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ONE of the key players in the kingdom’s FinTech revolution believes consumers will be using an array of digital currencies in the future as confidence grows and more consumers turn to alternative ways to pay for goods and services.
Top banker B. Chandrasekhar, CEO of AFS, a leading payments company and the inspiration behind the popular bwallet, warns that traditional banks will have to embrace a technological future to survive.
“The FinTech industry is growing exponentially at an astonishing rate,” he told FinTech Focus. “We recognize FinTech as an opportunity and we want to embrace it to surge ahead.
“We believe that the growth will continue with new players entering the field giving tough competition to traditional banks. In response, the banks will also turn towards an adoption of digital methods to offer ‘wow experiences’ to their customers.
“The trends are pointing towards cashless and frictionless modes of payments. We are already seeing a shift in adoption of these technologies in Bahrain through the launch of bwallet.
“In a short period of four months we have on-boarded a significant number of users transacting and transferring monies seamlessly. Also banks will have to adopt technology at an accelerated rate to remain contextual and avoid obsolescence.”
As reported earlier in FinTech Focus, bWallet, the first of its kind in Bahrain to provide peer-to-peer money transfers, was launched earlier this year by AFS, in partnership with telecom and Internet service provider, Batelco.
Customers can scan a QR code for merchant transactions and ‘enjoy secure cashless payments with exclusive benefits’, such as two-for-one offers at partner cafes and cinemas, through their mobile phones. The actual figures of how many people have signed up to its use have not been released, possibly for commercial reasons as others have entered the fray to woo customers.
“We have been ahead of the curve in developing and landing fintech solutions across Bahrain,” said Mr Chandrasekhar. “AFS introduced Bahrain to its first frictionless solution using the Near Field Technology (NFC) called EasyPay. It allowed the user to pay with the tap of their mobile phone at participating merchants.
“AFS also launched bwallet with a groundbreaking electronic KYC (know your customer) process for swift and efficient customer registrations, P2P (person to person) and P2M (person to merchant) QR-enabled payments.”
AFS, owned by 39 banks and financial institutions, boasts more than 70 clients in 21 countries and, as well as FinTech services, it also focuses on card processing and merchant acquisition.
In March, AFS and Bank ABC hosted the 2nd Middle East and Africa FinTech Forum, attracting industry keynote speakers from across the globe. It was attended by more than 450 key decision-makers and leaders in the FinTech space from Africa and the Middle East.
“The clear message at the event was that more and more banks are embracing FinTech and not seeing it as a threat,” said Mr Chandrasekhar, 54, who has more than 30 years of experience in retail banking and the payments industry in Bahrain, India, Lebanon and the UAE.
He joined Arab Banking Corporation in August 2010 as group head of products and marketing and took on the role of CEO of AFS in March 2011. During his career with Standard Chartered Bank, he held the positions of regional head of credit cards and personal loans for Middle East, South Asia and Africa from 2003 to 2008 and was the regional head of consumer banking for Northern Gulf, Lebanon and Jordan from 2008 to 2010. Mr Chandrasekhar was also a board director on the BENEFIT company in Bahrain from 2008 to 2010.
He has witnessed first-hand the banking industry dramatically change, with more innovations on the horizon such as Artificial Intelligence which he believes ‘will become mainstream and permeate across all levels of the banking system’.
He is also convinced there will be many benefits as a result of FinTech’s development, as all businesses in the sector will need to fully align with anti-money laundering (AML) regulations and compliance laws.
“To prevent exploitation from bad elements all FinTech companies should have an operational AML programme from the start that scales up as the business grows,” he explained. “Having said that, technologies like blockchain can significantly help counter money laundering by helping in the KYC / verification of identities and eliminate the creation of fraudulent transaction histories. Also, blockchain solutions can also substantially reduce processing costs, time and effort involved in KYC validations.
“As adoption of digital payments gains speed it will set up the environment for multiple digital currencies to emerge and gain momentum. We already have witnessed multiple crypto-currencies being accepted across the globe like Bitcoin, Ripple and Ethereum for example, which are threatening the established fiscal markets and banking ecosystems.
“With time, formal pathways will emerge allowing trading with these currencies and the regulatory frameworks across the globe will become more accepting. Once regulators embrace this, the adoption will be easier, so a multi-digital currency environment may become the norm going forward.”
It will not be all plain-sailing though and general concerns over cyber-security and data-related risks will have to be addressed. But, on that front, Mr Chandrasekhar believes there will be business opportunities aplenty.
“With an increase in the digitisation of services there will be a lot of data generated across the board,” he admits. “Managing digital data, and the identities of users and enterprises, will continue to be the focus area and more and more investments will be made in providing innovative authentication and authorisation services.
“This reflects in the fact that cyber security has become the fastest growing sector in IT.
“AFS is committed to providing the best solutions to our partners so that they can deliver superior experiences to their end-users and we recognise that FinTech will lead the path to accomplish that goal.
“We have embraced digital in many ways, including seamless and comprehensive payment solutions like digital banking, ewallets, NFC payments, eKYC, P2P, QR, tokenisation and more.”