FinTech Trends

The Middle East and North Africa are witnessing a change in consumer preferences, evolving Fintech start-ups, and supporting regulation are testing banks and FI’s digital capabilities.  The consumers are going digital, creating new opportunities for financial market to disrupt and embrace fully integrated mobile wallets via smartphones, wearables, and tablets.  A recent GSMA research outline that in 2017 MENA region had 375m unique mobile subscribers that could reach to 459m by 2025, where smartphone connections can increase from 49% to 74% by 2025. In fact in countries like UAE the mobile phone usage is nearly 100%. To such a rapidly growing market, how can banks and financial institutions offer the best-in-class mobile payment experience? Our post of today will help you with that. The Mobile Wallet Use Cases in MENA While you may find a digital wallet as a technology buzzword, let us understand what customers are willing to use their mobile money for? Avail Banking Consumers in the MENA region are willing to use Mobile wallet to avail services like – Opening a Bank account Apply for Loan Apply for Credit Card Get product advice Apply for savings/Fixed deposit Balance Enquiry Funds Transfer Where can Banks and FI’s improve? While adoption to less complicated services like balance inquiry and funds transfer could be achieved, opening a bank account, getting a loan and credit card is where the customer finds absence of “end-to-end digital workflow” with a sense of trust and security. Avail Loyalty Programs and Discounts E-Wallets attract a lot of consumers for the loyalty programs, cashbacks, and discounts offered. For a bank or FI digitization of banking services like debts, personal finances and investment make more sense, but customer looks for their banks to provide more than banking in shopping, paying bills and book tickets. Some of the features that a mobile wallet user may be interested in – Attractive loyalty programs Discount coupons Mobile payment for cabs and neighborhood shops Virtual prepaid card for secure payments Customized bill payments A personal advisor or relationship manager Message-based payments Apply Personal loan, credit card, and mortgage via mobile Where can Banks and FI’s improve? Major gap for consumers is in understanding the products and services, the UI is not friendly, and in case they face any glitch they are again asked to contact customer support, making it a partial digital experience. If banks and FI’s could improve on availability, Security and awareness of digital solutions to its consumers offering them easy-to-use, seamless and end to end digital solutions it would help them in gaining trust of consumers. E-commerce is the future In 2017, e-commerce in MENA touched  $8.3 billion, i.e., with an annual growth rate of 25%. As forecasted, this figure is expected to reach $28.5bn by 2022. UAE, the most tech-savvy country in MENA region has a penetration rate of 4.2%, while Saudi Arabia is close to UAE with 3.8% penetration, combining both sector accounts for 60% of e-commerce market. Where can Banks and FI’s improve? Consumers are looking for convenienceand security aspects while making an e-commerce transaction. Banks and FI need to work on their integration with channel partners.  Offering a mobile wallet as one of the payment options to consumers of their favorite brand can help in winning the race for long term. Target Cross Border Remittance As per a report of 2015 latest data on international migration stocks, 34.5 million international migrants, that includes registered refugees are residing in the MENA region.  Another report of March 2017 stats – 4.9 million Syrian refugees in the MENA region. Also, the conflicts in Iraq and the Republic of Yemen have led to internal displacements. According to the United Nations High Commissioner Lebanon and Jordan hosted the highest number of refugees worldwide in relation to their population size in 2015. Also, what is worth noting is the cost of remittance of sending $200 in the MENA region is 7.4 percent in 2017. If we could simplify remittance cost clubbed with making it simple and hassle-free, many migrants in MENA could be thankful to Banks and FI’s. Where can Banks and FI’s improve? Banks and FI need to bridge the gap of offering the remittance solution with help from regulation. What Banks needs to understand is that “the untapped population” in the form of migrants could be their customers and if they are onboard with a simple Account opening service followed by a mobile remittance solution you not only have earned a customer but also enabled financial inclusion. Target Electronics, Fashion, Beauty in Ecommerce If we have to rate consumer choice of shopping category on an e-commerce platform, the top-rated one is electronics, followed by Fashion and Beauty and least [or a very smaller section] prefers shopping grocery online. As quoted in one of the articles on thinkwithgoogle. Pushing Mobile wallets to these brand lovers’ shoppers could help you in generating revenues. While consumers would enjoy benefits of anywhere anytime shopping, they could also reap benefits of discounts and cashback. Where can Banks and FI’s improve? Tap into the in-house data, analyze customer’s preferred choice of category, credit behavior, and offer a personalized product. As a consumer one of the pain point they face regularly is looking for best payment option while going shopping on an eCommerce platform. Pitching them with personalized shopping advice could help banks in cross-selling and drive revenues. Banking has to evolve The consumer no longer needs just a bank; they need a solution that could help them in solving their education loan issue, help them in shopping, book tickets for the vacation. Hence even Banks need to evolve and come out of the silo of offering just banking. Customers in the MENA region are tech-savvy who visit an eCommerce platform via search and video. As per stats on an average 70% of people in UAE and Saudi Arabia engage in shopping-related search queries on their smartphone. Another research on women in KSA suggests that Youtube has introduced 50% of shoppers to a new

In the year 2006, when I was in Pune, many Israelis were staying within our locality. Apart from the country name and a possibility of locating it on the world map, I hardly knew anything about Israel. So when I was offered this post, I never thought it would be an eye-opener to me, on Israel that is also known as startup-nation and ranks within the top 20 nations in the world. In fact as Wikipedia says – it is regarded as a Highly Developed country and has a high standard of living when compared to other western nations. But a contrasting fact is that digital payments in Israel have slower adoption, as people prefer to go for cash but situation is improving gradually. Our post of today would focus on mobile wallets in Israel, the key players of e-wallets in Israel, the regulation and customer who could be one of the ideals, leads for digital wallets. The Israel Economy and Consumers Israel economy has struggled a lot, in the 1980’s they were on the brink of financial collapse. In 1975 when they had to push 30% of GDP on defense spending’s for the Yom Kippur war, 1984 public debt and hyperinflation peaking at 450% a year. But in the past decade as The Economist reports- The economy has grown at about 4% a year The unemployment rate is 4.3%, a record low Abour-force participation rate has risen Public debt has come down to 62% of GDP Israel has not had a recession (defined as two consecutive quarters of falling output) since the height of the second intifada Also, as Israel is dubbed as a start-up nation, here are some facts supporting it, reported by the World Economic Forum, Between 1999 and 2014, Israelis started 10,185 companies, 2.6% with annual revenues of more than $100 million All sounds good, and you might get dazzled up with high-tech firms and advanced technology equipment’s making noise in Israel. But the flip side is Israel has two economies – Globalized Start-up Nation Accounting for about a tenth of employment Left Behind nation Where nine in ten Israeli’s work on something similar but in inefficient and protected from competition. Another interesting fact about Israel economy is – Poverty rates in Israel are among the highest in the rich world owing two main reasons Utilizing public subsidies, the ultra-Orthodox pursue a life of Talmudic studies Arab citizens struggle to achieve equality. What a contrasting economy with extremes at both ends. Do you think a Mobile Money solution in Israel could help both the economies? My answer to this is YES, and I feel e-wallets are the best solution that could fit the orthodox and tech-savvy individuals in Israel. Use Cases of Mobile Wallets in Israel As per statista the mobile phone penetration in Israel would reach 72% by 2019, and is predicted to grow to 74% by 2023. But just because mobile phone adoption is increasing, it does not justify the use of mobile wallets. There should be a “NEED” for people to avail it. Like just yesterday, when I was booking a cab and my reliable cab Meru was not available for the time, I had the NEED to switch to another cab provider. That’s the prime reason of business, the need and upcoming lines would narrate how the mobile phone that has penetrated Israelis lives could assist them in using a digital wallet because of the NEED balancing the economies, the cultural and religious sentiments and still making their lives more convenient. The need for Money/transactions on Shabbat In Israel ATM’s are not stocked on Shabbat [ i.e., from sunset on Friday to sundown on Saturday] so most of the people withdraw money on Friday that can lead to ATM’s running out of cash. For such scenarios Mobile wallet comes in handy – if you are a traveler and was not aware of this rule. Or if you are an immigrant working in the country. Even as on Shabbat banks are closed, the businesses and shops are open. Hence an e-wallet could be a quick solution to assist Israeli’s with cashless shopping and digitization of payments. Black Money and Money Laundering Guide to reduce Cash in Israel In the year 2000, an article on Telegraph reported – Israel Seen as Paradise for Money Laundering. Also, in year 2003 the country was in the blacklist of the Financial Action Task Force, an international body that sets standards in the fight against money laundering and terror financing. However, this year [in 2019] Israel had been accepted as full member of FATF, but there are some unanswered questions. The whole Black Money and Money Laundering business could be stopped once digital payments are enforced enforcing a transparent economy driven by trust. Mobile wallets are a simple and straightforward solution to eliminate tax evaders and making Israel and better place. Collaborating with government to offer easy and affordable mobile wallet solutions is a way to make Israel a cashless haven. Government Initiatives to Boost Cashless Economy In March 2018 Israeli government made a law to limit the use of cash to 11,000 shekels [i.e. $3,197] that would be reduced further to 6,000 shekels by year 2020, in an aim to crack down Israel’s black market. Some of the other pointers to the law are – A ceiling on checks of 10,000 shekels Tourists will be limited to paying no more than 55,000 shekels in cash to buy services or assets, although they can do so up to five times Government is trying to push the cashless drive, but what is needed is affordable and convenient solutions with understanding from consumers on its benefits. Mobile wallet serves all the features of affordability [ as no extra dime need to be paid by customer], convenience [ no need to carry additional card or wallet] and benefit of any time banking from anywhere. Exporters and Importers supporting Businesses Israel is ranked as the 37th largest export economy in the