CEO Se­ries: Ab­del­ma­lik Al Sheikh, CEO of SADAD Pay­ment Sys­tem

Arabnet - The Quarterly - - Content - By Mo­hamed Sal­hab | @mamiko_­so­hayl

In 2004, SADAD Pay­ment Sys­tem was launched as the first elec­tronic bill pre­sent­ment and pay­ment (EBPP) ser­vice provider for the King­dom of Saudi Ara­bia. To­day, SADAD is an es­sen­tial el­e­ment of e-com­merce and e-pay­ments in­fra­struc­ture in KSA. It aims at pro­vid­ing one so­lu­tion for all pay­ments, fa­cil­i­tat­ing and stream­lin­ing a wide range of pay­ment transactions for in­di­vid­u­als, banks, busi­nesses, and the gov­ern­ment sec­tor, while con­tin­u­ing to de­velop new pay­ment prod­ucts and ser­vices.

Arab­net’s CEO, Omar Chris­tidis, sat down with Ab­del­ma­lik Al Sheikh, SADAD’S CEO to dis­cuss the grow­ing scope of SADAD and his fu­ture vi­sion.

May you pro­vide us with your view of the progress that has taken place the past 10 years in the fields of dig­i­tal bank­ing, e-pay­ments, and e-transactions? So many changes have oc­cured these past few years that we couldn’t vi­su­al­ize back then the new ecosys­tem that we have now. A lot can be at­trib­uted to the high lev­els of con­nec­tion that in­di­vid­u­als and or­ga­ni­za­tions have en­joyed. An­other ex­am­ple is the ‘pro­sumer’ con­cept (con­sumer and pro­ducer) as a lot more peo­ple started de­sign­ing, pro­duc­ing, and sell­ing from their homes. We are also wit­ness­ing a move around the world from own­er­ship to ac­cess – peo­ple don’t have to own a car be­cause they have ac­cess to ride-shar­ing – in the form of the Uber dis­rup­tion.

At SADAD, we are build­ing an in­fra­struc­ture and an ecosys­tem ca­pa­ble of han­dling the de­vel­op­ments wit­nessed in the mar­ket. When we started in 2004 and launched of­fi­cially in 2007, we based our brand iden­tity on ease, com­fort, and ren­der­ing con­sumers’ lives eas­ier with re­gards to bill pay­ments. Cur­rently, now we are sup­port­ing e-com­merce through dig­i­tal ac­counts of the SADAD pay­ment ser­vices at the banks al­low­ing users to pay di­rectly on­line with only a user­name and pass­word.

This is just the be­gin­ning, there is a big wave of change that is in­flu­enc­ing the bank­ing world, and the fin­tech phe­nom­e­non is a prime ex­am­ple. Ev­ery­where in the world fin­tech is be­com­ing the talk of the bank­ing sec­tor and some ex­ec­u­tives con­sider it a threat to the bank­ing world be­cause it pro­vides ease, flex­i­bil­ity, cheaper ser­vices, and en­gage­ment. Fin­tech mod­els are more en­gag­ing in their re­sponse to client needs and banks are start­ing to view them as op­por­tu­ni­ties for change.

Speak­ing of banks, should they be wor­ried about dis­rup­tion from fin­tech? How must they re­spond and col­lab­o­rate? Fin­tech started as a small con­cept and has be­come a phe­nom­e­non in the past year that is gain­ing mo­men­tum in af­fect­ing the bank­ing sec­tor. It is clearly a threat to the bank­ing world, and banks have a big role to play. This is over­due. For a long time peo­ple have been won­der­ing when will dis­rup­tion in­flu­ence the bank­ing in­dus­try? Un­til now, banks still have full control over the fin­tech and bank­ing ser­vices. More re­cently, the ‘pro­sumer’ con­cept be­came at­trac­tive. Crowd fund­ing, for ex­am­ple, al­lowed peo­ple to bor­row from other peo­ple in­stead of get­ting a loan from a bank.

Banks have adopted dif­fer­ent mod­els in deal­ing with the fin­tech world. Some bought fin­tech com­pa­nies, oth­ers started col­lab­o­rat­ing with them. Such en­gage­ments are al­low­ing fin­tech play­ers to present new ideas that help banks tran­si­tion into the dig­i­tal age. How has SADAD’S jour­ney been thus far and what kind of ac­tive role will it play in fin­tech? I can proudly say that SADAD is the most ad­vanced elec­tronic bill pay­ments sys­tem in the world. We have a cen­tral sys­tem (with a head-turn­ing, com­pli­cated in­fra­struc­ture) for the full elec­tronic pay­ment of all ser­vices from elec­tric­ity to wa­ter, tele­com, mu­nic­i­pal­ity charges, etc. this led to a high vol­ume of us­age in­di­cat­ing that SADAD has be­come part of peo­ple’s lives. Last year, over 170 mil­lion transactions were made, while this year we sur­passed 180 mil­lion at a value of more than 200 bil­lion SAR a year.

Since we launched, there has been over one bil­lion op­er­a­tions, with a to­tal value ex­ceed­ing 1 tril­lion SAR. In ad­di­tion to these tra­di­tional pay­ments, the gov­ern­ment joined en­thu­si­as­ti­cally due to the com­pleted in­fra­struc­ture of our of­fer­ing – cit­i­zens can pay any fi­nan­cial dues, wher­ever they are through their bank ac­counts. This gave us the chance to reach new lev­els.

Part of our strat­egy is al­low­ing users to have a SADAD dig­i­tal ac­count with all the banks. This will be their gate­way to all fu­ture dig­i­tal trans­for­ma­tion – for it can in­clude per­son to per­son mo­bile and other on­line pay­ments in ad­di­tion to sup­port­ing in­ter­na­tional ser­vice providers such as Visa, Master­card, and Pay­pal. There has al­ready been talks of col­lab­o­ra­tions which can eas­ily be­come a re­al­ity given our ad­vanced, fa­cil­i­tat­ing in­fra­struc­ture. It is worth not­ing that this change won’t hap­pen overnight, it re­quires time, aware­ness, and ed­u­ca­tion for mar­ket play­ers to benefit from the ex­ist­ing in­fra­struc­ture.

Has your e-wal­let been launched as a ser­vice from within the in­fra­struc­ture? It is of­fi­cially avail­able now and there are over 100 traders and ma­jor com­pa­nies us­ing it in­clud­ing Saudi Air­lines and Jarir Book­stores among oth­ers. It is still a work in progress that has not, un­til now, achieved a high user rate be­cause peo­ple still need to open an ac­count to get used to the way it works. We are hop­ing for fast and con­stant growth with the in­tro­duc­tion of other prod­ucts.

“Fin­tech mod­els are more en­gag­ing in their re­sponse to client needs and banks are start­ing to view them as op­por­tu­ni­ties for change.”

When will we see a ser­vice that al­lows pay­ments among in­di­vid­u­als – friends split­ting a lunch tab, for in­stance? Per­son to per­son mo­bile pay­ments might lead to fast progress that would serve the com­mer­cial sec­tor as a whole, not just in­di­vid­u­als pay­ing one an­other. Cur­rently we have a pilot pro­gram and some early stage ex­per­i­ments on in­volv­ing the mo­bile num­ber reg­is­tered on the dig­i­tal ac­count of SADAD. We have con­ducted ex­per­i­ments with 8 banks, all of which re­sulted in a suc­cess, and we’re cur­rently build­ing the ecosys­tem to sup­port it, and that in­cludes call cen­ters, fraud de­tec­tion and se­cu­rity pro­grams, en route to of­fi­cially launch­ing the ser­vice in the first half of 2017.

What is SADAD’S in­ter­est and role in stim­u­lat­ing fin­tech growth given the pop­u­lar de­mand for such dig­i­tal ser­vices? SADAD Pay­ment Sys­tem is part of the Saudi Ara­bian Mon­e­tary Au­thor­ity (SAMA) and we have a group of ser­vices that in­clude SADAD, Mada, and Sarie (fast). They are all part of the In­te­grated Pay­ment Sys­tem Strat­egy (IPSS) 2020 cur­rently un­der­way. There is an in­cli­na­tion within SAMA to sup­port fin­tech which has be­come an in­ter­na­tional phe­nom­e­non where hubs, cities and gov­ern­ments com­pete in their sup­port of fin­tech and this is hap­pen­ing in Hong Kong, Sin­ga­pore, Ber­lin, and San Fran­cisco.

We want to cre­ate a stim­u­lat­ing fin­tech en­vi­ron­ment for de­vel­op­ing new ser­vices. There are pre­lim­i­nary talks with banks and sched­uled work­shops for de­vis­ing an op­er­a­tional for­mula for the knowhow of cre­at­ing fin­tech plat­forms that would pro­vide fin­tech play­ers with ideas.

I be­lieve we have the tal­ented youth to in­no­vate and de­velop ser­vices for the benefit of both the bank­ing sec­tor and the con­sumers. Fin­tech devel­op­ment in the King­dom is a very promis­ing field, and we’re hope­ful that by next year’s Arab­net Riyadh to share with you our re­sults and progress. What is re­quired from or­ga­ni­za­tions in the next 3-5 years to adapt with the fin­tech move­ment? Fin­tech will surely cause change. Banks, in re­turn, will play a ma­jor role in this new world. All the lo­cal Saudi banks are now in­vest­ing heav­ily in dig­i­tal bank­ing. Be­cause we can­not know what will hap­pen in 3 years in this chang­ing world, then the ser­vice play­ers have to be flex­i­ble and quickly adapt to changes in the mar­ket.

We have seen plenty of ex­am­ples when or­ga­ni­za­tions are slow in adapt­ing and this might threaten their ex­is­tence, such as what hap­pened to Nokia and oth­ers. More im­por­tantly, you have to be more agile and able to trans­form in­ter­nally and de­velop your prod­ucts quickly to con­tinue com­pet­ing. When will SADAD be used as pay­ment gate­way for the e-com­merce web­sites of KSA – not just for big com­pa­nies but also star­tups? The ser­vice is avail­able now and is pro­vided by banks and ser­vice providers. We have a qual­i­fied group of ser­vice providers ca­pa­ble of work­ing with star­tups and small com­pa­nies. In re­turn, these estab­lished com­pa­nies and star­tups must pro­vide a com­mer­cial reg­is­ter and a bank ac­count and they’d qual­ify for a SADAD ac­count as a pay­ment ser­vice via web­site or mo­bile.

Will you re­quire fin­tech star­tups to ob­tain a bank­ing li­cense for us­ing your ser­vices? If they are pro­vid­ing bank­ing ser­vices, then a li­cense is cer­tainly re­quired. How­ever, if fin­tech star­tups are

“Per­son to per­son mo­bile pay­ments might lead to fast progress that would serve the com­mer­cial sec­tor as a whole, not just in­di­vid­u­als pay­ing one an­other.”

pro­vid­ing ser­vices and new ideas within a bank’s ‘um­brella of ser­vices’ then it doesn’t need li­cens­ing be­cause banks al­ready deal with var­i­ous ser­vice providers in this re­gards. The new types of ser­vices would just need qual­ity checks, au­dits, and re­views. I ex­pect fin­tech star­tups to go through stages, first with the ba­sic ser­vices that at­tract banks and won’t re­quire a bank­ing li­cense and then mov­ing on to plenty of new op­por­tu­ni­ties in the field.

Will we see an ex­pan­sion of SADAD Pay­ment Sys­tem to the GCC? We cur­rently work with ser­vice providers from the GCC who have clients in the king­dom. There is an in­cli­na­tion by SAMA to ren­der the SADAD and Mada ser­vices as in­de­pen­dent en­ti­ties within the com­merce sec­tor. This is a jour­ney which SAMA has al­ready started, so we might ac­tu­ally see these ser­vices ex­pand­ing into the GCC and other ar­eas in the near fu­ture.

We are hear­ing a lot about new tech­nolo­gies such as Big Data, vir­tual re­al­ity and oth­ers; which do you think are the right ones to fo­cus on and in­vest in? De­vel­op­ing tech sys­tems used to take time in the past, whereas now the in­sti­tutes that want to stay and com­pete must change their tech devel­op­ment model. Agility and flex­i­bil­ity are of key im­por­tance. Around the world mar­kets are open to fin­tech devel­op­ment on all lev­els. In ad­di­tion, mo­bile apps have made a rev­o­lu­tion in pro­vid­ing ser­vices and prod­ucts. Now you can cre­ate what’s ben­e­fi­cial to peo­ple with­out the need for huge in­vest­ment in in­fra­struc­ture. Fur­ther­more, Big Data will be the en­gine of the world, and the in­for­ma­tion is there but we make very lim­ited use of it to­day. With time, more tools will be de­vel­oped for bet­ter anal­y­sis and mak­ing the right de­ci­sions.

Fur­ther­more, the ex­is­tence of APIS is very im­por­tant for com­pa­nies to in­ter­act with what’s hap­pen­ing abroad and to have ac­cess. Google Maps is the best ex­am­ple of an open API. So or­ga­ni­za­tions have to be open – and many of the in­ter­na­tional play­ers like Visa and Master­card ex­panded their sys­tems last year to in­clude an open API. Cur­rently at SADAD we are on the right path to re­lease the SADAD Open API which will al­low fin­tech star­tups to have ac­cess and de­velop prod­ucts re­lated to our ex­ist­ing in­fra­struc­ture.

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