A consortium of three Bahraini banks will establish a company dedicated to research & development in the sharia-compliant fintech sector as the Arabian Gulf state seeks to position itself as a leader in financial technology.
KFH Bahrain, a unit of the sharia-compliant Kuwait Finance House, Islamic lender Al Baraka Banking Group and Bahrain Development Bank said on Tuesday they will set up Algo Bahrain, which is yet to be fully incorporated. The company is expected to announce the appointment of its chief executive and management board in two weeks’ time.
Headquartered in Bahrain, it will aim to support the regional Islamic banking sector by developing fintech products and other innovative, sharia-compliant banking solutions, before expanding to other emerging markets across the world.
“This is a strategic company we expect to bear fruit over the long term, as the best way to approach the fast-moving fintech industry and ensure Islamic banking stays ahead of the game,” said Abdulhakeem Al Khayyat, managing director and chief executive of KFH Bahrain during a press conference in Bahrain.
The first phase of its existence will be driven and financed by the three founding banks – which declined to give details of their investment – and eight more banks are expected to join the consortium in the second phase.
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Middle East fintech sector begins to stir
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“The real potential of the Islamic banking industry is easily three to four times more than where we stand today," said Mr Al Khayyat.
“With innovative business models and new revenue and cost structures, the industry should be eyeing an asset base of US$9 trillion within five years, compared to the current $2tn. Anything short would be failing our customers.”
The company's plan is to launch 15 new fintech products or platforms within the next five years. Already, six agreements have been signed in Europe and Singapore, through which companies would work to develop new fintech solutions under the Algo banner.
“We have set an ambitious agenda for ourselves. The combined strength of our market access, customers base and financial resources will make this happen,” Mr Al Khayyat said.
Algo's first initiative will be a "person-to-small-business" crowdfunding platform that will aim to fuel the growth of Bahrain's SME sector. The Central Bank of Bahrain has issued regulations for crowdfunding businesses as the sector gains in popularity.
Bahrain also wants to increase the contribution of SMEs to the national economy as it looks to raise GDP and lower public debt. Making technology-related financial services solutions available to start-ups is a key part of this, said Sattam Al Gosaibi, group chief executive of Bahrain Development Bank.
“Technology will change the face of so many industries and Bahrain is taking a lead in this with the establishment of the Bahrain ‘Fintech Bay’ [a new incubator for fintech start-ups,” he said.
“We see Algo as a collaborative initiative that seeks to leverage on Bahrain’s status as a fintech hub to extend technology-related banking solutions to the start-up and SME ecosystem.”
Bahrain-based Finocracy, an organisation that works alongside Islamic banks and financial institutions to implement fintech platforms, is advising on the set-up of Algo Bahrain.
"The banking sector as a whole lacks information and data, and we cannot expand without this," said Adnan Yousif, president and chief executive of Al Baraka Banking Group.
ADCC AFC Women’s Champions League Group A fixtures
October 3: v Wuhan Jiangda Women’s FC
October 6: v Hyundai Steel Red Angels Women’s FC
October 9: v Sabah FA
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
Zayed Sustainability Prize
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
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In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
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The biog
Marital status: Separated with two young daughters
Education: Master's degree from American Univeristy of Cairo
Favourite book: That Is How They Defeat Despair by Salwa Aladian
Favourite Motto: Their happiness is your happiness
Goal: For Nefsy to become his legacy long after he is gon
The years Ramadan fell in May
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Volvo ES90 Specs
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Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
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Rating: 1 out of 4
Running time: 81 minutes
Director: David Blue Garcia
Starring: Sarah Yarkin, Elsie Fisher, Mark Burnham
The biog
Family: wife, four children, 11 grandchildren, 16 great-grandchildren
Reads: Newspapers, historical, religious books and biographies
Education: High school in Thatta, a city now in Pakistan
Regrets: Not completing college in Karachi when universities were shut down following protests by freedom fighters for the British to quit India
Happiness: Work on creative ideas, you will also need ideals to make people happy
The specs
Engine: 3.8-litre, twin-turbo V8
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Power: 582bhp
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On sale: now
8 UAE companies helping families reduce their carbon footprint
Greenheart Organic Farms
This Dubai company was one of the country’s first organic farms, set up in 2012, and it now delivers a wide array of fruits and vegetables grown regionally or in the UAE, as well as other grocery items, to both Dubai and Abu Dhabi doorsteps.
www.greenheartuae.com
Modibodi
Founded in Australia, Modibodi is now in the UAE with waste-free, reusable underwear that eliminates the litter created by a woman’s monthly cycle, which adds up to approximately 136kgs of sanitary waste over a lifetime.
www.modibodi.ae
The Good Karma Co
From brushes made of plant fibres to eco-friendly storage solutions, this company has planet-friendly alternatives to almost everything we need, including tin foil and toothbrushes.
www.instagram.com/thegoodkarmaco
Re:told
One Dubai boutique, Re:told, is taking second-hand garments and selling them on at a fraction of the price, helping to cut back on the hundreds of thousands of tonnes of clothes thrown into landfills each year.
www.shopretold.com
Lush
Lush provides products such as shampoo and conditioner as package-free bars with reusable tins to store.
www.mena.lush.com
Bubble Bro
Offering filtered, still and sparkling water on tap, Bubble Bro is attempting to ensure we don’t produce plastic or glass waste. Founded in 2017 by Adel Abu-Aysha, the company is on track to exceeding its target of saving one million bottles by the end of the year.
www.bubble-bro.com
Coethical
This company offers refillable, eco-friendly home cleaning and hygiene products that are all biodegradable, free of chemicals and certifiably not tested on animals.
www.instagram.com/coethical
Eggs & Soldiers
This bricks-and-mortar shop and e-store, founded by a Dubai mum-of-four, is the place to go for all manner of family products – from reusable cloth diapers to organic skincare and sustainable toys.
www.eggsnsoldiers.com
