Technology and the Middle East

In this article, Farhaa Abdelhaq, from Saudi Arabia, looks at how emerging technologies are impacting the Middle East.

The technology landscape in the Middle East region is constantly changing. As governments in the region are preparing to regulate emerging technologies, financial organisations in the Middle East are deploying these technologies and creating new ways of operating business, as they already see the benefits.

The technologies that lend themselves to the emerging technology definition - Internet of Things (IoT), blockchain, cybersecurity, and other technologies - are upending our perceptions of what the future of finance will look like. They have proved crucial in helping during the Ukraine-Russian war. For example, blockchain is being used to send money using decentralized data tools.

Not only have they produced new scientific and technological possibilities, but they have the potential to significantly revolutionize the way the economy and society operates.

So, let's take a closer look at these advanced technologies and their impact on the Middle East.

Blockchain technology

Blockchain is an emerging financial services technology trend transforming the financial world as we know it, but it's still at a relatively low adoption rate. Blockchain is the technology behind Bitcoin, has been used by major banks like JP Morgan Chase, and is widely regarded as one of the largest opportunities for banks and other financial organisations today.

Blockchain technology is slowly changing the future of the Middle East, with many benefits for businesses operating there. These include greater transparency, enhanced security, improved traceability, increased efficiency and speed of transactions, and reduced costs.

For example, Bahrain is actively developing a fintech industry involving different governmental authorities. The Central Bank of Bahrain (CBB), the regulator for the financial sector, has launched a regulatory sandbox to test fintech solutions and is working with local players to develop innovative retail payment systems. Bahrain's Economic Development Board is focusing on attracting foreign investments in, among others, the technology sector.

Meanwhile, Dubai has embraced blockchain as a core element of the Smart City Initiative, both through the Dubai Blockchain Strategy and its support of the Global Blockchain Council. In common with approaches internationally, the use of blockchain in fintech is likely to be rolled out in a controlled environment initially.

Additionally, The Benefit Company, a Bahraini provider of payment settlement services, has launched the National Mobile Electronic Wallet (BenefitPay), in a joint initiative with the Central Bank of Bahrain (CBB). This allows customers to use their smartphones to make or receive payments without the use of credit or debit cards or cash.

The system is still at an early stage of implementation. The intention is for it to be integrated with other payment infrastructures handling retail payments in Bahrain. There is a lot of excitement around blockchain technology, but it is not yet widely available. Some financial organisations are developing wider solutions, but most banks are using blockchain solutions on their own. This can be a major impediment to smaller financial institutions.

However, with the rapid adoption of blockchain over the past few years, it will quickly become a mainstream solution for payments, fraud reduction, loan processing, smart contracts, and more.

Artificial Intelligence (AI)

Artificial intelligence solutions are increasingly part of the digital transformation in banking and other industries. They are popular amongst financial institutions of all sizes, with everyone from large-scale banks to tiny credit unions implementing them.

AI is a broad tool that allows people to rethink how they integrate information, analyze data, and apply the ensuing insights to make better decisions. It's already revolutionizing every aspect of life. It's capable of making smart, agile decisions, cutting man-hours, and reducing time-investment for banks. Implementing simple chatbot solutions will allow you to offer faster customer security and improved response time to customers.

For example, Bahrain is taking steps to use robotics to improve customer service delivery, most notably in its burgeoning fintech industry. The Ministry of Finance has adopted robotics to help increase productivity and reduce costs. Kuwaiti Financial House (KFH) Bahrain used the first robotic assistant for loan applications. The robot assistant handles customer loan applications and autonomously creates credit reports for applicants.

Additionally, AI is needed in the implementation of smart cities. The Telecommunication Regulatory Authority (TRA) implemented many smart city initiatives, such as smart traffic lights, a vehicle traffic control system that combines traditional traffic lights with an array of sensors and artificial intelligence technologies, to manage traffic.

Internet of Things (IoT)

IoT technology supports decision makers in banks by finding the right solutions, thereby improving their productivity. IoT helps countries' progress by connecting local devices to multiple devices, thereby helping employees provide a quicker response to customers and opening up new streams of revenue and improving efficiencies and services.

Banks are becoming more efficient by implementing IoT related device. They have the ability to track processes carried out by customers through wearable devices; employees are able to gather the needed data easily which will refine and enrich their tasks and practices to advanced levels of proof and quality.

While this technology has been fully tested in the financial industry, some businesses in the Middle East have had early success with IoT technology in the fields of education, energy, environmental management, medical services, open data, smart buildings, and advanced manufacturing and it is expected to realise its full potential in the future years.

Improved Efficiency, Safety and Security, Enhanced Asset Management, Real-Time Statistics, Cost Optimization, and Improved Customer Services are just a few of the primary benefits that IoT adopting companies have received.

For example, Bahrain was the first Middle Eastern country to issue standards for IoT connectivity and support the use of the frequency band for IoT systems within international mobile communications systems. It is also among a few Middle Eastern countries to contribute to an International Telecommunication Union proposal for new working document to harmonize the use of the IMT spectrum for narrow-band IoT applications.

In the third quarter of 2021, the first Bahraini satellite was launched to the International Space Station. The satellite will be used to help implemented projects related to IoT monitoring of gas emissions from factories, utilising AI technologies and their applications in the field of remote sensing.

5G Technology

5G technology is poised to accelerate financial institutions' digitization efforts and moves to double down on mobile.

For example, the increased speed made possible by 5G could allow users to make transactions much faster and more reliably. In July 2021, Verizon Business and Mastercard announced a partnership to develop a range of 5G-enabled services, including Mastercard's Tap on Phone mobile point of sale product, autonomous checkout technologies for retail stores, and a mobile-first bill paying service, among other initiatives.

5G connectivity could also allow wearable devices to share biometric data with financial services to authenticate user identity instantly and accurately. This will cut down the time it takes to onboard new customers, approve loans, and more. On the back end, fraud detection tools will have access to more data and will be able to work more quickly

The introduction of 5G is an important part of the digital transformation process. Saudi Arabia, Qatar, the United Arab Emirates, and Bahrain have all invested heavily in 5G implementation. According to Opensignal research, the Saudi Arabian 5G network had the fastest average download speed in the world.

5G technology promises download speeds hundreds of times faster, expanded bandwidth, and reduced latency, enabling technologies such as telesurgery and the continued expansion of the Internet of Things (IoT).5G can connect a greater number of devices at faster speeds than ever before, this means faster data connectivity, less lag, and a significant shift in the way we live, work, and play.

Cloud Computing

The finance industry was quick to adopt cloud computing, with many institutions and service firms realizing its many benefits. Although the financial sector has gradually integrated cloud computing into their business processes, it still has a long way to go.

The Kingdom of Bahrain is a pioneer in the eGovernment field and was among the first in the Middle East to adopt a government-wide digitisation program. This reflects Bahrain's commitment to modernising its government ICT capabilities and leading by example.

By adopting cloud computing services, the government has reduced financial operational costs, increased security and productivity, and developed excellent public services.

Bahrain's forward-thinking vision for data and cloud computing lead to the Cloud-First policy, which provides a clear road map and guidance for adopting cloud technology at the public sector level. Under this policy, government and financial agencies are obliged to consider the adoption of Cloud Computing solutions as an integral part of their IT plans and processes.

Cybersecurity

As financial organisations increase their reliance on IT through rapid digital transformations, the threat of cyberattack becomes more likely, and the global community must cooperate to protect it. It is not just western countries such as the US and the UK that are being targeted by hackers, as the rapidly developed and wealthy nations of the Middle East become targets of both politically and financially-driven attacks.

Traditionally, the Middle East has never been a significant target for cyberattacks. But in recent times, rapid digitalisation in countries like the United Arab Emirates (UAE), Saudi Arabia has triggered the number of connected devices, opening new gateways for cyberattacks.

The Middle East region is moving quickly to adopt transformative digital technologies, through the increasing penetration of the internet, adoption of IoT, and cloud, among others, to enable economic diversification. Thus, the region has witnessed a healthy adoption of cybersecurity solutions for these digital platforms to avoid the increasing complex number of threats.

The massive use of IoT will make room for many potential cyberattacks, which is expected to necessitate the requirement for cybersecurity solutions and services.

The governments in Middle Eastern countries are taking up various initiatives, such as Dubai Internet City (DIC), and the KSA Vision 2030, both with the same motive of becoming fully digitally connected right from smart buildings, financial industries and smart transportation to smart cities. Hence, these initiatives are expected to be lucrative opportunities for Middle East cybersecurity market vendors.

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Saturday, 04 February 2023