Joel van Dusen on how Mashreq is driving innovation in banking

Banks in the GCC region are on the brink of transformational change. The industry is evolving rapidly to meet the demands of both new and existing customers who seek a more personalised banking experience through digital channels.

Many bank executives have come to terms with the fact that digitalisation is not just a nice-to-have, but it’s essential for enhancing customer experience and reducing costs. The ability to process and analyse massive amounts of data, the enabling power of the cloud, and the swift advancement of artificial intelligence (AI) are unlocking a multitude of opportunities for innovation and improvement, making banking more efficient and customer-focused than ever before.

In an exclusive interview with Gulf Business, van Dusen, shares insights into the bank’s strategic partnerships with fintechs, how the bank is leveraging innovative technologies and its commitment to sustainable finance.

Q. Tell us how Mashreq is leveraging digital technologies such as the cloud and AI to drive innovation and transformation across its portfolio.

We’ve always been innovators in digital banking, not just participating but driving change. Many of Mashreq’s initiatives have catalysed industry advancements, especially in our region. A unique aspect of our approach is our wholesale digital studio, which is rare compared to the more common retail-focused studios developing apps and digital banks.

Mashreq has been running AI models for two to three years, with 15 models currently in operation. While the advent of generative AI (GenAI) in the past year and a half has introduced new types of models, we have long been using machine learning (ML) and other AI technologies.

One of our key innovations is the Pulse system, a front portal for RMS that provides Relationship Managers (RMs) with tailored information, including credit alerts, compliance alerts, news articles, and client data. This system consolidates and replaces 22 different systems previously used by bankers.

We are also enhancing client journeys through digitisation, streamlining know-your-customer (KYC) and onboarding processes. By using APIs to access government services, we collect data directly, reducing the need for clients to provide it themselves, which increases efficiency and improves the client experience.

Q. How has the bank’s collaboration with fintechs evolved over the years to revolutionise the customer experience for corporate clients?

Fintech companies have been around for a while, and forward-thinking banks must integrate their innovative solutions. Rather than viewing fintechs as competition, we see them as partners. No bank, regardless of size, can succeed alone. Building relationships with fintechs, both regional and global, enables us to offer new services and enhance the client experience.

A key step in our fintech integration is becoming a founding member of the DIFC Launchpad, part of the DIFC Innovation Hub. We launched Neo Ventures, a DIFC company that serves as our entry point into the fintech space.

Neo Ventures acts as a sandbox for collaborating with fintechs, brainstorming ideas, and cultivating fintech investments. Our board has approved a fintech fund, allowing us to invest in strategically important fintechs that can be integrated into our business.

Recently, we signed an MoU with a fintech to bring tokenised carbon credits to the market after COP28 as the UAE seeks to become the region’s hub for carbon credit trading. Our partnership with the fintech firm allows us to enter carbon credit trading without setting up our own department. Mashreq will offer our corporate clients an easy way to purchase tokenised carbon credits through an app, making it accessible even for smaller purchases.

We are working with a Turkish fintech firm to bring a unique ability to securitise receivables and create programs that will be the first of their kind in the UAE. Furthermore, we are also collaborating with a homegrown startup called Newbridge, which is disrupting the loan syndication and agency marketplace.

Our digital studio is innovating new digital assets that we can also sell to fintechs. For instance, our trade asset sell-down AI model is something we are planning to partner with a fintech firm called TradeStream. The mutual exchange of innovation with startups helps both sides and will only continue to grow, fostering new ecosystems like banking as a service.

Q. How do banks manage the complexities of integrating fintech solutions, including regulatory compliance and data security?

The internal and external regulatory approvals, along with security and data privacy, are some of the most challenging and crucial aspects of partnering with fintechs. Ensuring solutions are appropriate for clients is paramount, which is why we established Neo Ventures to start the process with sandbox testing.

Operating in five GCC countries, as well as Egypt and India, adds complexity. Our unique position of working with corporates across these markets means any fintech solution must comply with diverse regulatory environments. We manage this complexity through a system that tests solutions in a sandbox and subjects them to rigorous regulatory and compliance checks.

Using modular architecture with microservices and specific APIs helps limit risk and simplifies testing. Technological advancements have enabled us to maintain strict regulatory control in markets where cloud solutions are not permitted and on-premises solutions are required.

Q. How is Mashreq leveraging fintech solutions and innovative technologies to support its goal of facilitating Dhs110bn in sustainable finance by 2030?

Sustainable finance is relatively new to the region, but activities are picking up. Clients who have embraced environmental, social, and governance (ESG) principles and financing tools to meet their KPIs have responded favourably.

We have committed around $30bn (Dhs110bn) and are on track to meet our 2030 target. We will soon announce a significant sustainable finance deal worth more than $3bn.

Mashreq has achieved several firsts in the Middle East, including a sustainable finance transaction for Bapco Energies, which contributes over 80 per cent of Bahrain’s emissions. We helped them define their emission reduction KPIs and linked a $2bn financing to those targets.

On the fintech front, fintechs will play a role in areas like carbon credit trading and potentially green mortgages on the retail side. While sustainable finance options are currently limited in the region, fintechs are developing them, and we plan to integrate these solutions as they become available.

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