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Banks, Baskets and Fintech

Saxo Bank A/S, an online brokerage bank headquartered in Copenhagen, is at the forefront of advanced financial technology, and is looking to strengthen its presence in the Middle East.

In an interview with World Business Times,  we spoke with Saxo Bank’s new Senior Executive Officer of its UAE subsidiary, Saxo Bank (Dubai) Ltd., Mario Camara, about his outlook on the regional banking sector and the recent trend in the UAE toward consolidation: “There is no question that the UAE is overbanked.  There are over 50 financial institutions across the emirates holding banking licenses.  Of those about half have ‘first floor’ savings and loans operations, which are low yield and expensive to maintain.  With a population of just over 9.3 million, of which less than 25% are bankable individuals, one infers that a lot of those first floor operations are being subsidised by their commercial, brokerage and investment desks.  Such ‘second floor’ operations thrive from infrastructure and large project investments, which are the norm when liquidity is abundant.  With lower oil prices, and therefore lower liquidity, mergers start to make sense to save on operating costs through economies of scale.  The trend toward consolidation is therefore perfectly logical but is likely to reach stasis in mid-2017 once the economy gains momentum.”

Mr. Camara’s thoughts are backed up with over 20 years of industry experience specialising in finance and regulatory law, a key reason for his Saxo Bank appointment.  We asked him how, in his view, can the UAE adjust to preserve its steady pace of growth and development when facing such a strong US Dollar: “If Trump stays true to his word by going on a spending spree to modernise the infrastructure of the US, the dollar will appreciate even more.  Such a rapid increase in the US national debt will cause runaway inflation.  Under such circumstances the Fed will be forced to increase interest rates, which will make the green back climb to even loftier heights.  That is if ‘The Donald’ keeps his word.  But let us assume that he does; what can the UAE do? Well there has been talk in the GCC for some time about de-pegging from the Dollar and going instead for a basket of currencies.  Now that the Renminbi has come of age and is market driven, it along with the Euro, the Swiss Franc and the recently self-battered British Pound can be the ingredients of a well-balanced currency basket which would prove quite helpful to the entire GCC economy.“

Referring to his strategy for the UAE, Mr. Camara is optimistic that Saxo Bank is positioned to deliver what regional investors want: “We are a bank but we see ourselves first and foremost as a fintech firm that specialises in providing instant electronic access to the international financial markets for medium-high and high net worth individuals at competitive prices.  For instance our recently launched fixed income trading facility will revolutionise the way corporate and government bonds are traded, bringing an under a minute ‘kill-or-fill’ model to a great asset class to invest when facing such moments of market uncertainty.”

As the UAE continues to embrace fintech and market diversification, Saxo bank’s platform, with Mr. Camara at the helm, can potentially give tech-savy UAE investors yet another competitive edge, whilst opening up valuable opportunities for Middle Eastern markets.