COVID-19 – The UAE Central Bank recently more than doubled the size of the stimulus package for the economy, to deal with the current crisis, while also allowing banks and finance companies to extend the deferment of both principal and interest repayments until the end of the year.
The reserve requirement for demand deposit has also been halved, from 14 to 7 per cent.
This was stated by Mahmood Ahmadu, Chairman of Fintech Solution, during an exclusive interview with Gulf Today, adding that the emphasis is on increasing liquidity in the financial sector and we strongly believe that agile solutions, such as the ones Fintech companies are facilitating, will play a critical role in the expanding the flow of this influx of capital, throughout the entire economy.
Talking about the local market, Ahmadu underscored the positive impact that the ease of money transfer, currency exchange and P2P lending, which Fintech facilitates, is likely to have in the wake of the UAE central bank’s sizable Covid-19 stimulus package.
In contrast to what has been the norm for decades in developed economies, a huge section of the developing world’s population is still underserved by traditional banking mechanisms, with the recent Covid- 19 crisis acting as a dark reminder of the ramification of this disparity. Although great strides have been made in this regard in recent years – particularly in India, South East Asia, Brazil and some other South American nations – universal global financial inclusion remains an unattained goal.
In this context, the case for Fintech solutions that facilitate electronic transfer of funds, provide basic insurance cover, and extend micro loan facilities, is compelling. For instance, mobile banking, crowdfunding and P2P lending, make it possible for rural innovators and entrepreneurs, in the remotest of areas, to establish small community oriented enterprises. Skilled as well as unskilled workers are able to look for more lucrative employment, further away from home, empowered by quick and easy money transfers to their dependants.
According to the 2017 Global Findex Database issued by the World Bank in April 2018 – which is the most recent version of this report – marginally over two-thirds of the population in the MENA region are unbanked. More than 60% of the UAE’s current working population is outside the traditional banking system because such institutions find it difficult to work with customers earning less than Dh 5,000 per month.
The UAE’s large low income expatriate worker population sends regular remittances to their countries of origin, and Fintech is emerging as the best avenue to service their needs. Ahmadu, Chairman of Fintech solution provider Innovate 1 Pay – which has operations in 24 different nations and trading in over 60 – spoke about some of the advantages Fintech solutions have over traditional banking, in servicing some of these niche needs for the unbanked and marginalised communities.
“Expat remittances from the UAE were around Dh165 billion in 2019”, said Ahmadu. “These funds stimulate considerable economic activity in the worker’s home countries, so easing this process goes beyond simply facilitating the individual. What’s also significant is that, in recent years, a greater proportion of these funds have been transferred through exchange houses and Fintech solutions, as compared to traditional banking channels”.
“These services are even more significant currently, given the huge economic disruption that the Covid-19 pandemic has unleashed. The infusion of these remittances can be the difference between resilience, and the total collapse of a remote community in the current situation, literally a matter of life and death”, he added.
Continue To Read From Source – https://www.gulftoday.ae/