Jorge Camarate is a partner with Strategy& and the leader of the firm’s Financial Services practice in the Middle East. We sat down with the UAE-based leader to discuss some of the trends sweeping through the sector, the growing impact of emerging technologies, and why the sector remains top of mind for new talent.
The financial services sector is in a state of flux. What are some of the main trends shaping the future of the industry?
There are three major trends: bank resilience, compliance, and innovation.
For all the predictions about how banks were on their way out, they have persisted. Banks are resilient. They possess strong customer relationships, regulation makes them stable, governments support them, and they play a role in the real economy.
Technology challengers have failed to disrupt financial services as promised. In periods of financial stress, banks benefit from being long-established compared to technology upstarts. Banking partnerships with companies in other sectors such as retail and telecom have not changed the sector.
Compliance, an issue rarely in the headlines, will be a significant trend. Middle East governments want technological change and innovation, but they also want financial services to be sound and fully compliant with national, regional, and international rules.
Innovation will be a major trend in part because of pressure from customers and governments. Customers expect digital convergence among sectors. It is particularly important that financial services respond to the rise of e-commerce, which has been propelled by the Covid-19 pandemic. Customers want hassle-free payment solutions. To do so, providers need to digitize and modernize their infrastructure and customer service.
Governments are important because they are encouraging technological change as part of the region’s economic transformation. Regulation assists by allowing for the development of financial technology (fintech), open banking and open finance, and new business models. Examples are Dubai already having a digital assets regulator, and Middle East central banks discussing digital currencies.
How are new technologies enabling financial institutions to rapidly deliver new services and operating models?
New technologies will have a significant impact on how banks operate, especially cloud computing, which is now mainstream, and artificial intelligence (AI), which is finding an increasing number of use cases.
Cloud computing helps banks to become more efficient and serve customers better. The arrival of large data centers in Saudi Arabia is an indication of how the cloud has become central to how enterprises operate in the region.
AI is similarly important. It can detect money laundering and fraud, it can enable operational improvements, and it can handle clients better.
These new technologies pose a challenge for banks because they now must master new capabilities on top of traditional capabilities such as analytics, relationships, and sales. Banks need to understand technology use cases so that they help them to do banking fundamentals better and offer distinct services to customers. The intrinsic nature of banking remains unchanged, banks act as intermediaries between depositors and borrowers, provide financial solutions, and manage risk.
Technology also matters to governments and regulators. There is considerable interest in blockchain and distributed ledger technology. Dubai and Abu Dhabi believe these technologies can contribute to the economy.
How do you see workplaces evolve in the financial services sector?
The workplace of the future will be characterized by a broader set of skills. There will be far more people with technological skills. Already, technology is playing a significant role in retail banking and in lending to small- and medium-sized enterprises, both growth areas in the Middle East.
Banks are aware of their need to have more people with technology skills. That explains the competition to buy regional technology firms – for example Al Rajhi purchased the largest tech firm in Saudi Arabia. Banks need more programmers and coders, especially as some banks prefer to develop solutions autonomously rather than rely on external vendors. Banks also need AI specialists, data scientists, and data analysts – skills in short supply in the Middle East.
Banks still need people with traditional skills. There is an enduring need to price risk. After all, the core of banking remains taking deposits and extending loans. Banks will always need actuaries, underwriters, and risk managers. These jobs are highly specialized, well paid, but not as fashionable as technology roles
These traditional and technology and traditional skills rely upon graduates with degrees in science, technology, engineering and maths (STEM), an educational area receiving more attention from Middle East governments.
To what extent is the financial services sector prepared to meet the evolving needs of their workforce?
Financial services are as well prepared as any other sector. There is a global shortage of people with technology skills. At present, every company is trying to hire the same people. Regionally there are not enough people with analytical skills.
The financial services sector recognizes the need for a broader skillset among its employees. That is why some banks are taking decisive moves to acquire talent through inorganic growth, such as by buying technology companies. Simultaneously, some firms are investing in building employee skills through training and education.
Still, training and education alone are not sufficient, particularly when it comes to technology talent. What these people are looking for is an open, innovative workplace culture. They do not want the kind of rigid culture that they associate with financial services. In response, banks are trying to change internal workplace culture. That will take time.
On a different topic: You’ve been active in the financial services sector for over a dozen years. Why should professionals choose a career in the financial services sector?
Financial services are interesting because they involve problems that are complex but not tangible. That is why people who like to work with complexity thrive in financial services. The ability to analyze accurately and quickly is critical. Growing areas in the region include insurance products and home loans, both of which demand employees who are analytically capable.
The growth of fintech in the GCC in particular should attract talent. Venture capital is flowing into fintech because of the potential for innovation. Fintech is the leading edge of finance right now, the place to be for those with technology skills and ambition. These young workers like the fast-paced, non-hierarchical workplace culture of the startup scene.
Another reason to join the sector is that it pays well, particularly in such fields as investment banking, commercial insurance, and asset management. Not all jobs require technological or analytical skills. There are lucrative opportunities for sales and relationship management.
Finally, what skillsets do you feel people need to succeed in the financial services sector?
Financial services contain many specialized branches, each requiring different skills. Broadly speaking there are three core skillsets: analytics, relationships, and technology.
Analytics involves actuarial, accounting, risk management, and economics skills. These skills are vital because the core of banking is analytical.
Relationships require so-called soft skills. These include the ability to sell, interpersonal skills, and customer relations. Money is an emotional subject, which is why predictive analytics have not made the inroads in financial services that they have in retail. People with strong relationships skills understand that emotive component of finance
Technology requires coding, programming, data science, and data analytics. These skills are not merely technical, there has to be an ability to apply technology solutions to use cases and solve problems for banks.
Pulling these skillsets together is a form of art. Successful banks are financially sound, they know how to interact with customers, and they understand how technology can strengthen all aspects of what they do.
About Jorge Camarate
Jorge Camarate is a partner with Strategy& and the leader of the firm’s Financial services practice in the Middle East. He has over 15 years of strategy consulting experience in business strategy and operating model design for universal banks and life insurance companies.
Camarate specializes in retail and commercial banking, private banking and wealth management, and life insurance. He has advised clients in the Middle East, South Africa, the United Kingdom, Continental Europe, Latin America, and Australia. He is an avid thought leader, and has published numerous reports.
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