Alternative Payments, Immediate Payments and Collaboration—Big Initiatives That Will Bring Big Value in the Middle East
We recently wrapped up an exciting Seamless Payments, Middle East conference. Attendees debated about numerous industry topics, with considerable buzz around alternative payments and immediate payments.
Some key themes emerged from the conference –
- eCommerce – Although eCommerce is not as prevalent or perhaps as sophisticated as in other markets, the general consensus is that the region is on the cusp of massive growth driven by the increase in mobile device usage and alternative payments.
- Industry collaboration – This was a very hot topic, with the local government playing a key role in many markets in terms of spurring innovation. For example, the Smart City 2020 plan in Dubai will see a digital revolution in the city (and I’m particularly interested in following this initiative).
- Pragmatic Blockchain – The hype around blockchain is petering out slightly; attendees feel it’s an interesting technology with very specific use cases and fledgling business cases.
- Faster Payments – Banks are keen to understand the business value of faster payments and how their business models might change.
Now I’d consider myself the data-driven type, and for the second year running, we surveyed attendees to gauge their sentiment—on both the aforementioned themes as well as other topics that were passionately discussed. I wrote out the above before I analyzed the data and we’ll now find out if the facts align with the feelings.
Last year, respondents felt that eCommerce presented the greatest business opportunity in the next 12-18 months. In 2016, 33% of respondents expected their existing payment systems to handle these new methods of payment. In 2017, this number leapt to 51%. The rising tide of eCommerce is driving the alternative payments opportunity. Facts and feeling align here.
The feeling of collaboration increasing is certainly reflected in the data. Last year, 48% said that FinTechs and Banks were friends. This year, 57% said they were friends while only 5% said they were foes. Again, facts and feeling aligned.
Facts and feelings diverged slightly with blockchain. Perhaps I am more of an optimist than I realize. Only 21% felt blockchain was going to provide a benefit to their business in the next 12-18 months. I’d like to say that if the time horizon extended, at least 75% would agree that it will provide benefit. However, on further reflection, is it a solution looking for a problem? I’d disagree and state that there are some real business cases – most notably cross-border payments.
Faster, or immediate, payments were narrowly behind alternative payments in terms of the theme/initiative that would provide the most benefit in the next 12-18 months, and we’re trying to ascertain this reasoning. Perhaps the industry knows faster payments are coming and it will provide value? Possibly, but in follow up conversations after interviews, many bankers indicated they wanted to know more about deployments across the world and best practices. And every faster payment session I attended was packed – a little of feeling and a little bit of data!
Overall, my feelings and the facts were similar – which is pleasing and reassuring. With a sample size of 120, I won’t be submitting my PhD thesis any time soon (being in a formal program would also help), but it does give us an indicator of where the industry is heading.
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