Emerging Tech in Streamlining Middle Eastern Businesses

Kokila Alagh: Founder of KARM Legal, Member of MENA Fintech Board, Discusses Role of Emerging Tech in Streamlining Middle Eastern Businesses

Karm Legal Advisers, our UAE associate firm, has been nominated for Middle East Law Firm of the Year by the International Financial Law Review. Karm specialises in technology and emerging markets law and has successfully grown over the last two years, having offices in Dubai and Abu Dhabi but representing clients across the MENA region, including the Arab Monetary Fund.

Congratulations to all of the team at Karm for their dedication, innovation and hard work.

Here is an article on recent issues of relevance to the region written by Senior Partner of Karm, Kokila Alagh.


Digital banking has become a popular choice for consumers, globally. How has this trend picked up in the UAE and in the MENA region, in general?

The digitalization of banking and financial services have picked up significantly in the UAE and in the MENA region. Around 30% of the MENA region’s Fintech firms are based in the UAE. The country has emerged as the leading startup hub for this sector.

It is important to note that the paradigm shift from traditional to digital banking has been gradual and a result of a combination of factors. Technology is dynamically evolving and is driven by customers’ changing preferences and expectations. Moreover, the competition from Fintech start-ups and changing regulations have forced banks around the world to integrate technology solutions into their business models.

One of the most important aspects of Fintech, in the context of digital banking, is the importance of a robust Digital ID and KYC verification system. A secure digital ID provides easy engagement through every channel and makes customer-identification efficient and possible. This allows businesses to onboard customers efficiently and provide customers with instant financial services.

To provide a few examples, Abu Dhabi Islamic Bank (ADIB) partnered with Fidor Bank to launch the Middle East’s first community-based digital bank; Emirates NBD (ENBD) launched Liv., a millennials digital banking proposition; Commercial Bank of Dubai launched CBD NOW, targeting the digitally connected customers with a mobile proposition, and Mashreq Bank launched Mashreq Neo, its full-service digital bank.

Besides the UAE, Saudi Arabia too has emerged as a front-runner in digital banking. The Kingdom has become one of the top digital banking markets in MENA, with more than three quarters of banking customers using online or mobile apps. The Saudi Arabian Monetary Authority (SAMA) recently created a regulatory sandbox and has managed to attract local and international Fintech companies to provide innovative financial services to Saudi markets.

Fintech lending solutions and marketplaces have been launched throughout the world, including the Middle East. But it seems that many lenders, especially smaller or less established peer to peer lenders are struggling to maintain operations due to COVID-19. What can this Fintech segment do to survive during these challenging times?

 At this time, the most immediate concern is navigating through this uncertainty. Business across the financial and technology sectors have switched to extreme crisis management mode which has led to companies securing their capital and funding from investors and lenders.

Companies are implementing cost-saving measures, including workforce reduction. In this sector, since majority of revenue is generated based on transactions and volumes, a priority strategy right now is making sure that as many expenses as possible are variable and fixed expenses are minimized.

We, at KARM, understand the challenges faced by Fintech SMEs or start-ups especially in these unprecedented times. We have launched our start-up manual that outlines the essential elements that start-ups and budding entrepreneurs should focus on before entering into the arena of competitive business.

The Coronavirus has accelerated the shift towards digital platforms and services. What are the main companies in the UAE that could potentially lead to a nationwide and region-wide digital transformation?

Some of the companies in the UAE region that are paving the shift towards digitalization include Telr, Beehive, Souqalmal, and Eureeca. The services of these companies range from payment services, HR, robo wealth advisors to peer lending and crowdfunding. Beehive, based in Dubai, is the first peer to peer lending platform in the MENA region. Beehive shows huge potential as it caters to SMEs and provides affordable finance to them through online platforms.

Another company, Eureeca, launched in Dubai in 2013 and operates as an equity crowdfunding platform and provides high-yield potential investment opportunities to its investor network which includes casual and angel investors and also some institutional firms. Outside of the UAE, big waves are also being made in terms of digitalization, such as FAWRY which is an Egypt-based digital transformation and e-payments platform that has recently reached a market cap of over $1 billion.

You’ve mentioned that you are a board member at the MENA Fintech Association. Please tell us about your role with the organization and why it’s important.

I think that the MENA Fintech Association (MFTA) is a one-of-its-kind organization that brings together startups and entrepreneurs, corporates and financial institutions, professionals & academia, regulators & investors. Our firm KARM Legal is the founding member of the organization and I am in charge of the policy and governance vertical.

Under the initiatives taken by MFTA, the Association along with KARM has released “Regulations Simplified,” a publication for simplifying the digital assets framework provided by the Abu Dhabi Global Market, UAE for the industry.

KARM, through MFTA, has also undertaken the drafting of policy and regulatory guidelines for the ambassadors and members of the Regional Fintech Working Group of the Arab Monetary Fund on “Cyber Resilience Oversight Guidelines for the Arab Countries, Concerning Financial Market Infrastructures” and also “Digital Identity and e-KYC Guidelines for the Arab Countries.”

From the beginning, the aim of the organization has been to bring together the community to have discussions about the development of Fintech and other forms of emerging technologies.

You’re the Founder at KARM Legal Consultants. Please tell us about this role and how it complements your other professional activities.

KARM is my third venture in the region. I have founded and have been a managing partner of two full-service law firms in the past. KARM was founded with the idea of being the bridge between the start-ups/SMEs and conglomerates and the regulators in blockchain, Fintech, data protection, open banking, cybersecurity, robo advisory, general technology space.

With KARM I have tried to build a team of lawyers who are willing to look at law and legal solutions unconventionally. As emerging tech needs the support of strong regulations, we try our best to become enablers of a regulated but conducive environment for technology. With this role, not only have I had a chance to deal with some breakthrough projects, but to also witness and support the evolving role of a regulator. In addition to our practice of servicing private clients, we have been very actively involved with policy-making in the MENA region.

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