The COVID-19 pandemic has facilitated the acceleration of digital transformation in the banking sector across the world. At the same time, pandemic-related circumstances have paved the way for several new transformational trends resulting in significant impact in various sectors.

In an exclusive interview with Emirates News Agency (WAM), Varouj Nerguizian, Group CEO of Bank of Sharjah, underlined that the transition towards digital transformation in the banking sector was inevitable and was gradually taking place. However, the pandemic boosted the shift for enhancement of the sector. This change is helping banks cope with the new landscape brought by the pandemic and facilitate future gains and profitability, he added.

"One of the biggest shifts has been the ability to work remotely. More and more firms and banks are more flexible when it comes to working from home, which in time can impact overhead costs of the banks," Nerguizian said while explaining related new trends.

At the same time, traditional banks are focusing on new ways to promote cost-cutting in terms of branch networks and manpower.

Blockchain, cryptocurrency in banking

He further pointed out that the blockchain is a revolutionary technology, the potential of which the banking industry is still exploring.

Blockchain is being used in certain areas like KYC [Know Your Customer] or the real estate title deed verification, allowing parties to transact with each other without the need for an intermediary. In this regard, the top executive has raised concerns to actively monitor the activities of blockchain technology to avoid any harmful impact. He underlined that enterprise blockchain (private blockchain operated in a closed network) could enhance connectivity between banks as consensus would be limited to known and trusted parties.

"I personally believe blockchain technology and by extension cryptocurrency is here to stay and impossible to regulate at large," Nerguizian said.

In the UAE, jurisdictions like ADGM (Abu Dhabi Global Market) and DIFC (Dubai International Financial Centre) have formulated necessary crypto regulations. Crypto could become a significant part of the banking landscape moving forward, he pointed out.

Digital banking, cybercrimes

When asked about potential ways to tackle frauds targeting digital banking customers, the CEO noted that the industry has built several layers of security and implemented a multifactor authentication system in combination with technology and old-fashioned phone calls to confirm transactions.

Various awareness campaigns are also being conducted through media platforms and other channels to promote education of customers on ways to protect their banking information and prevent cybercrime. The UAE Banks Federation (UBF) organised a successful fraud awareness campaign that raised awareness about immediate actions customers can take if they fall prey to a scam.

"Having all banks communicating the same message will certainly enhance awareness, which is essential now as the digital banking services have increased during the COVID-19 pandemic and so have the fraudsters," the CEO added.

Nerguizian said that the UBF has been playing active and crucial role in raising awareness about concerns of the banking industry with the monetary authorities. In addition, it has been regularly reviewing existing or forthcoming regulations and proposing changes for their better application.

"UBF has done a great job by raising the standard in the banking and financial services industry and has a significant impact on the economic development of the UAE," he said.

Steps to tackle COVID-19 impact

The CEO explained that the bank immediately took advantages of the Standards for The Targeted Economic Support Scheme (TESS) initiated by the UAE Central Bank (UAECB) to ensure the provision of seamless services during the global pandemic. The sector enforced necessary health protocol to enhance the safety of the staff and customers and assist them through any problems.

"We initiated our own additional deferral package for other deserving customers. To raise and benefit from the UAECB liquidity windows, we initiated liquidity through the subscription to eligible Sukuk of Government of Sharjah," the top executive said.

The bank also implemented relevant measures to support the Small Medium Enterprises (SMEs) that are the backbone of the economy. Nerguizian said the bank raised significant proceeds in cooperation with UAECB in the form of TESS and the BOS (Bank of Sharjah) component for the SMEs.

"SMEs remain more vulnerable than mid-corporate clientele. The impact of this support will only crystallise in 18 months provided there is no resurgence of COVID-19 or its variant," the CEO added.

WAM