Finastra: Cryptocurrency to Surge in Popularity in 2022

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Financial services in the Middle East and North Africa (MENA) region is experiencing digitalisation on a wide scale, accelerated by the pandemic and shifts in consumer demands. A major trend to come out of this is the surge in popularity of cryptocurrency, which we expect to continue throughout 2022 and beyond. 

Marwan Abouzeid is Finastra’s Principal Solutions Consultant focusing on retail and SME banking solutions. Finastra currently serves over 8,600 financial institutions, providing the broadest, deepest software applications and connectivity to marketplaces, partners, and fintech’s through its open financial services platform.

Here, Marwan shares his thoughts on how cryptocurrency will surge in popularity in 2022. 

Marwan Abouzeid, Principal Solutions Consultant, FinastraMarwan Abouzeid, Principal Solutions Consultant, Finastra
Marwan Abouzeid, Principal Solutions Consultant, Finastra

Cryptocurrency has undergone a major evolution over the past 12 years. When Bitcoin was introduced in 2009, it was difficult to foresee how it would progress. There are now more than 6,500 different cryptocurrencies with great potential for continued growth. 

Governments and organisations in MENA are embracing blockchain and expanding its application across industries. The keenness to use blockchain and set up related platforms has played a critical role in propelling regional economies in the direction of cashless and paperless ecosystems.

Due to the increased level of transparency blockchain brings to processes, whether it’s a transaction or data storage, there is a growing urgency to harness its true potential. Several initiatives and efforts are being made to understand and leverage blockchain to benefit business growth. For example, the Bitcoin Fund recently became the first cryptocurrency fund to be listed on a major exchange, the Nasdaq Dubai.

The MENA region is gradually becoming a crypto capital, thanks to its progressive policies. Banks and financial institutions need to take advantage of this opportunity in 2022 and beyond.

An opportunity for financial institutions in the MENA region

Back in April 2018, the UAE government announced the Emirates Blockchain Strategy 2021, which aimed to move half of all government transactions to the blockchain by the end of 2021. Dubai’s Multi Commodities Center (DMCC) also opened a Crypto Center last year, to help enterprises gain a foothold in the blockchain and cryptography industries. 

However, cryptocurrency is still a relatively new notion in the region. Crypto regulations have been issued by jurisdictions such as ADGM (Abu Dhabi Global Market) and DIFC (Dubai International Financial Center), and the UAE’s central bank launched a virtual asset scheme last year. With international organisations stepping in, it is only a matter of time before virtual currency and blockchain technology enter mainstream transactions. The UAE for example has just signed a cooperation deal with Binance, a cryptocurrency exchange platform. Financial institutions need to act now to stay ahead of this trend.

When it comes to offering cryptocurrency services to customers, banks have options and a big opportunity to demonstrate that they understand their customer’s needs and are quick to respond to them. They can maintain custody of the assets themselves, integrate directly with cryptocurrency exchanges, or partner with fintechs that specialise in cryptocurrency.  Another route is partnering with a banking software provider, to integrate cryptocurrency within core banking systems for a richer and more seamless offering. 

What’s next for crypto?

In 2022, we can expect more volatility in the cryptocurrency markets. However, this is not necessarily indicative of a bubble that’s about to burst. While they tend to be more volatile than traditional currencies, cryptocurrencies have increasingly stabilised over the last few years and we expect them to continue doing so.  

Additionally, Government agencies in the UAE, Saudi Arabia and Egypt are now providing assistance in exploring multiple use cases for blockchain and cryptocurrency. Strong and regulated policies will be required to sustain its growth in the region.

It’s also important to remember that the digital currency landscape is evolving daily. Today the focus is on digital wallets, but the asset class is already expanding to include new products like cryptocurrency ETFs. Banks need to embrace and adopt technology, such as open APIs, that will allow them to integrate emerging products and advanced solutions seamlessly and efficiently. Platforms, such as Finastra’s open developer platform FusionFabric.cloud, help to orchestrate an ecosystem that facilitates such integrations and partnerships.

  • Polly is a journalist, content creator and general opinion holder from North Wales. She has written for a number of publications, usually hovering around the topics of fintech, tech, lifestyle and body positivity.

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