Fragmented payment systems and a lack of standardization have hampered Middle Eastern companies’ cash management efforts, but that’s likely to change.
Although Covid-19 has spurred the adoption of digital payments in the region, new government initiatives and regulatory measures in the Middle East are also driving a cross-border payments ecosystem that will bring greater transparency and control to finance departments.
Ahmad Alyousef, senior vice president and head of cash management product solutions at Saudi National Bank (SNB), which won the Best Bank for Payments & Collections award, says several initiatives have already resulted in faster and more efficient payment transactions while reducing transaction costs and introducing real-time payments.
One such initiative developed by the six member states of the Gulf Cooperation Council (GCC) is GCCNet, which connects all national exchanges across the GCC in real time to build a single network.
“This allowed debit cards issued in one GCC country to be used in another, reducing the cost of cross-border transactions,” Alyousef explains. “In addition, some GCC countries have also created real-time payment systems for low-value local and cross-border remittances. In Saudi Arabia, for example, the instant payment system facilitates daily payment transactions with instant credit. Fintechs have played a significant role in driving demand for cross-border payments using digital wallets.”
After completing the merger of two Saudi Arabian banks – National Commercial Bank and Samba – to form the SNB in April 2021, it took the new bank nine months to offer its customers a seamless service migration. The SNB was also the first bank in Saudi Arabia to create a sustainable finance framework and is well positioned to help companies recover from the pandemic.
With a deep-rooted network in the Middle East and North Africa and extensive local expertise, Best Bank for Cash Management winner Arab Bank is well placed to price transactions based on local market requirements, credit risk and historical data.
ArabiConnect, Arab Bank’s digital enterprise platform, offers a range of global transactional banking services; while the ArabiSync host-to-host offering offers a superior customer experience. To stay ahead of the cash management innovation curve, Arab Bank launched a fintech-focused business accelerator program, AB Accelerator, in Egypt in August 2021, following the success of a similar program it previously set up in Jordan.
National Bank of Egypt (NBE), which won Best Bank for Liquidity Management, has branches and affiliated banking units in the United Arab Emirates, Ethiopia, South Africa, Saudi Arabia, Sudan, the US, the UK and China; and it has a dedicated banking network that includes more than 39 accounts in North America, the Eurozone, the UK, the Middle East, Asia, Canada and Australia. NBE arranged and managed more syndicated lending deals last year than any financial institution in the Middle East and Africa – and in 2021 managed 51 financing deals worth more than 235 billion Egyptian pounds (about US$15 billion).
Banque Misr was recognized as Best Short-Term Investments/Money Market Fund Provider for its Banque Misr Money Market Fund, Youm B Youm, which offers barrier-free access to Egypt’s debt capital markets without requiring a significant minimum investment. In addition to zero subscription and redemption fees, investors can increase their investments or withdraw their profits daily and provide liquidity when needed.
Liquidity and easy access to cash remain essential for businesses and banks to play a critical role in providing tools for real-time visibility and instant payments. Backed by new payment rails and national and regional regulations and standards set by organizations like Swift, banks in the Middle East have a real opportunity to help finance departments and fuel growth for all.