WPC 2021 - Abdul Aziz Al Ghurair - Workshop 1: Money and Finance

Thank you very much, Jean Claude. Ladies and gentlemen, good evening. I am happy to be here with you. I am going to talk about our experience here in the United Arab Emirates. I am going to start by saying that it is really fair to say that, like so many industries across the economy, the financial sector is really being disrupted. We are seeing a huge disruption here and the game changer is really digital innovation and the transformation of consumer behavior and expectations, which are affecting the sector in the way ahead. The consumer is now really our regulator forcing us to change the way we do business. Of course, the pandemic has further accelerated these trends. It is pushing us further and faster. I will address this from the perspective of the United Arab Emirates. One thing I have learned from the digital revolution is that you never know where the next big thing will come from. I would like to open by highlighting some themes we are thinking about. First, digital payments: it is a fact that the cashless society is upon us and the coronavirus break has turbocharged the transition. When the United Arab Emirates government launched the first ever digital payment system, which we call the klip, last year, all the banks joined it because they had no choice and all thought this is the way forward that the consumer wants. This means as banks we are losing control over the payment system, which has provided us valuable revenue in the past. However, fintech and specialized players are increasingly capturing a greater share of this profit, so we are no longer alone in this game. More people are coming into our territory. The future for banks that survive will be dominated by platforms that cut across industries and platforms. Banks as a service means that financial products will seamlessly be embedded in an end-to-end digital customer journey. This puts a new angle on the challenge of securing the digital journey and keeping people's money safe from cybercriminals. All of these challenges proliferate as people and companies revalue the meaning of money, opening the door further for continuing growth of cryptocurrencies. The question we must all ask is how broad or narrow money will be in the future. If we look at the use of blockchain technology, cases within the financial industry are surging and cryptocurrencies continue to gain strength. It is estimated that there are already over 100 million blockchain wallet users worldwide. The combined market capitalization for all the cryptocurrency has already surpassed USD 2 trillion. To understand the scale of this, the combined value of the companies on the Dow Jones Industrial Average is only USD 10 trillion. Let us recognize therefore that digital money is a serious business. Looking to the future, there are only two scenarios I see. The first is a system that is narrow and closed in which only central bank money survives and the other digital currencies are confined to the fringes. The other system is one that is broad and open in which there is decentralization of money with the proliferation of the new digital currencies from government and private institutions. It is still very early days and, given the degree of uncertainty, it is impossible to predict what will happen in the endgame, but regardless the impact of an open decentralized financial system could be profound and we must be proactive in considering the implications. Financial players will need to massively set up their technology, their partners, their relationships with developers and to think strategically on how to survive, and we must never forget that the heart of the future of finance is data, and data and artificial intelligence will grow exponentially. The expectation is that by 2025 only this will be increased by a factor of 20. In no uncertain terms therefore, the message is loud and clear that data becomes the most strategic asset. That means artificial intelligence will become a core differentiator. With that much data there is so much potential for analytics. It is a clear value proposition driven by increased revenue through specialization of service and reducing costs through efficiency generated by higher automation, reduced error rates and better resource utilization, and also potentially playing a role in avoiding the future financial crises by flagging events early and reducing dependency. This could also be true in spotting potential climate change on the global economies. As we increasingly understand the link between the fragility of our planet and economic cost, data will be key in understanding the link between weather and trade, between climate protest and consumer choice, between ESG rating and the company valuation. Now is the time for the financial industry to truly embrace the change and be bold in doing so because money and finance tomorrow will look nothing like today. Ladies and gentlemen, thank you very much.