MANAMA: Bank ABC, a Bahrain-based international bank, plans to launch a neobank - a fully digital and mobile bank with no branches - in Bahrain by next year, it has emerged.
The fintech-based project is six months in the works, the bank's president and chief executive Dr Khaled Kawan told the GDN on the sidelines of the second Middle East and Africa FinTech Forum at the Four Seasons Hotel Bahrain Bay, and will "deliver an entirely different banking experience mainly for the millennials - people born after 2000 - and other tech-savvy young people who have completely different expectations from what we think of banking".
Bank ABC is mainly a wholesale bank providing corporate banking, trade finance, project and structured finance, debt capital markets, syndications, treasury products and Islamic banking across Mena, Europe, Asia, the US and Brazil.
It also has retail operations in Jordan, Egypt, Tunisia and Algeria.
According to Dr Kawan, traditional banks have been slow in addressing customer pain-points and what the Bank ABC neobank will do is to use technology that has been available to people in other spheres of life to re-imagine the whole banking experience.
He said the neobank will run independently from Bank ABC and its edge will come from leveraging the brand equity, customer network, core systems and IT services of the legacy bank and its subsidiary Arab Financial Services (AFS) to provide the best services to customers.
Neobanks, already in existence in Europe and the US, aren't burdened by legacy systems and cumbersome organisational structures such as branch operations.
Most of them offer niche products rather than the entire retail banking value chain, thus rendering them less hampered by regulatory requirements.
In response to a question about the readiness and appetite for neobanks, Dr Kawan said a country like India with a population of a billion plus had set an example in starting a cashless drive and Bahrain with its world-leading mobile penetration, high Internet and social media usage and ICT infrastructure, should not lag behind.
Overall, the banking industry in the Gulf region is moving to keep pace with the historic changes in the fintech industry, he added.
"There are examples in the GCC like Mashreq Bank and Emirates NBD of the UAE that have already launched digital banking platforms to increase productivity and improve customer services. It's all about agility or adjustment, or else you will become a fossil."
He said conferences like MEA FinTech are a way to communicate with the community and educate them about the change and its importance, and encourage banks to think about it.
In terms of cyber security, he said billions of dollars were being invested in it and customers need not worry.
Global investment in fintech last year alone was $27 billion, and transactions worth $95bn are expected to be done in 2018 through digital wallets.
"The essence of fintech is security and reliability of data and transactions, and there is a constant endeavour to improve cutting-edge technology."
According to Sael Al Waary, chairman of AFS and deputy group chief executive of Bank ABC, the biggest trend in fintech this year was Open Banking - possibly the most radical global shift of control back to the customer.
"It is a concept that allows banks to share customer data with a third-party developer, securely and in real time, through the use of an open application programmable interface," he said.
To a question about the acceptability of virtual banks by customers in the region, Mr Al Waary said a recent survey had shown that more than 63 per cent of banking customers in the region would switch to virtual or digital bank given a choice.
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