If we’re going to be big in fintech, we first need to embrace regtech and govtech, says World Bank’s Mohieldin: Arab governments and regulators need to catch up quickly if they’re going to keep pace with innovations in fintech, Mahmoud Mohieldin, senior vice president at the World Bank, said at the Arab Federation of Exchanges’ annual conference, which we attended yesterday. That means developing a tech foundation for regulatory processes in the financial industry, he said, while governments need to both put in place locally relevant policies while continuing to digitizing their economies, he said.

Reps from international bourses stress smart regulation to encourage more listings: Market regulators need to strike a balance between regulation and deregulation to maintain companies’ interest in listing on stock exchanges, panelists representing Nasdaq, the S&P, Dow Jones, and World Federation of Exchanges said during the conference. Meyer Frucher, vice chairman at Nasdaq Group, said stock exchanges can add value for companies through top-notch trading facilities and a broader range of services, which he said is instrumental to attracting businesses to the capital market despite the additional regulatory burden. Frucher warned against cases where regulators “get lazy” and fail to provide the right conditions.

That’s not to say regulation is the boogeyman: Relaxing regulatory requirements for companies seeking to list on stock exchanges is not necessarily the way to go when looking to prop up capital markets, CEO of the World Federation of Exchanges Nandini Sukumar said. Whichever way you slice the cake, companies that list are better regulated, more accountable, and more visible, Sukumar said, suggesting that increased disclosure requirements for unlisted companies could also be beneficial.

Are exchanges doing it right for SMEs? Supporting SMEs and bringing them into capital markets will only happen with the right support from policymakers, said EBRD’s head of equity capital markets Hannes Takacs. “There is interest from SMEs [to list] but they need someone to take them by the hand,” Takacs said. SMEs lack familiarity with capital markets and there’s not enough research available on the companies, making it difficult for investors to get transparency on the market. Regs are also currently based on a “one size fits all” mentality, which sometimes squeezes out SMEs.

Investors are “missing out on future IBMs” by not kicking the tires of small-ticket SMEs, Takacs said. This gap requires a new breed of informed investors who can take calculated risks and invest in high-growth, but high-risk, SMEs, added Rachana Bhusari, VP-SME at the National Stock Exchange of India. Regulators play a role in creating the right conditions that facilitate SMEs’ access to financing, but these companies must also understand that improved corporate governance as part of being a listed entity will open the door down the road for better financing options.

AI and fintech in the future: Artificial intelligence is set to change fintech and how banks and the non-bank financial industries operates, panelists agreed. On the one hand, AI will create more cost-effective channels for financial institutions to reach unbanked populations, said Chief Global Transaction & Digital Banking Officer at CIB Mohamed Farag said. On the other hand, AI and fintech will turn conventional financing into a dinosaur, added Ahmed Darwish, head of product at EFG Hermes’ valU. Those in the finance industry will thus need to find a way to add value to the system using AI or by otherwise creating an edge, said our friend Ahmed El Alfi, cofounder and chairman of Sawari Ventures.