Bahrain is making a big bet on the future of banking. The kingdom’s sovereign wealth fund is teaming up with ARP Group to build a new bank around artificial intelligence and blockchain technology, aimed at institutions rather than everyday customers. Abdulla Kanoo and Abdulaziz Kanoo, Co Ceo and Co-Founders of ARP Digital, explain the gap they see for multi region corporates and what AI native banking means for clients. They also discuss why blockchain may fade into the background of banking, how their model differs from other digital banks, and why they started in Bahrain while treating the Gulf as one ecosystem.
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Inside Bahrain’s Plan for an AI Native Wholesale Bank Built for the Next Economic Actor
What problems are you trying to solve that today's banks are not?
There are a lot of high value, misunderstood corporates that struggle with transaction banking. They have multi jurisdictional setups and operate across multiple regions, and they have multiple needs, so they are constantly stitching together different providers: banking providers, FX providers and in some markets crypto providers. What they are really looking for is one integrated experience that serves them across jurisdictions, with products and services that line up for all the regulated subsidiaries of their business. This is the opportunity we see as very relevant and achievable today, and ARP understands it quite deeply.
You call this bank AI native. What does that mean for a client, and where do humans stay in control?
What is important about how AI gets used is the cost to serve, and the opportunity cost of serviceability. AI also lets you reimagine your workflows from first principles and reimagine the customer journey, because workflows and customer journeys need to add value and serve. AI gives us a much broader granularity on who we are able to serve, and lets us provide products that other banks cannot, because they cannot reach that customer segment. That is very difficult to achieve with a monolithic system or technology that is not modern, or if you are not using AI to the best of your abilities within the guardrails of banking supervision and the regulatory environment. We also ask ourselves across everything we do, who is the next economic actor and how will we serve it? As AI agents become more heavily embedded in the economic fabric, they will be the next economic actor. It is practical to provide products geared toward them, which means having the most modern stack, compatible with how they interact, along with all the integrations needed to serve both human clients and, over time, agents.
Where does the blockchain come in, and what can it do that today's payment systems cannot?
Our view is that capital will always flow to where it is best treated, and that means leveraging the most modern back end infrastructure. To some degree that is blockchain, and at other levels it is not. What matters for us is that we incorporate an objectively value adding technology stack that can facilitate any kind of transaction and be the most optimised to do that. Blockchain has characteristics and primitives that make it very interesting for financial applications. As the world continues through this digital revolution, partly brought on by the productivity AI can provide when it has access to data, you need technology systems that can interact with that data. Tokens are a great representation of it, and blockchains are a great back end technology to handle, manage, transact and store that data. Our view is that this whole notion of blockchain or not blockchain will be abstracted away, and everything will be represented in a digital format that will eventually be a token. So it is important that the technology stack in core banking can handle and manage blockchain interoperably with regular fiat currencies.
Bahrain's sovereign wealth fund already backs another digital bank that works with crypto companies. How is what you are building different?
The objective of any sovereign wealth fund is to deploy capital where entities or people can create value for the country and the ecosystem, so naturally they will have lots of investments that do that. For us it is a good sign that the ecosystem is maturing, and we are a completely different model. We are a wholesale institutional bank. The idea is to serve a broad range of corporates and multi jurisdictional entities, payment companies and high value, misunderstood clients. Digital assets are one part of the story, and we understand that deeply because we are operators, but there are many other highly valued, misunderstood sectors that we aim to serve and underwrite, and they will keep evolving. We are effectively building the bank that we needed as a client.
The UAE has been aggressive in courting fintech and digital asset firms. Why build this in Bahrain, and how does it compete with its neighbours?
The way we view it, the GCC is effectively one ecosystem. Even if an entity launches in one country, it quickly expands. To achieve critical scale you need to treat the region as one unified ecosystem. Bahrain is important as a starting ground because the Central Bank of Bahrain has decades of experience in banking and regulation and was one of the early crypto adopters, and it is a lot easier dealing with one single regulator. The backing of the sovereign wealth fund also makes it a very strategic hub for the bank. Over time the idea is to expand to many markets: Bahrain and the UAE, the whole GCC, and then hopefully regional and global.