Mehdi Manaa, Chief Executive Officer of Buna, shares his views on the role of Buna the cross-border and multi-currency payment system in transforming the payments scene, empowering Arab economies and promoting regional integration.</em></p> In a Spotlight session for March’s Sibos, ‘Transforming a regional payment landscape’, Buna CEO Mehdi Manaa shared his thoughts on the positive impact of the cross-border payments system on participating banks in the Arab region and beyond with Joy Macknight, editor of The Banker. </p> Buna is a multi-currency payments market infrastructure, launched by the Arab Monetary Fund (AMF) last February 2020 to improve the speed, cost-effectiveness and transparency of cross-border payments flows in regional and key international currencies.</p> A key aim of the initiative, strongly supported by the region’s central banks, is to advance the growth and integration of Arab economies. To this end, Buna serves as a single-entry point to the region’s financial systems for global financial institutions, as well as a multi-currency and multi-instrument platform for local ones. </p> Announcing the launch, Buna said this “constitutes a major, tangible and irreversible step toward the empowerment and integration of Arab economies”. </p> “We can’t think about a well-functioning economy without the support of appropriate payment solutions,” Manaa told Macknight. “It’s a virtuous circle. Buna is supporting the economic growth of the region, and the economic growth of the region will support Buna.” </p> Manaa sees the cross-border payments challenges in the Arab region as having much in common with other regions. Diversity among countries’ national systems poses barriers almost everywhere, he said, with maybe the exception of Europe. </p> “Generally, we see important differences from one country to another within the same region. Some countries may have achieved very advanced payment solutions, regulatory frameworks and efficient market infrastructures, while others are in the middle or even the beginning of that journey,” he explained. </p> But all regions, even Europe, are still working towards the development of truly efficient cross-border payments solutions, he insisted. “Cross-border payment solutions are less efficient, more costly, less accessible than the solutions that exist at national level.”</p> Despite pursuing greater integration and efficiency, cross-border payments have not kept up with the evolving needs and practices of the end-user. </p> “Even advanced solutions are often a step behind the purpose of the payment,” he said. “Physical goods still move from one country to another at a quicker speed than the underlying digital payment. Addressing this challenge is one of the main objectives of Buna.”</p> As was seen globally, lockdown restrictions introduced in response to Covid-19 prompted an increase in e-commerce flows and digital payments in the Arab region, including the rapid development of contactless point-of-sale payment solutions in some countries. </p> “All these evolutions were expected, but they have been accelerated by the pandemic, with perhaps 5-10 years of change compressed into a single year,” said Manaa, noting the impact on consumer behaviour and business models. “There was need for a fast change and the payments industry was able to adapt and respond.”</p> The pandemic made Buna’s roll-out slightly slower than initially hoped, but it reinforced the rationale for the platform too. “Efficient market infrastructures have always been key to overcoming difficulties in the financial sector,” said Manaa. “It has always been instrumental in supporting economic recovery too. As we faced the pandemic, we realised we needed to double our efforts.”</p> In response to the challenge, Buna conducted a series of workshops to maintain the momentum and prepare banks for onboarding, while central banks and monetary authorities across the region showed their commitment by further encouraging their local markets to participate. </p> Fortunately, Buna’s launch plan was already designed for flexibility, once the technical platform was implemented, Buna first focused on onboarding currencies and then participants. </p> </figure> Buna has large ambitions and open programmes in terms of geography, currency and instruments” </p></blockquote> Mehdi Manaa, Chief Executive Officer of Buna</em> </p> </div></div> Always conceived as a cross-border system, Buna currently clears and settles interbank payments , commercial payments and consumer remittances. It will soon launch its instant payments solution and trade finance, securities settlement and ATM/ POS processing services will follow thereafter. Four currencies were onboarded in its first 12 months – Emirati dirham, Egyptian pound , Saudi riyal and US dollar – with the euro, the Jordanian dinar in the pipeline among others. More than 130 banks are in various stages of preparation, with approximately 90 currently onboarding, including some already fully operational. Manaa expects all to be live before the end of the year. </p> “Buna has large ambitions and open programmes in terms of geography, currency and instruments,” he said. </p> More efficient cross-border payments are also a priority for the G20 (Group of Twenty). To this end, the Financial Stability Board released a roadmap for the future of cross-border payment systems last October, in conjunction with the Committee on Payment and Market Infrastructures. The report flagged four common challenges – high cost, low speed, limited access and lack of transparency – and recommended future solutions be designed based on five key areas, supported by 19 building blocks. </p> The five areas of focus cover public-private sector collaboration, supervisory coordination, data quality and market practice, improving existing payment infrastructures and exploring the role of new ones. </p> Buna “ticks all the boxes” according to Manaa, including its strong element of public-private sector collaboration, its support for ISO 15022 and 20022 message standards, and its interoperability with existing platforms, currencies and instruments.</p> Manaa accepts that not all banks will immediately embrace Buna’s opportunities, noting that some business models are designed to address existing inefficiency across borders. “This is a transformation, for the benefit of the economies of the region, empowering them to increase integration. Business models that would benefit from integration will see a lot of value. But models based on existing fragmentation will have to adapt,” said Manaa. </p> The advantages of Buna extend to banks outside the region, “Offering a single access point to a broad region through a single market infrastructure, with efficiency, speed and low costs, is a huge change. For any trading partner, it makes cross-border payments and access to the region as simple as for a single country,” he said. </p> SWIFT & Buna</strong></p> As a payments market infrastructure that aims to serve the Arab world and beyond, reaching and connecting members in all these markets is essential. To do this, Buna is working with SWIFT, which is able to provide not only the reach that Buna needs, but also the highest security and availability. As Buna grows and continues to evolve its services, it will continue to work with SWIFT to enhance the value proposition of Buna’s payments system by enabling instant payments capabilities, ensuring SWIFT gpi compatibility and reducing the onboarding time for Buna participants.</p>