Abdulla Almoayed, founder and chief executive of Tarabut Gateway, says open banking will elevate customer experience in the financial industry. Photo: Tarabut Gateway
Abdulla Almoayed, founder and chief executive of Tarabut Gateway, says open banking will elevate customer experience in the financial industry. Photo: Tarabut Gateway
Abdulla Almoayed, founder and chief executive of Tarabut Gateway, says open banking will elevate customer experience in the financial industry. Photo: Tarabut Gateway
Abdulla Almoayed, founder and chief executive of Tarabut Gateway, says open banking will elevate customer experience in the financial industry. Photo: Tarabut Gateway

Business

Banking

Open banking platform Tarabut Gateway secures DIFC regulator's licence

The FinTech is licensed to provide money services in and from the DIFC

Alkesh Sharma
Alkesh Sharma

April 21, 2022

  • English
  • Arabic

Open banking platform Tarabut Gateway has secured a licence by the Dubai Financial Services Authority (DFSA) to provide money services in and from the Dubai International Financial Centre.

It marks the first time the DFSA — the independent regulator of financial services in the DIFC — has authorised a company to provide account information services and payment initiation services activities.

“There is a huge potential for open banking across the UAE and the region, and it is the commitment from regulators and authorities that helps companies like ours take those initial steps,” Abdulla Almoayed, founder and chief executive of Tarabut Gateway, said in a statement on Thursday.

“We look forward to working in close collaboration with DIFC to drive innovation in financial services,” he added.

Mr Almoayed started Tarabut Gateway in 2017 to create an open banking platform, using Application Programming Interfacing, or APIs, to allow banking systems to integrate with each other and with the growing band of regional FinTech companies.

An open banking platform gives a customer the ability to access accounts from different banks, credit card providers and other financial services companies in one place, allowing them to instantly transfer payments between several accounts.

Tarabut Gateway provides the software to facilitate this, and charges the banks to use it under a "software as a service model".

Regulators across the region are warming up to the potential benefits of open banking. Abu Dhabi Global Market published its framework for open banking last April.

Open banking enables more choice and efficiency for customers as well as more product innovation for financial institutions, said Salmaan Jaffery, chief business development officer at the DIFC.

“Attracting leading FinTech companies is in line with our strategy to create a global innovation ecosystem in Dubai that can contribute to shaping and developing the future of finance,” Mr Jaffery said.

Tarabut Gateway, which has partnerships with multiple banks, financial institutions and FinTech companies across the region, raised $13 million in a seed funding round last February, led by Berlin-based venture capital firm Target Global. It was followed by another $12m in a pre-Series A led funding round by Tiger Global.

With offices across Bahrain and the UAE, Tarabut Gateway went live with its API infrastructure in December 2019.

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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.”

Red flags
  • Promises of high, fixed or 'guaranteed' returns.
  • Unregulated structured products or complex investments often used to bypass traditional safeguards.
  • Lack of clear information, vague language, no access to audited financials.
  • Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
  • Hard-selling tactics - creating urgency, offering 'exclusive' deals.

Courtesy: Carol Glynn, founder of Conscious Finance Coaching

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Updated: April 21, 2022, 4:05 PM
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