Banks, remittance houses at forefront of blockchain use cases in UAE
Blockchain technology will soon transform business operations in several sectors, according to experts who spoke at the recent Arabian Business StartUp Academy.
Osama Al Rahma, vice chairman of Foreign Exchange & Remittance Group and CEO of Al Fardan Exchange told the audience: “Blockchain can change the whole way we are doing remittances. This is a $630 billion a year industry with an annual growth of seven percent. But to do cross border payments it’s very complicated process. With blockchain it would be a simple transaction-based settlement which is a revolutionary way of looking at things.”
Al Rahma said that Al Fardan was also working with Abu Dhabi Global Market [ADGM] and various UAE banks on an “EKYC” project to verify customers.
“A vital focus for the banking and finance sector is the ‘know your customer’ [KYC] process. If we were to start with a unique personal digital identity and a secure blockchain database then this would also allow people to easily move from one bank to another without needing to resubmit their documentation. Plus we could allow customers to go online in a much more secure way.”
Banks are also looking at various use cases for blockchain, according to Hicham El Khaoudy, head of global transaction banking sales & services at Abu Dhabi Islamic Bank.
“We have a strong view that blockchain will change UAE real estate. For example, will we need escrow accounts for holding developer funds? Maybe yes maybe no. So how are we adapting to this? What kind of solutions are we offering to developers and our clients to deal with this?”
El Khaoudy also said that blockchain could unlock financing for small businesses. “One obvious way is issuing finance based on a company’s invoices. At the moment it is difficult to check if there has been any double accounting. A blockchain ledger could ensure that they have only been invoiced only once.”
Jan Grabski, director of enterprise scaling at Consensys, said his blockchain software technology company has already worked on the successful implantation on a blockchain scheme with Emirates NBD. “If you're a customer of Emirates NBD your cheque book is registered on the blockchain.”
Tobias Young, head of hydrocarbons at Dubai Gold & Commodities Exchange and a member of the Global Blockchain Council of Dubai and the DMCC Blockchain working group, said the next step is for the government to lay out some legislative guidelines.
“The good thing is that the UAE government is open minded to adopting this technology. But it still needs to lay down the rules and regulations governing consumer protection - where is the money lying when I use a blockchain? Who was responsible when I do the remittance at any stage?
“We currently have different cross-border jurisdictions that look to these technologies in different ways.”