H E Sheikh Abdullah bin Saoud Al Thani (left), Governor of Qatar Central Bank, receiving a memento from the Dean of Carnegie Mellon, Michael Trick, during the Dean Lecture Series on “Qatar’s Strategy for Fintech” held at Carnegie Mellon University in Qata
Predicting a major shake-up in the global banking industry operations, Qatar Central Bank (QCB) Governor H E Sheikh Abdullah bin Saoud Al Thani has urged the local banks to brace themselves for the potential challenges. To stay relevant in the industry, banks have to change, he said.
“Globalisation is reshaping the traditional business model of banks. Banks have to change, else they will remain irrelevant in the industry”, the QCB Governor said.
Delivering the revered Carnegie Mellon University in Qatar ‘Dean’s Lecture Series’, here yesterday, Sheikh Abdullah said local economies are facing biggest challenges from external decisions. For instance, most banking regulations are being influenced by what’s happening outside the border.
Banking industry, across the world, is facing multiple challenges and the biggest one is from the technology side. Innovations and technology are key success factors for banking industry going forward. If the industry fails to respond to the changing demands and expectations of the key market players, the role of banks will become irrelevant, the QCB Governor said.
Sheikh Abdullah said Qatar Central Bank, as a regulator, is well-positioned to address these challenges with the support of government and policy makers. QCB is set to introduce its ‘financial technology strategy’ before the end of this year. The objective of this strategy is to develop, collaborate and connect the local banks to the country’s financial ecosystem, in line with the country’s ambitious Qatar National Vision 2030.
As part of the proposed QCB’s financial technology strategy, local banks are expected to leverage their payment system like crowd funding and e-wallet. Another focus will be enhancing the mobile banking and the business environment of SMEs. The QCB, on its part, will use the Big Data analytics to improve regulatory compliances, thus developing a strong risk culture.
Sheikh Abdulla noted that global tech giants have already started grabbing the market share of traditional banks. Global investments in the fintech have increased rapidly over the last five years. Competition in this sector is expected to be intensified in the coming years.
Alibaba, the Chinese multinational conglomerate holding company specializing in e-commerce, retail, Internet, and technology, is set to enter into the banking industry.
Facebook is into launching new currency. It’s natural that the technology majors like these will capture some of the margins of the traditional banks. Currently, an estimated 11.3 percent of global tech companies’ revenue comes from financial services.
Banks should ensure that they are taking care of the demands and the changing priorities of their customers. Listing out key elements that the banks have to focus on to win the battle against the changing industry ecosystem, the QCB Governor urged the local banks to ensure customer loyalty, create value, improve their resiliency, increase efficiency and nurture talents.
