Fulfilling the potential of FinTech in the GCC
Mathieu Ghanem, global head of sales and marketing at ADSS, looks ahead to the potential developments in FinTech for the Gulf region
How has technology transformed the regional finance industry?
The MENA region, through the creation of a number of important financial centres, has developed a very well respected financial services sector, with a focus on asset management and investment banking. However, direct trading and product development has been limited. In 2010 with the opening of ADSS in Abu Dhabi this situation started to change. ADSS was founded to bridge investment flows from Asia through to Europe by providing trading in the GMT+4 time zone. This maintains liquidity at this quiet time in the trading day, adding liquidity to global markets and reducing risk. ADSS also invested in and launched its own OREX trading technology. This was the first platform and trading app to be designed and built in the MENA region, and provided the opportunity to start offering a price and market-making out of the region. Traders who had historically got up early to place orders in Singapore or waited for London to open, can now buy and sell assets through Abu Dhabi.
Starting with a blank piece of paper, ADSS was able to base its OREX technology on the very latest thinking. The lack of legacy systems meant that the architecture could be designed to allow for the fast adoption and integration of future technology, from Artificial Intelligence (AI), algorithms or blockchain.
What is the potential of FinTech in the Gulf and how could it shape the financial landscape in the months and years ahead?
The Gulf region has a number of advantages over the traditional main markets and the rapid development of FinTech will give it the opportunity to create specialist and unique financial services sectors. The MENA region has always been a centre of unique liquidity and an important point on the global financial highway. The entrepreneurial nature of the Gulf - investment in high quality balanced regulation and an experience and knowledgeable workforce - has led to the early adoption of new systems and technology. These have included AI, algos and blockchain, including digital assets such as cryptocurrencies.
ADSS, as a leader in this sector, believes the rapid development in FinTech is directly linked to the end users of the products. Offering millennials and Generation Z access to financial services which require phone calls to brokers or asking them to look at a desktop based systems is no longer an option. They want transparency, easy and instant access through technology such as apps with sophisticated AI functionality guiding them to the right choices. They see the world as digital, fast and simple to access, and they want to manage their investments in the same way. ADSS has been a leader in developing systems which work for and provide this new audience, today’s investors, the solutions they want.
What will be the timescale for change? When will investors start to see a change in the systems they are using?
The change to the systems we use has already started and this will accelerate as investors start to see the benefits the new technology provides. This new audience wants to be able to trade a full range of digital and traditional assets in a sophisticated, cost effective and accessible way.
The first generation low-cost financial services systems are already available and through ADSS’s OREX mobile app investors can trade thousands of products, from equities to FX, at any time and wherever they are in the world. In the future the OREX app will use artificial intelligence to deliver cash management solutions – simple and innovative ways to generate fixed returns on capital, while offering opportunities to utilise funds to trade a wide range of financial markets and assets. Advances in automation will also reshape the user-experience which will be linked to the latest chat-bot and robo-adviser technology.
Where do we go from here? What can we expect in the longer term from developments in FinTech?
The game changer for financial services will be the introduction of blockchain, distributed ledger technology. There are many different views on cryptocurrencies and the digitisation of assets. ADSS has looked to embrace these new products and was the first investment firm to
introduce cryptocurrency CFD trading into the MENA region. ADSS sees blockchain as a game changer for financial services. The use of transparent distributed ledger technology will allow the financial services industry to develop a new range of products delivering what the next generation of investors is looking for. At ADSS we are already a leader in this area having developed our own internal blockchain, which links our offices in Abu Dhabi, London and Hong Kong as well as our trading servers in New York and Tokyo. As part of the OREX technology we are also developing an eWallet to store debit and credit cards. But more importantly, OREX will offer global financial services access to its clients who will be able to use and trade digital assets anywhere in the world. Just tap your phone to pay for a new car or your morning coffee, and to transfer funds to trading and bank accounts (and even send money to friends). Finally, early adopters and long-term clients will be part of a loyalty programme which provides them with digital rewards for their trading.
Is ADSS concerned that using AI rather than people will reduce the control and the expertise involved in trading financial markets?
The reason ADSS has been so successful in creating FinTech trading applications has been the ability to translate genuine trading experience and knowledge into platforms and systems. The AI applications and the algos controlling the trading are only as good as people who programme them. Modern markets are fast and dynamic, so systems need to instantly track and react working across many thousands of different products, providing services which can be managed and controlled from smartphones or desktops.
AI technology will also understand the risk profiles, asset classes of choice and objectives of investors allowing it to identify individual traders or flag new trading strategies. The ‘intelligence’ side will learn from the user, enhancing and improving the trading performance making personal investment accessible to a much wider audience. However, trading is only half of the story - the development of new products and the ability to reconcile accounts is also essential. The move to digital assets will allow coins to be used to transfer value between different asset classes and geographies without the need to use traditional fiat currencies.