inclusive innovation
AI Editor's Choice Middle East & Africa Paytech

Inclusive Innovation: Fostering a New Era of Financial Services in MENA

The digital landscape in the Middle East and North Africa (MENA) region is undergoing a significant transformation. With 85 per cent of people in MENA having used at least one alternative payment method in the past year according to Mastercard, digital payments in the region are projected to grow from $204billion in 2023 to $343billion in 2028. 

Inclusive innovation is a key driver of this growth, broadening access to financial services for a larger segment of the population. To gain deeper insights into this evolving paradigm and its driving forces, we turned to Mostafa Menessy, co-founder and CTO of Paymob, a digital infrastructure provider in MENA.

The MENA region, with its unique set of demands, contrasts sharply with the payment ecosystems of Europe and the US. This distinctiveness has paved the way for numerous organisations to spearhead the transformation from cash dominance to a digital-first approach. Paymob’s platform enables this transformative journey while integrating inclusivity into the growing digital landscape.

Tackling a spectrum of payment methods

Merchants in MENA face the complex task of integrating a wide array of payment methods. This includes cards, digital wallets, account-to-account payments, Buy Now Pay Later (BNPL) and cryptocurrencies.

Establishing an infrastructure that can seamlessly integrate all of these payment methods can be challenging and carries inherent risks.

Paymob’s omnichannel digital payments infrastructure seamlessly and securely facilitates this process to alleviate the burden on merchants. The key is single API integration which enables merchants to offer a wide range of payment methods via one streamlined integration.

A closer look at regional payment trends

Enabled by supportive government policies and the quest for cashless societies across the region, digital payments are on the rise in MENA. Other contributing factors include high internet penetration rates, the dominance of smartphones, the rise of e-commerce and young, tech-savvy populations. The popularity of mobile wallets has significantly influenced the growing adoption of digital payments in parts of the region.

It is important to note that while the adoption of mobile payments via platforms like Google Pay and Apple Pay is rising exponentially in the UAE, consumers in Saudi Arabia and Egypt still prefer debit card payments. Yet digital payments overall have played a pivotal role in advancing financial inclusion, drawing numerous previously unbanked individuals into the digital economy.

The role of AI 

In the rapidly evolving digital payments landscape, the incorporation of AI has proven to be vital in mitigating fraud and reducing the incidence of false positives.

As Menessy explains, AI’s power lies in its capacity to analyse vast datasets in real-time, distinguishing genuine transactions from potentially fraudulent ones with increased precision. Machine learning algorithms, an essential component of AI, can learn and adapt from historical transaction data, continuously refining their ability to detect irregular patterns and anomalies that often signify fraudulent activity.

This results in a significant decrease in false positives, where legitimate transactions are mistakenly flagged as fraudulent, a phenomenon that has historically plagued the industry. By minimising these instances, businesses enhance the trust and satisfaction of their customers, fostering a secure and more efficient payment ecosystem in the MENA region.

AI also ensures that Paymob’s merchants can process transactions smoothly. Harnessing machine learning, the platform is equipped to foresee potential outages by analysing historical data and then proactively redirecting transactions, circumventing the compromised channels to enable a wider range of the population to engage with financial services without disruptions.

For Menessy, the synergistic interplay between data and AI is paramount. He emphasises: “The evolution of payments is inextricably linked to data and AI. Fostering inclusivity in the fintech sector also entails the responsible utilisation of data to enhance AI functionalities. Organisations that neglect this shift or hesitate in the adoption of these technologies risk obsolescence within a remarkably short timeframe.”

Towards autonomous banking: A five-tiered roadmap

Drawing parallels to the progression observed in autonomous vehicles, Menessy outlines a five-tiered framework that charts the evolution of AI in banking.

In level one, only specific tasks are automated at the direction of a human. At the pinnacle is level five, an environment that eliminates the need for human intervention completely. This creates a more secure, intuitive, seamless, and user-centric banking experience that is accessible to all.

“As long as we ensure safety and accuracy in our advancements, the horizon looks promising. We’re poised for groundbreaking innovations in the next few years, setting the stage for a transformative banking experience that is exponentially more accessible,” Menessy optimistically concludes.

Facilitating seamless, secure, and diverse payment methods through innovative AI integration is the key driver of MENA’s ongoing digital transformation as the region shifts from cash dominance to a digital-first approach. MENA stands at the cusp of a new era where technology, guided by responsibility and collaboration, promises to redefine the boundaries of banking and financial services to shape a more inclusive financial future.

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