Faisal AlHaroun is managing director of Tap Payments Kuwait and senior vice president of Tap Payments Global. He speaks to Global Finance about the evolution of fintech and its customers in the MENA region.
Global Finance: How is the MENA fintech scene evolving?
Faisal AlHaroun: In recent years this region quickly became one of the most innovative fintech markets in the world. It is growing at an accelerated pace with the number of fintech startups in MENA in 2020 increasing eight times more than the number of fintech startups in 2013. A majority of this is from the GCC since 46% of the total number of fintechs in 2018 was from UAE alone.
GCC countries are also looking to reduce their reliance on oil and shift toward a digital economy and cashless society. As such, the financial and regulatory support provided by government entities has been crucial in the accelerated growth of the fintech industry over the past few years. There is a greater push from the governments of countries such as Saudi Arabia, Egypt, UAE, Kuwait, and Bahrain for the adoption of digital payments, with initiatives such as Vision 2030 in Saudi Arabia aiming for 70% of all transactions to be non-cash.
Covid-19 was also a big driver of fintech growth, forcing the region to move away from cash-on-delivery and get comfortable with online payments, contactless payments, and e-commerce.
This acceleration was further driven by the MENA region’s large youth population and high smartphone penetration. Around 60% of the region’s population are under the age of 25 which is higher than more developed eCommerce markets such as the US and China.
GF: What are the biggest opportunities coming ahead?
AlHaroun: Easing the payment experience across MENA continues to be one of the biggest opportunities for the region. With financial service regulators more open to the idea of breaking down barriers to entry for new fintech companies, open banking remains a big priority.
There are also many opportunities for banks to partner with tech companies to produce more innovative offerings. At Tap Payments, such partnerships are something we’ve prioritized from the start, building on the existing ecosystems within Riyad Bank in KSA and the National Bank of Kuwait for example.
Blockchain is another area that’s revolutionizing the financial world by transforming cross-border settlements along with embedded payments that also highlights a massive opportunity.
GF: What are the challenges in this region?
AlHaroun: A reliance on cash and traditional payment methods, with cash on delivery being the third most highly used payment method. This is partly due to the lack of trust in online payments and a relatively high unbanked population, however many businesses in the region still don’t fully understand the importance of learning about constantly evolving consumer payment behaviors, which slows market adaptation.
The GCC along with the entire MENA region still remains a fragmented market with every country displaying examples of unique payment methods and behaviors. Unifying this landscape is a core mission of Tap Payments. Being born in the region, we combine global expertise with regional understanding.
GF: How are customers evolving?
AlHaroun: Customers in the region are becoming more online savvy. Immediate transactions, more payment options, real-time payouts, and accessibility across multiple devices are a few of the expectations of customers who want faster, easier, and more secure ways to shop online.
Customers also look at different and innovative payment experiences while continuing to use their traditional payment methods, giving rise to versatile wallets such as Careem Pay, that allows customers without credit cards to save and use their local debit cards–similar to leading global solutions such as Apple Pay. This is particularly important in countries such as Kuwait, Saudi Arabia, and Bahrain, where 90% of the cards issued and used are debit cards.
