Fatema is a customer-service representative at the Arab Banking Corporation (ABC), a leading Bahrain-based bank, who helps customers open accounts, apply for credit cards, or get a mortgage. She is never late, never takes days off, and is available 24/7. She is friendly, punctual, but not human. Fatema is the first emotionally intelligent digital banking employee in the region. She is an on-screen employee using cutting-edge artificial intelligence to emotionally engage with the bank's customers. Fed by a huge set of data, Fatema's electronic brain processes data and answers customers' questions. But she also reacts to customers' facial expressions, smiling back or showing concern when they look worried. The questions that Fatema can answer are still limited, but they will soon expand when she is working at full capacity. Fatema embodies the use of technology in financial services, known as fintech. Fintech products and services are faster, more efficient and more cost-effective than traditional ones, with one example being the use of smartphones for mobile banking, money transfers and cryptocurrency transactions. Fintech also comprises artificial intelligence (AI) through which a computer programme can think and work almost like a human, performing activities like speech recognition, problem-solving, learning and planning. Fintech is changing the banking industry as we know it, both threatening and complementing traditional banks, as was revealed at the Middle East and Africa Fintech Forum: Banking Beyond Disruption meeting held in Bahrain last week. Fatema's debut was part of the forum, which was hosted by ABC. A dozen central bank governors from the region together with dozens of bankers and tech gurus revealed how technology is changing banking services, as well as their cost and customer base. “Traditional banking as we know it is dead,” and “we need banking, but not banks,” were some of the statements heard at the forum. Despite the sophisticated technological terms used by the speakers and the high calibre of the attendees, there was a consensus that fintech is not only targeting the well-to-do and the tech-savvy. It can be beneficial in improving financial inclusion and serving the less privileged, speakers at the forum said. “We are already seeing fintech has a hugely positive impact on our customers and how we do business. There is so much more to do, however, and we have a responsibility to continue pushing forward to leave no one behind,” Sael Al-Waary, deputy CEO of ABC, told attendees at the forum. According to Al-Waary, more than 1.7 billion adults across the world remain unbanked, and many more are underserved by their banks. “Here is our challenge and the opportunity to contribute to a new world,” he said. Small businesses and underbanked individuals were main targets of companies displaying their fintech technologies on the fringes of the one-day forum. The credit-card company Mastercard was displaying its newest app, Masterpass QR, which serves small merchants and aims to make their relationship with banks less expensive. Merchants can use Facebook to look for the account of the Mastercard chat bot, a computer service designed to simulate conversations with humans, in order to get their QR code in the chat box. A QR is a machine-readable barcode that includes information about a commodity or merchant. When consumers want to pay for their purchases, they can scan the merchant's QR code through the banking app on their mobiles and the payment is made. “It is secure, smart and easy, providing a cost-effective alternative to cash payments. This is to make the process easier on small merchants, as their accounts are settled without having to go to the banks,” Irina Lopshina, product-management director with Mastercard, told Al-Ahram Weekly. Jaib, meaning “pocket” in Arabic, is another application, this time founded by Jordanian entrepreneur Fouad Jeryes to facilitate payments by customers in Arab countries to international online retailers like Ali Baba and Amazon. Users of Jaib do not have to pay for their purchases online as the company that created the app pays for them after making an assessment of the client's credit-worthiness by analysing his track record with other online retailers. The company receives its dues on the delivery of the purchased product within 14 days of ordering. “It is an electronic-payment application based on quick user-assessment to minimise the retailer's risks and cater for those who don't feel at ease with online payments,” Jeryes told the Weekly. Having founded three banks over the last 12 years, two of which are digital and mobile-only, Anthony Thomson, a financial-services innovator, said the spread of fintech could help in including the unbanked and improving banking services. “If one looks at traditional banks, part of the reason they were not able to serve unbanked customers was the cost of service was high compared to the commission they got for small transactions. The cost of maintaining branch networks was also high. The beauty of digital banking is that it comes at a much, much lower cost,” Thomson said. As a result of greater competition and more open-banking applications, consumers' satisfaction with their banks will increase, he said, recalling his experience establishing two challenger banks, retail banks in the UK that compete with longer-established banks through the use of information technology. These can avoid the costs and complexities of traditional banking. “We did not reward anybody for selling anything. Instead, we changed the culture from a bank-sales culture to a customer-first retail culture. Selling products is not the priority; serving the customer's best interest is,” Thomson said, describing the UK banks Atom and Metro. 86400 is the name of Thomson's newest bank based in Australia. The name symbolises the number of seconds in a day, meaning that the mobile-only bank will offer its services to its customers around the clock. Betting on customer satisfaction was what triggered Thomson's interest in the Australian market, where several banking scandals and exceptionally high fees have stripped the traditional banks of customer confidence. “It was clear to me, as I started to look into banking in Australia, how it makes the UK banks look like they look after their customers,” he told Reuters. Thomson said he had been struck by a 2016 analysis from the Australia Institute, a think tank, that found that Australian banks' profits made up 2.9 per cent of gross domestic product (GDP), the highest proportion among a list of 10 major developed economies. Inma Martinez, an expert in AI and venture partner at Deep Science Ventures, an investment fund, said that AI could help the underprivileged. “AI can analyse thousands and thousands of data entries and come up with results. Humans cannot make these calculations in their heads,” she said. Such data analysis can show trends that were not seen before machine intelligence, and it is helping companies to observe how populations are moving from region to region according to data from satellites and government registries, including the number of babies born and marriages, she explained. On a smaller scale, by analysing the spending patterns of a mobile-banking customer, the machine can predict what his or her needs are going to be, indicating future financing possibilities. Reacting to concerns that AI could replace employees as a less-expensive and more accurate alternative, Martinez said that “the machine does what you tell it to do. It is like buying a horse: you raise it either to run in races or to work in agriculture.” “It does not replace workers. Instead, data which was gathered manually by people in the past is now seamlessly analysed by machines,” Martinez said.
