Fintech - The ADGM Innovation

foreign [Music] well I hope you had a wonderful lunch and that you'll enjoy the rest of today's content my name is Gabriel and zarillo and I'm a financial regulator here at adgm and I'm really very pleased to have you back with us now The Innovation Challenge what is it so the Innovation Challenge is a staple of fintech Abu Dhabi which is now part of Abu Dhabi Finance week and essentially it is a once a year event where we at the financial services regulatory Authority along with Partners from the UAE ecosystem put out challenge statements to the community and call on innovators from around the world to make themselves known to us so that we can potentially collaborate together now today's session is a sneak peek before the rest of the world knows because our challenge statements are going out next week of what this year's Innovation Challenge will look like and with that I'm going to introduce our esteemed panelists so on my right I've got Salma kayali vice president of innovation aldar properties and furthest away from me I have Tristan Brandt Executive Vice President design and Innovation at Rack Bank now while we were in the speaker's Lounge Salma did tell me that this is her first time speaking on a panel in three years so could we give her a little round of applause to cheer her on unfortunately the same can't be said for Tristan and I who are speaking together at jitex last month so we're old friends by now so one thing you should also know is that there is an important seat missing here unfortunately we have a very important innovation partner so HSBC and how unfortunately the representative Paul was unable to be here for personal reasons however they are very much part of the Innovation Challenge they are putting out some excellent problem statements and the entire HSBC Mana team is actually here in the audience I don't know if you guys can make yourself known there they are so HSBC representing there just unfortunately not on stage so with that let's kick it off um I want this session to essentially be a concrete information session on what aldar and what rack Bank do to actually interact with vendors entrepreneurs startups like what's the actual process like because so far we've had a lot of talk leadership but then we have some wonderful entrepreneurs out there who are wondering how can they work with you and of course with us at the office sorry so my first question um and I'll kick it off with Tristan is can you tell us a little bit more about how you interact with vendors if you have any Innovation programs how does that work and uh I'll bring this closer so ragbank is a smaller player compared to some of the other household names here in the banking sector for us we find that the opportunity to stand out comes from having a more open mind about Innovation and new propositions first and foremost we always are trying to understand the commercial Market opportunity and in the context of fintech and Innovation there are really two ways we're assessing who we want to work with the first is with regard to whether or not that particular organization potentially if we were looking at sponsoring them through bin sponsorship gives us access to New Markets and new segments that we don't necessarily have an appetite or ability to go after so there's the the revenue growth or the market growth opportunity through that type of alliance and then the other main area of focus is uh clearly we all understand that marketplaces and distribution is changing uh as a bank how do you get access to that well there's a terminology that a lot of the audience will be familiar with which is banking as a service we look at technology alliances that enable us to participate more effectively in other in other markets or marketplaces that are run by some of the companies we want to work with and as a for example uh you know we're in dialogue with one of the food delivery organizations to offer them an embedded finance service for their restaurants so we we look at Innovation very much through the lens of uh you know enabling businesses that are reaching into new markets or staying relevant in the evolving uh ecosystem and in that process ultimately and I think in the context of the Innovation Challenge what matters for us is the ability to realize that opportunity if I'm honest at least effort right and so we think of innovation not so much in some cases of the pure r d basis more from can this particular partner help us convert an opportunity at a cost and risk that we think is acceptable you have very very structured processes on interacting with people who want to come in can you give us a little bit more detail about that absolutely um so for those who are not familiar with aldar aldar is the main real estate developer and asset manager in UAE and we're very well known for our development construction sites however not very well known for Asset Management arm which includes Hospitality over 29 schools that we operate Leisure retail community and big malls and others so with that almost any type of startup can find a product Market fit within our portfolio and you're absolutely right we do have a strategy and Frameworks and processes that we have developed specifically to streamline this process and some people might assume Innovation is a chaotic experience but it's not it's very methodical and there are processes in place to ensure that we achieve those different Milestones while we're running these projects now the three main areas that we focus on under our Innovation division is one the incubation acceleration programs that we run annually and those are internal facing through our people our biggest asset but also externally working with our customers and the overall Community the second area is investment into VC tax globally so we've invested in over six VCS and we're scaling across the world and the final area which is I think often neglected is governance reporting and measuring economic value that is absolutely crucial to get the endorsement and buy-in for additional Innovation investment um the three I want to highlight maybe two of our programs that are very uh well known in media anyways is the manosa program which is an FMB and service retail incubator program a six-month program with a six-week incubation where we attract startups regionally and give them space within our Flagship properties such as for example Manchester yacht you have come across maybe some of these Concepts and the other program is the scale up which is a global accelerator program where we attract creme de La Creme of the startups into the region to scale into the UAE very nice I mean today we are winning the fintech Abu Dhabi portion of Abu Dhabi Finance week however the thing that really does link all of the events that are coming up tomorrow we have crypto afterwards the day after we have race is very much the financial element which powers just about everything that we do so I think it would be very nice if you can tell us a little bit because traditionally you know like you mentioned people don't know aldar is an asset manager and of course you know we think about rackback we only think about fintech products what are the industries that you actually look at um and the maturity of those Solutions who wants to go for a Selma um so ultimately our goal is to drive operational excellence anywhere where startups can help us cut down costs be more efficient and agile is a solution that we're interested in now traditionally as a real estate company proptech would have been the number one area and broadly speaking it is however we can see that many solutions nowadays are at the intersection of prep Tech so there's fintech and other Solutions and honestly the best type of solutions we have come across are those that have integrated these Advanced Technologies into one solution but I would say that as aldar we work with companies that are a little bit more mature on the startup scale so that's typically post series a they have a success record and traction and they are ready to scale if they're from abroad into the region or scale here in partnership with aldar now I wish I could say the same for the episode but I do believe and you're going to see this with our problem statements later on um that we are very much still focused on supervisory text subtech and Rec Tech Solutions and such so we don't have that breath at the moment because we have to look at just the financial industry and how we can be better supervisors but Tristan wouldn't rack back you're also able to look at a number of different areas right so with regard to the the industry sectors we look at um historically we've been a very strong performer in the SME sector and I think it's you know it's well known that uh at a national level there's a strong desire to support small and medium Enterprise as a way to diversify the economy to create more sustainability and a better kind of infrastructure within so when it comes to the way we look at innovation in in that particular Market context usually what we're trying to do ultimately is is to make it easier to interact between the bank and the smes and at a simple level what was referred to at the start of the day in terms of level of digitization we focus on being able to make better decisions about the suitability of particular companies and organizations in a digital world and what does that ultimately mean that means that the way in which we use data to understand the health and viability of a business if it's a going concern and to profile that organization that's probably going to be over the coming you know three to five years the most consistent area of investment for us where we we know that if we can make better informed decisions than our risk selections better our lending and decisions are better informed the stability of those businesses we can help them more effectively so to a large extent I'd say you know in terms of Industry sectors we don't necessarily discriminate we we understand and we focus a lot more in tiers of the economy uh our objective is to be smart about how to use insight to make better decisions at scale right abroad so I think I think we've been teasing the crowd a little bit at this point because we are here to to pre-launch or launch The Innovation Challenge can you share at least one of the concrete concrete asks you're going to put out or for the challenge statements what are you what are you going to ask of the crowds what are you asking these people so ultimately what we're looking for is in simple terms we're looking for help to make better decisions at scale about potential customers you know historically for those who aren't so familiar you know there are decisions that predominantly around lending and establishing lines of credit that have been quite hard to make particularly in this region because there hasn't been a wealth of information or rating on different organizations uh you know corporate tax is coming that'll give us better understanding understanding of actual history and how our businesses perform but that's not all there today so the the Challenger that we're asking for help with is if there are fintechs out there who have intelligent predictive models to enable us to make better risk selection at the point in time where we're establishing a relationship with a new customer then we're very interested to see how they can make that true very nice very clear Salma can I ask you what your concrete ask of the community will be um so we are looking for startups that can help us streamline the digital journey of our customers around the the financing Solutions of homes and that so specifically that space and that is everything from financing the the house itself their home anything to do with kyc compliance cryptocurrency really removing those pain points along this whole journey and ensuring that we are also advancing in our digital Payment Solutions as aldar so ensuring that home acquisition is easy but also done appropriately for the right profile people absolutely and we are a very old dinosaur industry we understand that we are you know maybe behind other Industries but we are taking very solid steps into that direction I I think you're the only person who here who's actually admitted that I had your CEO on stage saying no we are absolutely not an old dinosaur are you asking whether we're dinosaurs no I'm just pointed I'm just you know jabbing at you um look the not speaking to uh a gentleman just before coming on stage uh in a uh where are we in the Innovation cycle so we're in the stage where uh free money chasing uh Concepts is no longer on the table right so uh what you would understand is a lot of the criticism of banks uh some of which I would agree with but a lot of it was self-serving from Challengers who wanted their story to sound good uh now we're in a stage where uh all of a sudden the economic validity of many startup businesses is being put under scrutiny you know the question is who's going to be standing once that reconciliation has run through I'd argue the banks will still be here right and a lot of the fintechs won't so there's a value in Prudence there's a value in being clear about whether what you're going to do is will work or not and I think we're entering that cycle where the the hurdle rate for Innovation is going to be much higher uh and and I had a conversation recently uh with the company that we shared the stage with and they wanted to pitch an idea to me but I'd say if you're if you're a fintech and you're coming to an incumbent the best way to make a sale is to be able to say what's in it for the incumbent at a factual level so if you say here's what I can do for you and this is what it means in terms of return then I think you've got my attention I like it I like it well whichever way the markets swing whether we have all dinosaurs or new increments coming in luckily we as a financial regulator will hopefully always be there right unless we could completely disintermediate by smart contracts which might happen um so you might be wondering what is the fsra looking for in terms of challenge statements and what we're going to be asking from the community well we'll be putting out two challenge statements um the first one is very topical and I'm not going to get into discussions when any one of you here on stage but the first one is on focusing on the traceability of funds and within crypto wallets so essentially demonstrating proof of control of those wallets and demonstrating you know ownership of those keys we at age gym are very proud of having a very sophisticated virtual asset regime and we are constantly pushing our supervisory capabilities on that front and our second problem statement which is a little bit different but we're also very excited about which goes back to my smart contract comment is that we have very recently digitized our rule books using Ai and all of that training data is now in a GitHub repository that we're about to open up to the world so we're really looking forward to seeing what the community of developers will be able to do with all this training data and with all the rulebooks and see the use cases that are going to come out of the imagination of the community now I know we're running out of time and I know you're tired of hearing me drone on soup Tech Solutions and fsra Innovation so I'm going to ask Salma to take the final question to close us off and it is Selma want to start up one one of these people are going to come to you later on saying you should really take talk to us we have the most amazing solution what homework do you expect them to have done before they come and they pitch you hard so we expect startups to have and I know this sounds very simple but honestly I've encountered the situation where where startups we advise them to research the company in and out go onto their websites read their financial reports on sustainability reports Innovation reports anything that's available to understand the structure of the company their operating model because if we take aldar as an example over the last two years we have drastically grown our operating model has expanded into new geographies into new sectors so understanding that very well means that they can connect with the right stakeholder in the business unit and ensure that there's an alignment between their solution and the requirement of the business which also means understanding the Strategic imperative of every entity or every business unit we also expect them to work on which is the point that Tristan raised the ROI I mean what is it that you were producing in terms of value for the company and it's not enough to say well it's going to increase customer satisfaction it has to be tangible it has to be built into some tangible some non-tangible uh some monetary some non-monetary but it shows a clear understanding of what is this bringing to the organization as an overall Tristan you want to add on that I think it's a really really good question um I get approached regularly by people on LinkedIn or other mediums who um you know ninety percent of the time it's a bit of a random shot I think some puts it correctly there are certain ways to make yourself highly relevant to start that discussion and the truth of the matter is it comes down to you know assessing whether what you have to offer is likely to be necessary for me or likely to be a problem I have and so what is complex and that that matchmaking activity arguably the the onus of effort is with the startup to to get that right in the UK um you know because this whole matchmaking problem was so exacerbated what ended up happening is that a number of the banks have created a Consortium an unpublished a set of kind of Engagement principles that they signed up to and made it easier so that that you know what should you expect when you come and work with us was already predetermined and there were channels of communication for that I'd say you know the more you as a startup can put that thought process in to actually say actually you know I've seen you're in this business we see we think you've got this challenge if you do here's how we can solve it and this is what it means for you that would be amazing nobody's approached me with that yet love it well thank you very much so ladies and gentlemen we have Tristan from rack Bank you can get in touch with him Selma from aldar we have the Innovation team from HSBC all there if you want to get in touch with him please do go and see them they're lovely people they have lots of challenge statements out and then of course please do get in touch if you'd like to speak to the fsra my final piece of advice for anyone who wants us to get in touch with all of us and maybe it's a little unorthodox or controversial is be humble if you're humble we'll be humble back thank you thank you