The <a href="https://www.thenationalnews.com/business/money/fintechs-and-banks-more-likely-to-be-collaborators-than-competitors-wealth-managers-say-1.1162519" target="_blank">first wave of FinTechs</a> in the Middle East and North Africa (Mena) region has evolved along expected lines — copying models from more developed FinTech markets with <a href="https://www.thenationalnews.com/business/money/2022/04/21/careem-enters-fintech-sector-with-a-digital-wallet-and-peer-to-peer-transfers/" target="_blank">products such as wallets</a> and novel payment solutions including sound and Bluetooth-based platforms. The rapidly developing FinTech ecosystem — spurred by an increasingly sophisticated <a href="https://www.thenationalnews.com/business/technology/2022/02/25/mena-market-regulators-keen-to-further-boost-fintech-sector-development-study-finds/" target="_blank">enabling regulatory environment</a> — is more broad-based and transformative in nature. The sector is moving through a period of localised, collaborative invention that gives rise to <a href="https://www.thenationalnews.com/business/2022/02/07/can-indias-neobanks-challenge-traditional-lenders-and-transform-an-archaic-industry/" target="_blank">new lending solutions</a>, prepaid/virtual card payment systems, industry-specific digital services and innovations in regulatory technology and wealth technology. However, for Mena FinTech innovators to stay ahead of the global curve and compete as market makers, the region faces several <a href="https://www.thenationalnews.com/business/technology/uae-central-bank-and-adgm-invite-fintech-firms-for-an-innovation-challenge-1.1042541" target="_blank">emerging challenges</a>. One of the most predictable concerns is that of value: with so many unproven solutions with novel commercial strategies, it is difficult for investors to assess real-world value. And in an environment of excess liquidity in capital markets, there is a real risk that there may be large sums of money chasing poor ideas or the poor execution of good ones. The second concern that affects all stakeholders, including consumers, is the regulatory backdrop and how well FinTechs understand them. There is a risk that some FinTech innovators feel that they do not need to worry about regulations; this assumption will test how policymakers respond and potentially hold back progress. I have outlined below the four key trends shaping the future of FinTech in our region. Mobile banking represents a completely new, reimagined customer journey — presenting consumers with numerous real-time physical and digital touchpoints. Banks have to keep re-examining the customer journey against satisfaction metrics and understand how to provide customers with what they need. For now, a hybrid approach that uses human beings and technologies may be the ideal way to solve customer needs that cannot be easily migrated to the digital realm alone. The possibilities in blockchain are particularly interesting — and something legacy banks must understand and explore. Blockchain is structured in a way that makes it almost impervious to fraud. Transactions made using blockchain cannot be altered or deleted: they are permanent and completely traceable. This makes the new technology especially important as we adapt to the security challenges of hyperconnected digital supply chains that risk leaving businesses and consumers more at risk of cybercrime. They are also fundamental to how cryptocurrencies and the future of central bank currencies operate. By harnessing and understanding enormous amounts of data, banks can now speak to customers through AI chatbots in a life-like conversational manner. This means we can offer contextualised products that meet the customer’s real-time needs through AI chatbots — a whole new level of personalised banking that eliminates the need for human interaction. It makes banking available to customers on a self-service model, 24/7, without interruption. Rendering services over a chatbot is almost instantaneous and convenient for customers. AI conversational features can be embedded into customer loyalty programmes, such as referrals, discounts and more personalised offers. These services will quickly become the norm, which is why the rise of digital banks is so exciting. Because of their make-up, they are more flexible and innovative when creating solutions. They have much lower acquisition costs than a traditional high street bank. They can also utilise data from the outset — enabling continuous improvement of their services to adapt to customers’ needs. The combined benefits of digital banking and the vast FinTech ecosystem is an unstoppable force. As we look ahead, we will see exponential growth in the number of FinTechs originating in the GCC region. Many will focus on solving client issues in creative and interesting ways. For banks such as Mashreq, the task is to continuously engage, partner with and invest in an ecosystem that is changing rapidly and in real time. <i>Vibhor Mundhada is the chief executive of Mashreq NeoPay</i>