Companies in the financial services and banking sector need to be able to meet the changing expectations of today’s customers. Fred Crehan, Area Vice President, Emerging Markets at Confluent, speaks to us about why the UAE needs strong data management for the financial services sector to grow.
The banking and finance sector in UAE is experiencing a significant recovery. In the first half of 2022, the country’s 11 listed national banks registered net profits of US$5.69 billion, owing to strong revenues and high liquidity. With clear signs that this momentum has carried through into 2023, the outlook for the year ahead is promising and continued Digital Transformation in the sector is likely to play a major part in its ongoing growth.
At the same time, the financial services sector is going through a period of major change, with many factors contributing, such as the rise in cybercrime, changing customer expectations and the growth of digital challenger banks. Dealing with this change requires agility and innovation – both of which can be hampered by the necessary high levels of regulation and governance in the industry.
To successfully navigate this period of change, banking and finance organisations in the UAE and across the region must put innovation and tech at the heart of their reinvention. Only then can they boost efficiency, streamline operations and meet customers’ changing demands. With Gartner having estimated that banks and investment firms spent US$623 billion on tech products and services in 2022, it’s clear that many firms are getting the memo. And when businesses in the banking and finance industry are identifying where best to focus that spend, they should keep data management firmly in the spotlight.
And just why is data management so important? Because data is the essence of most businesses – and the past few years have brought about a significant change in the way organisations must think about processing and managing that data. Today, it’s vital that companies can consolidate data from various applications and services – and that data needs to be accurate, complete and in real-time. Particularly in financial firms, it’s not possible to make accurate or appropriate decisions based on old data.
Having easy access to reliable, up-to-date data means businesses can provide better, more personalised service to customers, while also addressing issues such as fraud. Enterprises are shifting from traditional systems of data storage and collation, such as Excel, and looking at far more sophisticated and effective systems utilising databases, apps, Software-as-a-Service (SaaS) and the cloud.
Allowing data to flow fluidly in real-time enables real innovation – here are three use cases from the financial sector that highlight how.
Digital payments tech
From transport to TV and mobile apps to gaming and e-commerce, people pay for almost everything digitally nowadays. The global payments infrastructure and environment have had to rapidly scale up to meet this demand – and it hasn’t been a simple shift, especially in view of evermore challenging security conditions and tight regulations.
Again, it’s all about data. Many FinTech companies, for example, are busy launching cloud-native platforms which rely on real-time data access. With so many platforms, channels and networks, fraud is now an increasing problem in digital payments and it is trickier than ever to spot and thwart because of the larger attack surface for cybercriminals to target. Accessing real-time data helps detect and block fraud before transactions are completed.
Staying secure
Cyberattacks, fraud and financial crime can all be part of the same whole, with attacks like phishing or account takeovers often the precursor to short- or long-term fraud. Because of this, fusion centres are becoming increasingly common in the drive to share information and block attacks. For this to be successful, people need to be willing to adopt new, collaborative ways of working. Traditional barriers between internal teams need to be broken down. It’s important that everyone, including the executive, embraces the new norm in the fight against the increasingly challenging cybercrime and fraud environment.
Risk in real-time
The 2008 financial crisis shone a spotlight on risk management, with the result that techniques evolved, new asset classes developed and the data used for risk calculations is now more readily accessible, there’s more of it – and it’s more complex. Financial institutions such as asset managers, retail and commercial banks, hedge funds and insurance companies all have their particular data challenges, risk measures, regulations and reporting requirements. Firms need to understand and address these factors to deliver a real-time risk view and master the risk environment.
Using data to drive Digital Transformation
Companies in the financial services and banking sector need to be able to meet the changing expectations of today’s customers, with excellent experiences delivered in real-time. To provide the experience required and successfully navigate the current period of change, firms need access to real-time insights, with all data brought together on a common platform. So, for banks and financial firms in the UAE to successfully handle the disruption, innovate and pivot their business models in the changing climate, they’d do well to remember to focus on data management when allocating their tech spend.