Is regulation driving innovation in the Middle East?

Rob Penn

Sales Manager, Middle East

Tuesday, January 5, 2010

Regulation’… this one word seems to have carried a dark cloud over the banking industry for the last year. However, not all regulation in recent months has been focused on liquidity or reigning in banks’ independence. In the UAE, for example, the introduction of the ‘Wages Protection System’ has enabled banks to seek out opportunities to become more innovative and gain more customers.

The Wages Protection System means that businesses must now pay workers by electronic transfer, rather than good, old-fashioned cash. While these changes are designed to protect the rights of the four million plus employees in the country, there have also been some welcome side effects.

New payment methods, such as prepaid cards, have jumped in popularity, presenting an opportunity for financial institutions to roll out new and more innovative services to customers. It has also supported a wider trend towards electronic transactions driven by the banks in an attempt to reduce the high processing costs associated with cash and cheques.

With this change, there are of course some hurdles to overcome if innovation around the existing payment infrastructures and methods is to be successful. At present, employee understanding around electronic banking is low and few people use ATMs. What’s more, uncertainty caused by the economic downturn has meant that banks across the UAE have kept their spending low and investments in new technologies to a minimum.

While it may take several years to fully restore confidence in the region, there are already some signs that banks are reconsidering payments innovations. For example, the National Bank of Kuwait recently announced the first Near Field Communication (NFC) mobile payment trial in the GCC. If we are to look back in five years time I expect we'll see that those banks that took this opportunity to couple practical innovation with consumer education will be the ones that were able to grow their market share and tap into a previously unreachable customer segment, and they will have been able to reap the associated competitive advantages. Only time will tell who those banks will be.

Rob Penn
Regional Sales Manager, Middle East


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  • Roxana
    Saturday, September 07, 2013

    It is up now. I was interested in sieneg what percentage of students took the SAT at each school, and Mr. Rubinstein does report it. The top rated school had 55.3% of the four year cohort take the SAT with average scores of 325, 325, 345, while the failing school had 36.5% of students take the SAT with average scores of 373, 362, 356.As Mr Rubinstein says, the differing percentages taking the SAT at each school make a direct comparison difficult and it would be a good idea to try to control for other factors known to influence SAT scores like family income, but I agree that this finding suggests that these schools are doing an equally ineffective job preparing students to go to college. A large fraction of these students would be admitted to my University (we accept anyone who graduates in the top third of their high school class), but I doubt many could possibly succeed.

  • German
    Wednesday, October 30, 2013

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