How well do you think small and medium enterprises (SMEs) and large enterprises are supported by UAE banks? Differentiate CBD from the rest?

SMEs are the backbone of the UAE economy, accounting for around 94% of businesses in the country. In recent years, the UAE government has implemented several policies to boost economic growth by enabling businesses and entrepreneurs and increasing their contribution to the economy.

The financial services industry is crucial in helping SMEs navigate a challenging climate. In line with the UAE Government’s focus on SMEs, banks are supporting SMEs by striving to understand their businesses and developing products and services that suit their needs and minimize risk.

Othman Ibrahim Bin Hendi, Chief Customer Officer, CBD

As one of the UAE’s first and most reputed banks, CBD has always differentiated itself from the other competitors by being a bank focused on family-owned and managed businesses across the Emirates in the UAE. Over the years, it has supported numerous SMEs that have later grown with us to become large corporates.

Further, we have partnered with several government entities such as the Dubai Economic Department and Free zones, such as JAFZA, DMCC, DCAA, EFZA, Meydan, and RAKEZ to offer a full suite of products that are specially tailored for the SME segment to fulfill their business requirements and back their ambitions.

With the “Best Technological Innovation in Financial Services” award, CBD has been recognized at Seamless 2022. What innovation did make CBD achieve the award?

The “Best Technological Innovation in Financial Services” award was presented to CBD for its CBD Investr app, which is the first robo-advisory investment solution in the region offered by a bank. The innovative investment app is powered by smart algorithms that actively manage investment portfolios to deliver optimal risk-adjusted performance.

Through the CBD Investr app, customers can conveniently access a globally diversified and personalized portfolio of stocks, bonds, and other asset classes using low-cost exchange-traded funds (ETFs) aligned to investors’ risk profiles.

The app offers customers the option of robo-advisory portfolios or investing on their own through the self-investor option. Robo advisory portfolios are managed by smart algorithms to deliver optimal performance without customers needing to manage and track the markets. The self-investor option allows customers to buy and sell their preferred shares and ETFs in real-time, thus providing a more personal and customized experience.

Tell us about the recent global achievement of CBD of getting included in the Forbes List of the World’s Best Banks 2022

CBD has been named the number one bank in the UAE on the Forbes list of the World’s Best Banks 2022, based on key customer satisfaction metrics including trust, fees, digital services, and financial advice.

The Forbes fourth annual ‘World’s Best Banks’ report, published in conjunction with market research firm Statista, surveyed more than 45,000 customers across 27 countries around the globe for their opinions on their current and former banking relationships.

This global recognition is an affirmation of our customers’ trust in us to back their ambitions, and it also proves the success of our customer-centric strategy.

Elaborate on the performance indicators of the Commercial Bank of Dubai (CBD) and, as one of the longest-established banks, what role does it aim to play in 2022 and beyond?

The bank has delivered a net profit of AED 866 million for the first half of 2022, up 28.1% compared to the first half of 2021. Higher revenue across net interest and other operating income generated a strong increase in net profit. Market interest rates have risen, and solid loan growth resulted in higher revenue in the first half. Whilst the global macro-economic environment is challenging, the outlook for the UAE economy remains positive. The solid return on equity generated internal capital for growth while the bank’s liquidity position remained robust with the advances to stable resources ratio at 89.35% as of 30 June 2022. All capital ratios were well above the minimum regulatory thresholds mandated by the UAE Central Bank.

In 2022, we will continue to be instrumental in driving digital transformation and investing in enhancing technological capability to provide our customers with a best-in-class banking experience. For the first half of 2022, 98% of our wholesale banking transactions were initiated digitally, and we achieved a 102% increase in mobile banking transactions. Our app was rated 4.8 on App Store and 4.7 on Google Play Store.

We will also continue to back our customer’s ambitions by enhancing our products and services to fulfill the evolving needs of our customers and initiate strategic partnerships to support customers in achieving their financial goals.

Backing the nation’s ambitions and supporting the UAE’s Government initiatives is also one of our top priorities, and the launch of the CBD Digital Lab demonstrates that. The CBD Digital Lab is the first initiative by a bank to establish an R&D facility in the DIFC Innovation Hub, which aims to create a collaborative ecosystem in the FinTech sector by fostering innovation and supporting integration between financial institutions and fintech start-ups.

The Digital Lab will not only drive the future of finance and the future economy, but it will position the UAE as one of the world’s most innovative nations and a global hub for innovation and technology. Further, it reaffirms our efforts to become “default digital” and expand infrastructure in financial technology, unlock innovation opportunities, and introduce new and innovative financial products to the market.

How do you evaluate the post-pandemic banking situation in the UAE, and what reformative actions can be expected from banks?

We have recently announced our financial results for the first half of 2022. The positive results that we have achieved indicate that we are in a recovery mode and returning to pre-pandemic profitability levels.

The pandemic has forced banks to evolve and adopt new business models. A bank’s success in the future will be based on its ability to be agile. The landscape of the financial sector is changing dramatically. With technological disruption, the emergence of new entrants, both fintech and digital giants, and constantly evolving customer expectations, organizations are forced to continuously adapt to these changes and deploy an agile organizational model.

At CBD, digital transformation and innovation are fundamental to our ongoing success. We will continue to invest significantly in these areas to ensure we provide our customers with a convenient and seamless banking experience.

Can you tell us more about CBD’s ESG and Sustainability initiatives?

As an organization backing the ambitions of our proud nation, CBD remains committed to operating its business in a sustainable manner, aligning with the UAE’s efforts towards sustainable development, empowering local communities, and preserving the environment.

In 2021, CBD initiated an ESG transformation journey. We have consolidated ongoing and future environmental, social, and governance initiatives under a common ESG Framework governed by an ESG Committee, which is accountable to the CBD Executive Committee.

Our ESG Framework sets out the key initiatives we believe we must undertake as a responsible corporate organization. We firmly believe that every employee in the Bank, and every citizen and organization in the UAE, has a role to play in sustaining our future.

It is an incredible time to be a part of this great nation, particularly as the UAE readies itself to host COP28 in 2023. We are determined to play our part in driving the sustainability agenda and backing the ambitions of the UAE.

Below are some of the key initiatives that we have undertaken:

• CBD financed a government entity undertaking the development of a 300,000 tons per annum multi-fuel conventional-based Waste-to-Energy (WTE) facility and associated power substation in the UAE. The project will help the Emirate of Sharjah reach its zero-waste-to-landfill targets and help the UAE achieve its goal of diverting 75% of solid waste from landfills.
• CBD financed a consortium of companies that has been tasked to build and operate the expansion of a major solar park in the UAE. The solar park is one of the world’s largest renewable projects based on an independent power producer (IPP) model.
• We have already begun reviewing the assets currently on our books. Additionally, we see potential opportunities in green repos and green trade loans. Our green product exploration is further supported by an emphasis on sustainability as part of our employee innovation challenge.
• We are expanding upon our procurement framework to ensure that we are not only promoting local suppliers but also suppliers who have a demonstrable dedication to the environment.
• We have reduced our paper consumption by 47%. Additionally, our consumption of plastic water bottles was reduced by 28%.

The cover story intends to examine the significance of the latest technologies in the financial service industry. It also attempts to objectively evaluate the theoretical and historical significance of cryptocurrencies and shed light on trending topics in the fintech industry.

Fintech helps resolve some of the most complex problems related to trading and transaction if it stands by its foundational ideas. Considering the wide appreciation of cryptocurrencies such as Bitcoin, Ethereum, Solana, and several others receive along with blockchain technology, which enables the existence of cryptocurrency, one can easily guess that “fintech” revolutionizes not merely the online financial services but the digital economy as a whole!

Bigger and Broader Landscape of Fintech

The finance sector is interwoven with technology since its early stages to offer customers a better experience in terms of loans, trading, and transactions. The pace of the evolution in the financial sector happened faster than normal in terms of currency or check-based transactions to credit or debit card-based transactions across the globe. In parallel, customers are introduced to mobile banking, instant loans, online payments, and more.

When techfin enterprises i.e., Google, Amazon, Alibaba, Apple, and several others initiated digital transactions through stand-alone mobile apps and unified payment interfaces (UPI), the concept of fintech received wider appreciation. However, today’s landscape of fintech is incredibly broader compared to earlier predictions and calculations.

Bitcoin Disruption

The earliest decentralized digital currency, Bitcoin, ignited the financial revolution. The term revolution ideates as the exchanges of Bitcoin happen between users through peer-to-peer networks without an intermediary. All of these transactions are recorded in a distributed ledger, widely known as the blockchain, and verified by the network through cryptography. The crypto-blockchain ecosystem subverts central banks or similar institutions between transactions. Bitcoin was invented in 2008 by an unknown person or group of people using the name Satoshi Nakamoto.

Distributed Digital Ledgers and Secure Financial Transactions

The blockchain ecosystem helps businesses develop apps and smart contracts and facilitate quick and secure transactions. It is essentially a digital ledger of enormous transactions and they are duplicated and distributed across the network of computer systems on the blockchain. All of the activities of blockchain are managed and administered using cloud-based service providers.

The distributed ledger technology (DLT) and the complexity it carries out to maintain decentralized records of transactions invalidate the scope of any financial frauds. Each block in the chain records several transactions, and every new transaction that occurs on the blockchain would have a “digital identity” along with the digital identity of the previous transaction.

The following are some of the vital properties of DLT:

• Programmable: The blockchain is programmable for smart contracts
• Secure: No scope for intrusion and fraud
• Anonymous: Users can protect their privacy
• Distributed: The copy of transactions is distributed and transparent to all participants in the block
• Unanimous: The participants in the network can agree to the validity of each record
• Time-Stamped: The transaction time is recorded in the block
• Irreversible: Any record that is validated cannot be changed

For organizations to involve in the modern methods of fintech, blockchain as a service (BaaS) is provided by many companies.

Data and Privacy Protection

One of the major takeaways of a blockchain-based transaction is it protects users’ privacy and curtails the exchange of unwanted user data between stakeholders.

The debate about privacy started on the first day of public access to the internet. Most websites, web-based service providers, social networking sites collect users’ data and use them for marketing purposes such as target-based and demographic-specific online advertisements. Many of these activities are often face criticism as they are driven based on the “digital identities” created after collecting data, including personally identifiable information (PII) from multiple sources. The internet privacy crusaders argue, “the compromise of user privacy fuels social disparities, discrimination, prejudice, and political interests.”

Crypto: The Future Currency?

According to CoinMarketCap, as of March 2022, there are over 18,000 cryptocurrencies in existence. Considering their active and valuable status, there are 10,000 of them are trusted by users. The global crypto market cap is $2.12 trillion and it has 4 percent of growth – even after accounting cryptos’ volatility. Bitcoin (BTC), Ethereum (ETH), BNB, and Solana (SOL) are some of the notable and high-performing cryptocurrencies in the market.

Sidharth Sogani, CEO at Crebaco, a crypto research firm, broadly identifies, “cryptocurrencies can be classified into different categories, i.e., DeFi, NFT, utility tokens, store of value tokens.” He further describes, “they’re easier for cross-border payments, cheaper and faster in transactions.”

One of the major questions raised so far on crypto is, can the cryptocurrencies define future transactions? Perhaps, it is too early to draw a conclusion on the subject considering the manner economists, observers, and governments across the globe raised eyebrows at the decentralized pattern of crypto transactions. However, it is important to analyze, objectively, based on the growth and acceptance of crypto and supporting blockchain technologies.

Nearly a decade ago, the crypto market was barely $10 million and today cryptocurrency market is worth over $2 trillion. Similarly, one bitcoin was equal to $1 in 2009 and now it is over $46,000.

Crypto Licensing and Adoption of Crypto Ecosystem

In February 2022, Bloomberg wrote, “the United Arab Emirates is poised to issue federal licenses for virtual asset service providers to attract some of the world’s biggest crypto companies,” sourcing an unnamed government official.

In an exclusive interview with The Integrator, Ola J. Lind, Director, at FTFT Capital, observed the rising future of fintech in the Middle East. He articulated, “The Middle East becomes one of the most significant fintech hubs.”

The following are the status of crypto usage in some of the key economies across the world and the information is partly accessed from ComplyAdvantage, a London-based RegTech firm.

Cryptocurrencies aren’t considered legal tender in the United States (US). However, the US continues to progress in developing federal cryptocurrency legislation. Cryptocurrency exchanges are legal in the US and fall under the regulatory scope of the Bank Secrecy Act (BSA).

Cryptocurrencies are not legal tender in Canada but can be used to buy goods and services online or in stores that accept them. In Singapore, cryptocurrency exchanges and trading are legal although cryptocurrencies are not considered legal tender. Singapore’s tax authority treats Bitcoins as “goods” and so applies Goods and Services Tax.

Cryptocurrencies and exchanges are legal in Australia and the government declared that cryptocurrencies were legal and specifically stated that Bitcoin (and cryptocurrencies that shared its characteristics). Japan currently has the most progressive regulatory climate for cryptocurrencies and recognizes Bitcoin and other digital currencies as legal properties.

China does not consider cryptocurrencies to be legal tender the Asian country banned all domestic cryptocurrency mining in September 2021. Regulations effectively banned the use of all cryptocurrency exchanges (foreign and domestic) in China.

Major Criticism of Cryptocurrencies

American business magnate, Warren Buffet, criticized in a CNBC TV interview, “when you buy non-productive assets, all you are counting on is whether the next person is going to pay you more because they are even more excited about another next person coming along. But the asset itself is creating nothing.”

Paul Krugman, the Nobel prize-winning economist raises concerns about energy consumption and a lack of government backing. He wrote, “twelve years on, cryptocurrencies play almost no role in normal economic activity. Almost the only time we hear about them being used as a means of payment — as opposed to speculative trading — is in association with illegal activity.”

Microsoft founder Bill Gates told The New York Times in an interview, “Bitcoin uses more electricity per transaction than any other method known to mankind.”

Conclusion

No matter how critics question the volatility of crypto, it gets improved attention; so, does blockchain technology. Currency in any form, physical or digital, is meant to measure value, therefore, it can’t afford to lose its practical value – institutions are required to reassure citizens that. Whether blockchain changes the transactions of the future or not, the decentralized and secure nature of financial activities, certainly, turns more heads and impacts the future.