Alternative Payments Will Present New Business Opportunities In The Middle East
The second survey in our ongoing series took us to Dubai and the Cards and Payments Middle Eastern Conference in early June. Much like the blog from Australia, we had some fascinating results but for entirely different reasons. Whilst 64% of the Australian payment experts we interviewed were concerned about being disrupted by new technologies and entrants, only 38% in Dubai agreed with this sentiment. In fact, 39% disagreed with this and said their business was not going to be disrupted by new technologies or entrants. Hmmm... Let’s try and understand the reasons for this huge difference…
“New electronic payment methods” was the number one response we received when we asked, “What will provide the greatest business opportunity in the next 12-18 months”. Unsurprisingly, 33% of respondents are expecting their existing payment systems to handle these new methods of payment. Open APIs was expressed frequently as providing a great business opportunity. This is very similar to Australia where new payment methods and Open APIs were also highlighted as presenting opportunity.
However, when considering new entrants the responses differ wildly. In answering the question, “Do you see FinTech companies as a friend or foe to your business?”, only a 1/3 of Australian payment experts responded with “Friend”. In Dubai it was almost one-half. This view of the incumbents working with the FinTech newcomers drives the belief that they will not be disrupted. Putting the thoughts of disruption and new payment types together, it becomes clear that the incumbents in the Middle East believe they are in a strong position and have an advantage by utilizing their existing systems.
This may have to do with the strong role the government plays in innovation in the Middle East and in the United Arab Emirates in particular. In February 2016, The Museum of the Future launched a new research council focused on blockchain. The Global Blockchain Council has 32 members which include banks, government entities and start-ups. This type of environment is intended to foster collaboration and innovation, and leads the incumbents feeling protected against disruption as they are working with potential disruptors.
We are only two surveys into the series but some commonalities are starting to appear – new payment types and Open APIs will improve the customer experience, eCommerce fraud is causing concern among consumers, and real time payments is seen as an opportunity to improve payments. However, the big difference is the view on disruption – will the Australian apprehensive view of FinTech reign or does the Middle Eastern approach of collaboration become more common? Chime in with comments or find out when we take the survey next on the road at the end of July to the PASA International Payments Conference, South Africa and The Future of Banking Financial Services Forum in New Zealand.
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