• Stiven Muccioli, Founder & CEO at BKN301


• 06.03.2024 10:30 am
#fintech #payments #MENA

In an era when technology is moving forward very fast, the world of payments and the transition from cash to digital transactions is undergoing disruptive transformations in the  West, as well as (and perhaps even more so) in Africa and the Middle East. These areas are characterised by high-growth markets with strong demand for innovative banking and financial solutions, and a population with low average age, rapid population growth, high mobile penetration, and high literacy in payment-related technologies. Characteristics foreshadow an imminent revolution, in which fintech operators and Western financial institutions can play a leading role, acting as a new growth lever for the economy and the well-being of populations. 

The use of innovative technologies such as machine learning and artificial intelligence will be a key player and enabler of this change, driving huge growth in the MENA region in the coming years. To give just one example, the mobile payments market in Egypt is expected to grow at an impressive CAGR of 16.8% over the next five years, to be worth over USD 135.0  billion. 

This push, however, does not come only from above, but also from the interest of consumers in Middle Eastern and North African countries in solutions that can transform the way they use digital wallets that are becoming increasingly popular, thanks to the very strong penetration of smartphones. With a simple tap on the phone, people can now carry out virtually any everyday financial activity quickly and with the highest security. The combination of convenience, efficiency, and rewards, such as cashback, is powerfully driving the uptake of wallets, making them the preferred option for payments in the MENA region, succeeding in the complex mission of moving towards the farewell to cash or other outdated forms of payment such as P2P payments via mobile phones. 

In particular, if we look at Egypt, a Country that symbolises this extraordinary path of innovation, we see how change can also be driven by the government. In fact, thanks to Egypt's Vision 2030 National programme, which includes initiatives aimed at increasing the 

financial inclusion of all segments of the population with incentives to use innovative solutions, Egypt is thus experiencing extremely significant growth in the use of advanced financial solutions. According to the latest data from the country's Central Bank, between  2016 and 2022, there has been a 147% increase in the number of holders of Egyptian bank or  Post Office accounts, digital wallets, and prepaid cards, bringing it to more than 42 million users, 64.8% of the total population aged 16+. This increase is possible thanks to the development of the necessary infrastructure such as bank or postal branches, microfinance institutions, ATMs, POS, and payment service providers, which exceeded 1,200 per 100,000  inhabitants (+107% between 2020 and 2022). Fast-growing numbers are destined not to stop their run. A change has certainly been possible thanks to the presence since the early  2000s of some forms of digital payment, albeit more rudimentary, which over time have become very popular in these countries and have laid the foundations for the spread and acceptance of increasingly innovative payment methods, as well as, of course, open-mindedness and less attachment to cash. 

But not only Egypt is experiencing robust growth. Qatar is also showing great interest in digital payments and innovative banking services. According to a report by Statista, the total value of digital transactions in the Country will grow over the next five years with a CAGR  of 13.4 percent reaching a value of $10.47 billion in 2027. 

In this change, the digital wallet has and will certainly increasingly play a leading role.  Although the digital wallet concept emerged at the end of the 20th century, in parallel with the rapid growth of e-commerce, its widespread adoption was initially limited by the Internet connectivity that still characterized these areas, as well as many Western countries. However,  the presence of fragmented platforms was an obstacle to the true spread of this technology.  An obstacle that today, thanks to the push that fintech is bringing, can be overcome. 

In recent years, the uptake of new technologies has accelerated due to the Middle East and  North Africa (MENA) region's significant progress in digital payments. MasterCard's Digital  Payment Index 2022 study, which shows the increasing spread of digital payments across the region, is an example of this trend. According to the research, 88% of respondents in the  UAE said they had used at least one innovative payment method in the previous year, and  19% had used less cash. 

We are therefore facing a new and disruptive revolution that, thanks to fintech operators enabling change and acting as a bridge between Western and high-growth countries, can bring great benefits to the growth of these countries and consequently greater prosperity to the population.