The Innovators 2020: Middle East

ADCB promotes end-to-end connectivity via blockchain plat-forms as the route to resilience for trade in the MENA region.

Abu Dhabi Commercial Bank, this year’s Most Innovative Bank in the Middle East, is hoping that the combined global health and economic crisis will push more commercial activity onto blockchain platforms with end-to-end connectivity, including logistics and financing, arguing that this will help keep trade flowing and bring more transparency and efficiency to transactions.

“Most of the platforms and blockchain consortiums are working on the financing side of the trade transaction,” says Krishnakumar Duraiswamy, head of Trade Finance at ADCB, “and this is not enabling the buyer or seller to see the benefits of the technology and the efficiency of these platforms on managing trade flows.” ADCB is working with a group of providers to bring all parties together—not necessarily on the same platform, but with greater connectivity so that trade transactions can be handled more smoothly.

Several midsize corporates and commercial segment clients are already interested, says Duraiswamy. “As a first step to help them digitize the trade transaction, we have been able to onboard approximately 75% to 80% of our trade clients on our ProTrade platform [launched in 2010],” he says. “We are now working with clients as part of the next phase to get their buyers and suppliers on to the platform, so that end-to-end transactions can be completed within the platform.”

All-party connectivity will ensure smooth and efficient exchange of information, Duraiswamy argues. Meanwhile, greater acceptance of digitization as a result of the Covid-19 crisis should result in fewer paper transactions in trade.

ADCB’s drive to fulfill its vision for trade comes as it completes its three-way merger with Union National Bank and Al Hilal Bank, which finished consolidating their operations ahead of schedule on April 1, even with most teams working remotely. The merger was a remarkable achievement, given that the bank had to migrate four of its core banking systems into one over two years.

ADCB has also been encouraging wholesale business customers to adopt digital solutions for more than three years. From less than 30% of transactions digitized, it pushed acceptance to 91% by the end of last year.

This has required some cultural accommodation, says Jacek Kurantowicz, head of Cash Management at ADCB, since UAE companies still like using physical checks. “So we’ve digitized the acceptance of these checks,” he says. “The issuance can be done directly by the customer, who can print the check themselves, having agreed on the stationary, look and feel and security features of the check. They can print it in their office or order the printout from a printing company. We also provided them with an automated solution on the receivables side, so they can scan checks and upload them through the ADCB ProCash e-channel, which is integrated with the [United Arab Emirates] Central Bank’s image check-clearing system.”

E-signatures and instant payments are also gaining ground in the region, Kurantowicz says, arguing that just as digitizing trade finance helps the shift away from paper, greater speed and efficiencies will help the MENA region move away from its historical commitment to paper checks.