Al Fardan Exchange ties up with blockchain company Ripple for real-time remittances

Money transfer company Al Fardan Exchange is teaming up with US blockchain technology company Ripple to offer instant cross-border payments as exchange houses increasingly join forces with FinTechs to capture new customers and scale up their business offerings.

The partnership will allow Al Fardan's customers to remit money internationally in real time, the company said on Tuesday.

Al Fardan will join Ripple’s cloud-based global financial network, RippleNet Cloud, which allows financial institutions to move away from ageing and expensive legacy infrastructure and adopt the flexibility, speed and resilience of cloud computing without the burden of hardware management, it said.

“We are well into a digital future and payments powered by technology, which is becoming key in the region,” said Hasan Al Fardan, chief executive of Al Fardan Exchange.

“This partnership underscores our commitment to offer new channels and opportunities for people to remit money more securely, with more flexibility and convenience.”

Money exchange providers are increasingly partnering with FinTechs to cater to customers who now rely on the convenience of mobile apps to send money home rather than visit physical branches.

Remittances to poor and middle-income countries are projected to have grown 7.3 per cent to $589 billion in 2021, the World Bank said in November.

In GCC countries, the recovery of outward remittances was boosted by stronger oil prices and the resulting pick-up in economic activity, the Washington-based lender said at the time. Remittance flows increased by 9.7 per cent in the Mena region.

Remittances are projected to continue to grow by 2.6 per cent in 2022, according to the World Bank.

Meanwhile, outward personal remittances from the UAE increased 8.7 per cent, or by Dh3.6bn a year, in the second quarter of 2021, according to the Central Bank of the UAE.

Outward remittances through banks rose by Dh6.1bn while transfers through exchange houses dropped by Dh2.5bn.

“We are proud to partner … to leverage blockchain technology to revolutionise cross-border payments and the thriving payments industry in the UAE and the Middle East,” said Navin Gupta, managing director of RippleNet, South Asia and Mena.

The partnership will allow more customers to benefit from instant cross-border money transfer services through Al Fardan Exchange’s touchpoints, the company said.

“We will continue to tie up with FinTechs that offer inroads into brand new customer segments as we see our global processing and clearing capabilities allied with digital technologies, which will … lead to financial inclusion. We see this trend continuing as the UAE is positioning itself as a FinTech hub in the region,” Mr Al Fardan told The National in an interview in December.

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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.”

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When Saturday

Where Diriyah in Saudi Arabia

What time Qualifying takes place from 11.50am UAE time through until the Super Pole session, which is due to end at 12.55pm. The race, which will last for 45 minutes, starts at 4.05pm.

Who is competing There are 22 drivers, from 11 teams, on the grid, with each vehicle run solely on electronic power.

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