Blockchain Technology has unique characteristics that can bring disruption in several sectors of the Financial Services industry, including retail payments, wholesale payments, capital market and security services, trade finance and insurance. Not only could there be major cost savings through its use in back-office operations but also huge gains in transparency that could be very positive from an audit and regulatory point of view.
While blockchain investments are growing faster and new blockchain FinTech players are rapidly emerging, more financial institutions in the region are launching initiatives to understand possible business and operating models and its potential to transform business processes in the region.
The Middle East, particularly the United Arab Emirates, has taken major steps to catapult itself into the digital age, especially with global trends in the emerging technology. Within the Middle East, the UAE plays a lead role in fostering innovation and encouraging the development of new processes and methods to build smarter cities throughout the region.
Dubai, one of the leading ﬁnancial centers of the Middle East, has unveiled the “Dubai Blockchain Strategy” as a part of a joint effort to transition Dubai into becoming a “smart city” by injecting blockchain technology to the city’s public and private sector infrastructures to save and redistribute 25.1 million hours of economic productivity. Initiated by Smart Dubai, a governmental agency aims to use blockchain technology to boost government efﬁciency for both citizens and non-citizens by ﬁling, processing, and transacting governmental documents, through the use of distributed ledger technology. Dubai Blockchain Strategy also hopes to boost industrial growth by introducing a blockchain-based system that would encourage and enable the creation of new businesses in various industries using blockchain technology.
Other countries in the Middle East, such as the Kingdom of Saudi Arabia, and Kuwait, have also introduced cryptocurrency to its nationals. Kuwait-based investment banking and asset management ﬁrm Markaz, has taken a step further stating that oil producing countries, particularly in the GCC, could beneﬁt if crypto currency is used in trading.
In the Kingdom of Saudi Arabia, digitization is expected to play a central role in that nation’s recently announced National Transformation Plan, aimed at overhauling its entire economy over the next 10 years to wean the nation off its almost absolute reliance on oil & gas production as the foundation of its economy. This is in line with Saudi Arabia’s vision of developing a vibrant digital economy by 2030. For this purpose, the Saudi Arabian Monetary Authority is taking steps to provide the legislative framework for the use of bitcoin. Moreover, the Saudi Arabian central bank is working with the UAE central bank to test a new digital currency for cross-border payments.
The Kingdom of Bahrain has been targeting national blockchain adoption and has been working along with the central bank of Singapore in a plan to build a pilot blockchain project within its borders. The Monetary Authority of Singapore (MAS), along with Singapore’s stock exchange and eight local and foreign banks, have been developing a project to use blockchain technology for interbank payments. Following this, Bahrain is looking to develop its own blockchain trial, as the government works toward establishing a robust and comprehensive regulatory regime in the digital currency space. That is to say, the development of a “regulator-friendly space” that will allow research and testing of new FinTech products and innovations that it believes the Middle East region requires.
Oman has also made progress in their blockchain usage and development. The National Bank of Oman conﬁrmed the completion of a blockchain pilot for the use of international remittances.
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