UAE: Finocracy adds Ernst & Young heavyweight to accelerate FinTech agenda

Dubai: A group of prominent investors led by Ashar Nazim have acquired a significant stake in Finocracy. Ashar was formerly senior partner and the global head of Islamic banking practice at EY.

Finocracy specializes in operationalizing FinTech platforms. Nazim will take up the role of Managing Director at Finocracy, to lead an ambitious mandate to roll out high impact FinTech solutions in collaboration with partner Islamic banks.

Ashar Nazim was previously Senior Partner and Global Head of Islamic Banking Practice for Ernst and Young

Commenting on his new role, Nazim says: “More than 50% of banks in GCC are experiencing declining profitability, and that is a cause of concern for the boards. Islamic banks are no exception. After five decades of enjoying double-digit growth, the industry is experiencing a sharp slow-down. The forecast for next three years to 2020 suggests between 5-8% growth in Islamic banking assets globally. Finocracy will lead the charge to revive industry growth by operationalizing digital platforms, revenue models and cost structures for Islamic banks.”

Finocracy to open up opportunities for Islamic banks to target 10 million consumers through collaboration with FinTech challenger platforms

According to Finocracy, the GCC industry is positioning for a second wave of challenger digital banks and platforms entering the market.

“Over next five years, we expect between 8-10 million customers in the region to switch to a digital-first relationship. That is a big prize to win. The business volumes will understandably remain modest in initial years. Still, at stake is up to 25% of banking revenue pool in the region.”

Sayd Farook, Chairman of Finocracy says: “This year, we expect to see 6-9 major Fintech platforms scaling-up across GCC markets, with Series A and B funding. Another, 60-70 serious Fintech solutions are in incubation phase and expected to be launched in next 12 months in the region. Regulators are responding well by helping open up the markets, specially in Bahrain, Dubai and Abu Dhabi.”

Once the disrupters themselves, Islamic banks appear to have been disrupted by a changing customer preference.

MENASEA region alone holds a population of more than 1 billion unbanked customers

Nazim adds: “Bank data suggests that 4 out of 10 GCC consumers are ready to switch to a digital-first relationship. This transition is already in progress and we expect a dramatically different banking landscape over next five years.”

Finocracy estimates that the rapidly evolving banking environment would render 70% of the current skills set at banks irrelevant.

In response, leading banks in GCC expect to sign up between 3 and 7 Fintech partners as part of their transformed business strategies.

Finocracy brings connectivity, access to futuristic technology and a strong track record of its senior team in operational build-outs. Nazim personally led the build-out of 30 major Islamic financial institutions and programmes at EY, and will now be driving the ambitious roll out of high-impact Fintech platforms in the region.