesses and financial institutions in the region.  I see the role of technology and automation streamlining the collections process — and that frees up lenders to be able to develop more effective communication and negotiation strategies to resolve outstanding debts, while retaining customer loyalty.    

  5. REG TECH. 
    Last, but definitely not least, we need to talk about RegTech — short for regulatory technology — which helps companies comply with regulatory requirements through software, systems, and processes.  RegTech utilises AI, ML and data analytics to automate and streamline compliance tasks, such as reporting, risk management, and monitoring, and helps companies track their compliance obligations in a more efficient and cost-effective manner — for example AML, KYC and trade surveillance.  We’ve already witnessed some banks being financially penalised and suffer reputational damage though non-compliance… and we certainly don’t recommend taking that risk!  RegTech is already firmly in place as an important part of the regional financial services industry, and I expect I see even more rigorous regulations and standards in the future as the financial services sector grows and evolves even more.

It will be interesting to see how my predictions pan out this coming year … so let’s revisit at the end of next year!

In the meantime, I’d like to take this opportunity to give a big thank you to all our clients and business partners for the great work we’ve done together this year, and I wish everybody a fantastic and successful 2023.