CASHLESS SOCIETY?

Saudi Arabia 2019-2020 | FINANCE | VIP INTERVIEW

TBY talks to Bashar Khalil Baidas, CEO & Co-founder of Digital Cash International Company (DCI), on the Saudi banking sector, shifting from a cash-based society, and Fintech developments.

How was DCI established, and what payment solutions have you developed?

DCI started in 2015, when we were working with the Central Bank of Jordan on various payment initiatives. At the time, DCI was attending the Digital Transformation Committee meetings by invitation from Central bank of Jordan. We attended workshops with WTO, the Central Bank of Jordan, representatives of the German government, and other entities. The main focus was the financial inclusion for Jordan including helping the refugees in Jordan with a low-cost remittance solution. That is where DCI started, and we decided to create our own platform because financial inclusion was not our type of software, and it changes rapidly. We did not want to depend on someone else for the technology because then we lose our agility.

How did DCI enter the Saudi market?

DCI is the name of the Saudi company who was formed to be the vehicle to sell the Digital Solution in KSA. DCI started its activities in the Saudi market in partnership with the Alsubeaei family, the major shareholders of Albilad Bank, among many other business interests, and other banks outside the Kingdom. As bankers, they knew the challenges facing the banking industry and were convinced that digital money was the future. Thus, the partnership made sense, and we transferred our technology to Saudi Arabia and nationalized it. It was truly the biggest catalyst of our success. We signed a major agreement with Saudi Post and received two licenses from the Saudi Arabian Monetary Authority (SAMA) with the cooperation of our partner, the Arab National Bank.

What services do you offer under your agreement with Saudi Post?

There are two offerings essentially. First, we empower SMEs to be part of the SADAD payment network. SMEs need to be sophisticated in term of staffing and infrastructure to integrate with SADAD, so they will never be able to be part of this system on their own. Through our technology, DCI created an aggregation cloud (AC) platform whereby we can aggregate bills from SMEs, send these to our cloud, and load them onto SADAD. SMEs can use this platform through simple tools like our portal that businesses of their size are able to handle. We inform our SME' clients through various digital means when bills have been issued for them. The National Electronic Bill Presentment and Payment System (EBPP) is a significant factor for the economy because it accelerates the payment process, allowing companies to inject there money into new business. This is even more important for SMEs because they are more cash dependent than large businesses. Our second offering is an e-wallet or digital wallet that uses pre-paid cards supplied by our partner bank. This allows customers to make payments, personal transfers, and international remittances through approved networks, such as Tele Money and MoneyGram. Using our system, we have totally eliminated the need for a network of costly physical over-the-counter money transfer offices. This means we can still have a healthy margin while lowering costs for our customers.

What is your experience and perspective on SAMA's more open and evolving approach to licensing of financial players here?

In our case, the licenses were actually issued to Saudi Post based on DCI's technology, though we led the issuing process, and our name was on the request for approval. SAMA is evolving, though it is strict in the anti-money laundering (AML) and know your customer (KYC) areas, and we understand why. SAMA has a tough mission because it wants to promote agility and digitization, but at the same time does not want to compromise on the AML and KYC rules. Digital solutions are vulnerable to hacking, and SAMA wants to make sure those solutions provided to the market are low risk to protect consumers and the market. If we look at all these elements and considerations, we can see SAMA is doing a great job. It is truly pushing for a digital market.

How do you see this progress in a regional context?

In our experience, Saudi is in the first group, but not number one. In Egypt and Jordan, the central banks are doing extra work in their regulations because they want and need to create more financial inclusion to their citizens. In Saudi Arabia and the GCC in general, financial inclusion is already more than 80%. Most people have bank accounts and access to financial services. At SAMA, the current focus is on digital inclusion, rather than financial inclusion because more than 80% of transactions in Saudi are still cash based.

How does DCI plan to grow its business in the coming years?

DCI is currently introducing a specialized marketplace just for e-commerce promotions for its regular clients. We are signing with the big merchants and retailers, who will use our digital promotion tools, and we will report back to them on the demography of their users and where they saw their advertising. It is vital information for merchants and retailers to know the conversion rate between promotions and actual sales. This marketplace will have some unique features never seen before. We are a completely cashless ecosystem from end to end. If we had not addressed all the different stakeholders in the cash system, we would not have succeeded. This is why through its platform DCI is addressing merchants, retailers, SAMA, banks, and consumers. We want to show the market that one can build many offerings on our platform, for example, a specialized marketplace, digital promotions, or connections with Uber or other third parties. And we are cooperating with banks, not competing with them, in providing these solutions. Retailers have to react to e-commerce, as do banks; Banks will not disappear, though they must address the Fintech rush.