May 16, 2020

ACI Worldwide: The payments landscape in the Middle East

Craig Ramsey and Thomas Reda
3 min
Craig Ramsey is the Head of Real-Time Payments, and Thomas Reda is the Director, Middle East, ACI Worldwide. ACI Worldwide is a global payments software...

Craig Ramsey is the Head of Real-Time Payments, and Thomas Reda is the Director, Middle East, ACI Worldwide. ACI Worldwide is a global payments software company. Here Ramsey and Reda discuss how the payments landscape in the Middle East is evolving.

 

The Middle East is developing quickly and considerably. The population has surpassed 410mn and a number of nations, such as Saudi Arabia and the United Arab Emirates (UAE), are being touted as some of the world’s most up and coming economies. The region has become synonymous with the rise of large infrastructure developments and technological innovation, while tourism continues to grow - 1.4 bn people visited in 2018 alone. 

This push for innovation, coupled with an influx in foreign visitors, is driving changes to the region’s payments ecosystem. Visitors from abroad are not only using less cash; but many have also become accustomed to new ways of paying, such as via contactless cards. At the same time, businesses in the region are increasingly operating cross-border, and as a result require smoother, cheaper and quicker payment processes. 

The state of play

Currently, the payments landscape in the Middle East is fragmented. In some countries, such as Egypt, the majority of the population is unbanked; and cash remains king. This reliance on cash also exists in places like Turkey and Saudi Arabia, but the influence of card payments and the growing role of smartphones is creating a strong demand for digital payment options there. In the UAE, on the other hand, consumers increasingly trust digital payment alternatives over cash.

Despite these differences, there’s a growing consensus that the region needs to focus on embracing digital payments and reducing the number of cash transactions. To this end, organisations in Saudi Arabia and The UAE (such as the Abu Dhabi Global Market) have launched digital sandbox initiatives; creating an environment where banks, regulators and financial service providers can come together to collaborate on the development, testing and creation of products which support new ways to pay. At the same time, momentum is building in some countries around mobile and app-based payments. The Emirates NBD, for example, has opened up WhatsApp banking; enabling 24/7 access to banking on the go. 

Getting real-time ready 

As digital payment options continue to grow in popularity, an increasing number of businesses and consumers will expect to be able to adopt them. It will therefore be crucial that the region has the underlying real-time infrastructure in place to enable these payments to be made quickly and effectively. Access to a provider who can help offer participating banks faster and lower-risk onboarding to the new real-time payment services will also be vital.

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The recent launch of real-time payments in Saudi Arabia could serve as a catalyst for the adoption of real-time payments amongst other countries in the region. But in order to live up to this potential, and ensure Saudi Arabia itself reaps the benefits, it’s important that banks in the country truly embrace real-time, and the improvements it will bring to their customer experience. 

Far from viewing it as a simple add on, banks need to see real-time for what it is: the new normal when it comes to payments. As such, they should ensure that they are investing in a strategic real-time solution that they will be able to scale up in response to rising demand and new opportunities. Ultimately, being real-time ready shouldn’t be an option as it’s a prerequisite for the future success of banks in the Middle East. 

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Jun 10, 2021

FIVE things fintechs must do to keep investors onboard

Fintech
Investment
venturecapital
AI
Brandon Rembe, CPO, Envestnet...
5 min
Fintech innovations drew in first-time investors who reshaped the markets. What new advancements will help them continue their rise?

New investors flocked to the stock market during the COVID-19 pandemic. Thirty-eight percent of investors said they had never had a brokerage or similar account before opening one in 2020.

Low or no-fee trading options have helped accelerate the trend – nearly half of new investors said they accessed their account primarily through a mobile app. As FinTechs, how do we create the trust needed to keep new investors in the market and create a fruitful customer experience for them?

The financial industry does a disservice to individual investors if we merely offer tools that focus on making money quickly, an approach that usually backfires. Instead, the surge of interest presents an enormous opportunity for those who want to help more consumers use financial technology to educate them on responsible spending, saving, and investing in order to achieve financial wellness current fintech tools have welcomed individual investors in the door.

Now, it’s time to focus on education and improving their experience going forward. There are several ways those of us in fintech can step up to shape the future of retail investing so that it works better for everyone, starting with the following areas.

Equal access to financial wellness education

Financial health should be available to everyone — but today, not everyone has the educational resources to achieve it. One study shows that only 3.9% of students from low-income schools were required to take a personal finance class. What they aren’t learning in school or from family members, fintech companies can provide on their platforms.

The companies should move from solely offering financial services to a more responsible model of education, advice, and prescriptive choices to help consumers develop better habits and make wiser financial decisions. Not only can they empower consumers and bridge historical wealth divides, but they can also stimulate growth by opening up new consumer segments.

More personalisation

Just as we’ve come to expect that our fitness routines are tailored to our individual bodies, we’re also ready for finance tools that go beyond one-size-fits-all solutions. But only six percent of financial institutions say they’re using the kind of technology that allows them to deliver a deeply personalized experience. Fintech tools need to reflect that financial success looks different for each of us.

For one consumer, it may mean providing guidance on how to pay off student loans early; for another, it may mean prescriptive actions that enable them to stick to a budget for the first time; for a third, it could look like prioritizing environmental, social and governance (ESG) investments, so that her portfolio aligns with her political beliefs.

Now, we are seeing financial technology beginning to meet the demands of personalized finance in a substantial and meaningful way.

The rise of AI-Powered Advice

Big-picture advice and predictive guidance used to be a feature of high-end financial advisory firms — a perk only available to those who could afford it. But thanks to rapid advancements in data analytics and artificial intelligence (AI), that kind of holistic advice is now more accessible than ever. AI-driven robo-advisors can parse many different streams of financial information, delivering customized answers to key questions: Is it time to buy a home, or is it smarter to keep renting? Can I afford to take out another student loan?

Intelligent connectivity powered by AI can anticipate consumers’ needs and next steps, making proactive suggestions that guide them along the path to financial wellbeing. Fintech companies can also help consumers identify when their financial picture becomes too complex for a robo-advisor, and help them find a human financial advisor to meet their needs. 

Focus on financial mental health

New investors are quickly finding that the market can be overwhelming. That’s not surprising, financial anxiety is common and studies show that financial stress can have an impact on mental health for some.

It’s not enough for fintech companies to give retail investors access; they also must provide the guidance and support that help consumers manage their financial well-being. Educational tools can ensure that consumers are well informed about their options.

Predictive analytics can anticipate consumers’ questions, serving them key information and insights before they ask. Features that emphasize a comprehensive notion of financial well-being, rather than short-term wins and losses, can also help ensure that consumers are keeping their eyes on the bigger picture.

Gamification for good

The surge of gamification apps has done an impressive job making investing as engaging as playing a video game or joining a social media platform.

Much of the current use of gamification emphasizes short-term thinking, but there’s also an opportunity to help consumers think more broadly about their overall financial picture. One example is peer benchmarking, a feature that enables help consumers to see how their financial habits compare to those of friends and fellow consumers.

Gamification can also be used to incentivize making smaller, smarter choices — for example, rewarding saving over making an impulse buy.

The future of fintech is about more than just broadening access to the markets. It’s about making sure more individuals have access to the tools that can help improve their financial well-being—in the ways that suit their own circumstances and needs. The potential to act within their own set of individual priorities, with their long-term financial wellness in mind is much more empowering to a consumer than simply relying on short-term, high-risk investments.

About the author: Brandon Rembe is CPO at Envestnet Yodlee. He has over 18 years of experience building high-growth technology, software, and information service companies, Brandon has worked across a broad spectrum of enterprises from early-stage ventures to global businesses.

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