Emirates NBD Says Middle East’s Digital-First Approach Forces Treasury Management Change

The payments landscape is a global one, meaning winning innovations have boundless room to scale.

It also means that geographical positioning can help with strategically driving forward various innovations.

“The Middle East has always been a very unique trade corridor, placed right in the middle of the world, which facilitates transactions across the West and the East,” Anith Daniel, head transaction-banking at Emirates NBD, told PYMNTS.

He added that the unique position of the UAE as a trade hub has helped it act as an engine in driving advancements in payment technologies, as well as play a role in defining the rising importance of corporate treasuries.

Historically, investment in treasury and finance management was not a priority for many companies and ranked relatively low on the capital expenditure totem pole. However, the post-COVID-19 environment has underscored the critical role of liquidity management and efficiency.

Treasurers are now more focused on adopting advanced technologies such as SWIFT SCORE (Standardised Corporate Environment) APIs and sophisticated front-end systems to enhance liquidity management and streamline operations, said Daniel.

As he explained, this shift is also influencing banks, which are repositioning themselves to offer more technologically advanced cash management solutions.

“Most of our conversations, especially when we talk about APIs, don’t just happen with the treasury or the finance managers; they actually happen with the CIOs and the CTOs as well, because they have to get convinced,” Daniel said, noting that he anticipates a significant uptick in the space as corporate treasuries seek greater efficiency and integration with their enterprise resource planning (ERP) systems.

The push toward single-platform, bank-agnostic solutions will likely drive the adoption of APIs among corporates in the near future, he added.

Embracing Digitization and Supporting FinTechs as Catalysts for Growth

According to Daniel, the UAE’s robust infrastructure, including world-class airports and ports, facilitates seamless trade and business operations. This strategic positioning has attracted a diverse array of businesses and nationalities to the UAE, creating a vibrant ecosystem where cross-border transactions are the norm.

The UAE government’s own supportive stance on business operations, including streamlined government approvals and advanced infrastructure, has been instrumental in fostering this growth.

As a result, the government’s initiatives have significantly propelled the growth of digitally focused FinTech companies, virtual asset service providers and crypto companies in the region. This digital-first approach has created an environment where new FinTech entrants can easily set up and scale their operations.

“Every government department is monitored on their digital effectiveness,” Daniel said.

The focus on digital services extends to all facets of the government and banking sectors, ensuring that businesses and individuals can conduct their affairs with ease. This has not only enhanced the efficiency of business operations but also attracted FinTech innovators looking to leverage the UAE’s conducive environment for digital finance.

“FinTechs can start and ramp up quite easily … and from the banking side, we get to see what they want — we learn from their experiences in other parts of the world, and then cater to what they specifically need from our markets and build based on their requirements,” Daniel explained.

When it comes to payments, the priorities and requirements have remained consistent: speed, cost-effectiveness, full-value transfers, beneficiary validation and security.

“It’s been a hub of ever-growing payments growth,” Daniel said, emphasizing that customers’ expectations for instantaneous payments, minimal charges and secure transactions drive the payments agenda.

The Future of Payments in the Middle East

The rise of regional payment networks and the growing adoption of tokenization are seen as pivotal in meeting the expectations of modern end-users.

Tokenization, in particular, is viewed by Daniel as the next evolutionary step in payment technology. It promises 24/7 transaction capabilities and finality of payments, addressing some of the limitations of traditional banking rails. While still in its nascent stages, he added that tokenization is a key area of investment for forward-thinking banks in the region.

“We’re nowhere close to getting tokenization at scale, but we think it is likely to be the future in the next three to five years,” Daniel said.

The integration of artificial intelligence (AI) in banking and payments is another major trend.

Daniel discussed the establishment of an advanced analytics center of excellence at Emirates NBD, which focuses on leveraging data and AI for insights and efficiency. While regulatory constraints around data localization pose challenges, the bank is committed to exploring the potential of AI and machine learning in areas such as fraud prevention and customer experience enhancement.

Instant payments are a game-changer for the payments industry, providing immediate transaction finality and enhancing the customer experience.

“Bank customers really look forward to having finality. Meaning, if I make a payment, I need to be aware that it’s reached the beneficiary that I’m intending it for,” Daniel said. “Payments is usually a black hole: they initiate, then they don’t know what happened with that payment till somebody confirms that yes, the beneficiaries got it.”

“Instant means different things to different people and different markets. Instant is immediate, or it could be up to one hour after, three hours is also deemed as instant in some markets, or it’s near instant,” he added, noting that the eventual goal is to facilitate seamless cross-border transactions by integrating with other countries’ instant payment networks.