First Abu Dhabi Bank to launch crypto services

Reuters

• FAB will initially let customers use cryptocurrency for payments
• Identifying Web3 startups to develop financial services in the metaverse
• Bank’s chief tech officer said digital assets adoption is inevitability

First Abu Dhabi Bank plans to introduce cryptocurrency and digital asset offerings to its customers.

The move is part of a plan by the UAE’s biggest lender to implement Web3 technologies in its services to gain competitive advantage.

“We’re already working on a product paper looking at how to work with crypto and digital assets,” Srinivasan Sampath, chief technology officer at FAB, told AGBI.

“We’re getting ready to leverage Web3 along with digital assets. We’re at an advanced stage in terms of getting the approvals to initiate it. Initially, we’ll probably allow customers to use crypto to pay [for] or use some of our services.”

The Middle East and North Africa (Mena) region is the world’s fastest-growing cryptocurrency market, with the volume jumping 48 percent in the year to June 2022, according to blockchain researcher Chainalysis.

What is Web3?
Web3, or Web 3.0 as it is also known, is viewed as the next version of the internet. It decentralises data, meaning users (people) can own their data rather than big tech companies. People will be able to make safe transactions without having to seek permission from a third party such as a tech company or the government.

While Mena is one of the smallest crypto markets, its growth to $566 billion received in cryptocurrency between July 2021 and June 2022 shows adoption is rising rapidly.

Sampath was speaking on the sidelines of the launch of Hub71+ Digital Assets, a $2 billion initiative from Abu Dhabi’s tech ecosystem Hub71 to back Web3 startups in Mena.

Fabric, the research and development hub of FAB, is the anchor partner of the initiative, which includes digital asset exchanges and service providers like Binance, Midchains, Founders DAO, Mastercard and Amazon Web Services.

FAB has a market capitalisation of $41.50 billion. It will identify leading Web3 startups to help the bank develop financial services in the metaverse.

Sampath said the bank has already seen success working with startups in other tech sectors like data sciences and artificial intelligence (AI). 

FAB uses AI to power chatbots for customer service as well as to detect fraud and reduce fraud risk, he said. 

• First Abu Dhabi’s 2022 profit up 7% to ‘historic high’ of $3.65bn
• Opinion: Crypto will emerge stronger from recent challenges
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“Today 35-40 percent of customer calls have been contained from reaching agents because we’re working with AI-related fintechs who give us predictive behaviour experiences,” he said. 

Sampath added that although demand for digital asset services among FAB customers is currently modest, the bank is bullish on the technology.

“We want to be ready for when the spike comes. We’re putting down foundations while the demand is manageable,” he said.

Both bank staff and customers will need time to learn more about digital assets, but adoption of the technology is ultimately inevitable, Sampath said.

“First comes education, learning and creating awareness within the organisation, and then customer education.

“When a bank is offering digital assets, the customer should have trust especially when you’re reaching out to small and medium businesses and corporates.”

Abdul Aziz Al Ghurair, chairman of the UAE Banks Federation, warned last year that competition from fintechs poses a threat to the survival of banks unless they restructure their operating models.

Changpeng Zhao, CEO and co-founder of crypto giant Binance, has also said banks that fail to catch up with blockchain and decentralised finance technologies will have a “hard time in the future”.

However Deepak Mehra, head of investments at Commercial Bank of Dubai, has previously said he had not seen “any great demand” for digital assets from the bank’s customer base, and added that regulators should be concerned about the trillions of dollars lost in the cryptocurrency market.

He told a panel at Dubai International Financial Centre’s Fintech Week in 2022 that cryptocurrencies are unlikely to ever become currencies.

Hub71+ Digital Assets, which is backed by the Abu Dhabi government and sovereign wealth fund Mubadala Investment Company, said its objective is to support the UAE Digital Economy Strategy, which aims to increase the contribution of the country’s digital economy.