M. R. Raghu: FinTech innovations have the potential to promote financial inclusion and provide great

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M. R. Raghu: FinTech innovations have the potential to promote financial inclusion and provide greater access to capital for small businesses 22 - Sep - 2019

Marmore MENA Intelligence “Marmore”, the research arm of Kuwait Financial Centre “Markaz”, recently collaborated with the Kuwait Foundation for the Advancement of Sciences (KFAS) in creating and releasing a study titled ‘FinTech: Future of Financial Services’. The key findings of the report were presented in a talk organized by KFAS on Sunday 22nd of September 2019.

M. R. Raghu, Executive Vice President, Published Research at “Markaz” and Managing Director of “Marmore”, commenced the talk by presenting the big picture that is shaping the growth and development of Fintech. He specifically pointed out metrics like mobile penetration, young demography, internet penetration, and a vibrant eco-system. He argued that Fintech is disruptive to banks in many ways and elaborated the reasons and how it can be disruptive. He said that many banking functions can be performed by Fintech. At the same time, M. R. Raghu highlighted that FinTech is not only reshaping the global financial services architecture, but is also creating new and exciting opportunities for multiple stakeholders, including small businesses. Moreover, the Kuwaiti FinTech ecosystem is increasingly getting synthesized with multiple policy priorities (economic diversification, financial services center, etc.).

M. R. Raghu explained the key technologies behind the Fintech and how open banking is coming soon. He dwelled on the supply side factors of Fintech like social media, mobile adoption, cloud technologies and analytics process as well as demand side factors like changing client expectations. M. R. Raghu elaborated Fintech initiatives undertaken by various Kuwait banks and opined that they are indeed noteworthy. He presented the report findings on how Fintech will impact Kuwait banks in terms of their loan portfolio and net income.

For Kuwait, FinTech innovations have the potential to beneficially influence the financial services industry and promote financial inclusion; provide greater access to capital for small businesses; and more broadly redesign how stakeholders interact with evolving financial technologies. As Kuwait’s FinTech ecosystem continues to evolve, all stakeholders—including government and Kuwait’s private sector—must proactively collaborate in its development to ensure that value maximization occurs in a safe and fully sustainable manner.

M. R. Raghu outlined the overarching principles that outline a framework that policymakers and regulators can potentially use to deliberate and engage to assess the overall FinTech ecosystem and connected policy objectives. Similarly, the industry and civil society stakeholders can use the presented framework to understand how an inclusive financial system can manifest through public-private cooperation.

As the Kuwaiti FinTech ecosystem continues to rapidly evolve, the development of smart, practical, and authentic cross-sector engagement is essential. This is because the fashion in which development and further commercialization of innovative financial business models proliferate will underpin the positioning of Kuwait’s financial sector in the international scene. The caveat is that, like any other technology or tool, the FinTech phenomenon is neither good nor bad in itself. It is the usage patterns that matter.

It is fully clear that FinTech will continue disrupting existing business models. While it creates great opportunities for delivery of better business models and financial inclusion, it also harbors the potential to spawn new methods for digital fraud and cybercrimes.

That is why it is critical that governments and central banks maintain a close watch on developments.

M. R. Raghu concluded that FinTech innovations carry colossal transformative power, and Kuwait’s competitive edge can be sharpened further through targeted innovation. Thus, the collaboration of multiple stakeholders can catalyze innovation and change by horizon scanning for opportunities and emerging risks. The outcome could be a virtuous circle that fosters significant economic diversification and financial inclusion.