Breaking down barriers in an evolving digital payments ecosystem

December 11, 2019
Amnah Ajmal
Amnah Ajmal

By Amnah Ajmal

Executive VP

Market Development, MEA


IN today’s world, a mobile device is like holding the world in the palm of your hand. It serves as a gateway to life-enriching experiences, such as capturing moments with family and connecting with friends. It also means we can find information, share opinions, buy items and pay bills easily. In short, this era of digital and mobile has opened up huge potential for financial outreach.

According to the GSMA, two thirds of the population uses a mobile phone – which is the equivalent of 5.2 billion individuals worldwide. Even though there has been a slowdown of growth in the more developed regions, the Middle East & North Africa (MENA) region is expected to see the fastest subscriber growth rate globally after Sub-Saharan Africa, growing to 459 million unique mobile subscribers and up from 318 million in 2018.

This massive mobile user growth has resulted in the accelerated adoption of financial services without having the need to have a bank account. In the Middle East and Africa (MEA) there are over 445 mobile money wallets versus 286 million bank accounts. Armed with a phone, data and a need to transact, these are the people that will benefit most from the evolution of the digital payments eco system in the future.

Mobile has paved the way for a revolution in digital payments that is being embraced by policy makers, regulators and non-traditional financial service providers driving innovation and financial inclusion.

MEA is a very diverse and dynamic region across most industry sectors and verticals, with significant variation in mobile phone usage across the region’s countries. The more advanced GCC countries boast a subscriber penetration rate of more than 77%. These developed countries are at the forefront of digital innovation, embracing and adopting new technologies such as 5G and IOT (Internet of Things) whilst other developing countries such as Pakistan and Egypt have a subscriber penetration of between 30 to 40%, thus with a stronger focus on financial inclusion and initiatives that empower their communities.

It’s no surprise that policymakers in both developed and developing MENA countries are getting involved in providing the necessary regulatory framework and infrastructure required to support the growth of digital finance in the region. The central banks of Egypt, Bahrain, UAE, KSA, Jordan and Pakistan have adopted specific initiatives to deregulate digital payment services.

Telecommunication companies, digital service providers and electronic retailers – giants that are not traditional financial service providers – are increasingly looking to diversify their business models by offering financial services, intensify their growth in digital and benefit from the brand equity they have already worked hard to generate. According to the GSMA, mobile money providers that offer savings, credit or insurance products have on average 24% higher revenue per user and 19% higher activity rates than those that don’t.

Consumer needs are also changing, and consumers don’t want to be treated as numbers.

Given the new wave of mobile users will be a mobile-only generation, consumers increasingly expect access to a comprehensive suite of digital/mobile financial products and services, powered and delivered by the personalized consumer experience and user interfaces via mobile only.

While person-to-person, bill payments and cash withdrawals represent the most common uses for digital financial services today, consumers are demanding more benefits, such as secure access to a global online marketplace, easy and affordable access to credit facilities, or working capital in the case of small businesses. For example, in 2018, e-commerce transactions facilitated by mobile money grew 79% in value, demonstrating this increasing trend.

The non-traditional financial service providers are investing to understand these evolving consumer needs by offering a full range of digital financial services to their customer base, while at the same time keeping ownership of the end-to-end customer experience, these companies stand to gain a key commercial advantage. 60% of fast-growing companies are increasingly looking beyond the basics and investing in mobile technology and digital wallets that can power superior customer experiences seamlessly.

But taking advantage of opportunity is sometimes easier said than done.

As non-traditional financial service providers look to scale and differentiate at speed, they are challenged by the fragmented barriers that currently exist i.e. the legacy infrastructure, integrating with multiple FinTechs and delivering a superior consume experience. They are often required to procure and manage multiple third party fintech partnerships across each element of the digital commerce ecosystem, the end-result could be a disjointed consumer experience. When onboarding activities and ongoing partner management is estimated at five times the cost – it’s easy to see why companies are looking for more efficient ways to partner and deliver a seamless digital financial services experience.

However, as Wayne Dyer said “If you change the way you look at things, the things you look at change”

With an impressive base of consumers, merchants and agents, these companies represent the movers and shakers in the digital payments industry, some examples include Telecommunication Operators, Digital Merchants and Payment Facilitators and Fintechs.

They are fueling the unpresented growth currently being seen in the digital financial services space. In the region, this transformation of mobile financial services can already be seen through products such as Careem Pay in the UAE. STC Pay, a digital wallet app launched by Saudi Arabia’s biggest telecommunications company, allows people to send money to other users and pay restaurants and stores digitally. Earlier this month, Zain announced its first digital platform for Islamic banking services with Boubyan Bank in Kuwait, looking to leverage mobile money and digital payment channels to increase financial inclusion in the region.

A key ingredient to the success of these companies lies in their ability to offer innovative solutions to their customers in the most efficient and consumer-centric way. This requires partnership with a trusted advisor that offers payments as a platform build on a global scalable infrastructure, integrates multiple FinTechs, provides end-to-end product management supported by well-informed data insights, meeting current and future consumer needs all built on a strong foundation of safety and security.

December 11, 2019
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