As reported by media outlets, Varouj Nerguizian, Group CEO of Bank of Sharjah, believes that the pandemic is accelerating the rate at which banks are embracing digital transformation. While banks were moving toward digitalisation, the various restrictions put in place by authorities as they combat Covid-19 have spurred the banking sector to move fast.
Speaking on digital transformation, “One of the biggest shifts has been the ability to work remotely. More and more firms and banks are more flexible when it comes to working from home, which in time can impact overhead costs of the banks. Another trend has been to focus on cost cutting. Traditional banks are now looking to reduce their branch networks and manpower,” said Nerguizian.
Blockchain and crypto
While embracing many elements of the digital transformation trend, banks are wary of the blockchain, according to Nerguizian. While certain elements of the blockchain are relatively easy to understand, such as its utility in the verification of documents or an individual’s identity, “…blockchain supposedly allows parties to transact with each other without the need for an intermediary. This raises the concerns of the authorities that would like to monitor the activity,” Nerguizian said.
However, Nerguizian did state that he believed that private blockchain contained with a closed network, could be adopted and implemented between banks. His reasoning is that access to the network would be limited to parties trusted by the banks, whereas wider digital transformation efforts would involve the participation of unknown actors, “I personally believe blockchain technology and by extension cryptocurrency is here to stay and impossible to regulate at large. However, in UAE, jurisdictions like ADGM and DIFC have come up with crypto regulations and might in time be a significant part of the banking landscape as we move forward,” Nerguizian said.
Cybercrime
According to Nerguizian, banks have created security systems including layered defences and multifactor authentication to help defend against cybercrime, a problem which has allegedly slowed digital transformation in Saudi Arabia and the UAE. Banks often run awareness campaigns across their media platforms and are striving to educate the public about the dangers posed by cybercrime. In support of ongoing digital transformation, the UAE Banks Federation (UBF) has run a campaign giving detailed instructions to individuals about what to do if they fall victim to a scam, he said. The UBF has also been raising the industry’s concerns with monetary authorities by reviewing existing and forthcoming regulations.
Service during the pandemic
Nerguizian stated that the industry has worked hard to ensure high quality service during the pandemic. After observing the various health guidelines issued by the government, “we immediately took advantage of the Standards for The Targeted Economic Support Scheme (TESS) initiated by the UAE Central Bank (UAECB) and applied it fully to assist eligible customers,” he said. In addition, “We, moreover, initiated our own additional deferral package for other deserving customers. To raise and benefit from the UAECB liquidity windows, we initiated liquidity through the subscription to eligible Sukuk of Government of Sharjah.”
Support for SMEs
A significant proportion of the funds raised through the TESS were offered to SMEs, according to Nerguizian. While the support offered to date is important, SMEs remain at risk, “SMEs remain more vulnerable than mid corporate clientele. The impact of this support will only crystallise in 18 months provided there is no resurgence of COVID or a variant,” he said.
