The changes happening in the Middle East and Africa (MEA) with respect to fintech and wider digital transformation have been noted. The Fintech Times sits down with Padmini Gupta and Milind Singh of rise.
rise’s CEO and co-founder Padmini Gupta, spent her early career banking in California, where she helped marginalised communities gain access to financial services, all whilst winning two US SBA awards for being the best banker in California. After she left banking to pursue an MBA at Oxford and subsequently joined the World Economic Forum as a Global Leadership Fellow, Padmini worked on several critical global challenges and understood first-hand how global partnerships are needed to solve big challenges.
After returning to Dubai, Padmini discovered that many migrants were locked out of the global financial system and decided to ensure that these migrants had the opportunity to build a better financial future. Padmini believes that the world needs better tools and a new kind of global financial services platform. One that is built through partnerships with multiple institutions across multiple countries and helps 250 million migrants build a better future.
For our global audience, can you explain what the digital and fintech landscape across the globe currently looks like
Milind: This is a really exciting time for fintech globally and we are seeing an incredible amount of innovation across all aspects of financial services. Truly the adage that ‘everyone is a fintech’ has never felt more correct. Case in point is the Reddit army vs wall street/ Robin Hood episode, which highlights how democratised access to finance is a true gamechanger. This episode is a good lens to understand what is happening in finance and fintech globally.
The first and most important trend is products built around communities. Be it the Reddit wall street bets board, teen banking apps or our own migrant banking platform rise, finance is moving away from being one size fits all and getting curated and refined for meaningful communities. As communities get better at handling their finances the balance of power shifts away from legacy players to these decentralised communities.
The second trend is continued lowering of participation costs and time across multiple markets; trading, shopping or even moving money. As the cost of participating in financial services or doing a financial activity drops, more participations enter the market, ranging from teens in the US to migrants in the GCC.
The final trend is the move towards the instant back office. Financial back-office products like settlements and clearing have been designed many decades ago and are not equipped to deal with the need for instant and immediate settlement methods and this is where new products and innovations are seeking to disrupt; be it crypto against Swift, or defi against exchanges. This is again a mega trend and we will see many more players and innovations in this space. These trends layered on top of the increasing digitisation of payments and the COVID-19 tailwinds sets up the global financial markets for probably the biggest disruption in their history. The 20s are surely going to be roaring.
How does this alter in the UAE?
Padmini: Before we dive into how the UAE financial services market is shaped by these trends, its important to understand how the UAE market is slightly different from the rest of the world. There are two broad areas of divergence from other markets. First is the presence of the large number of migrants which land up sending home almost 70% of their income and second is the fact that UAE is a big trading and tourism hub, implying large amount of spending tools and patterns here are brought in by visitors who are temporal.
Against this backdrop, the three trends continue to play out within the UAE also. First is the emergence of community-centred financial products, be it our own product (which is focused on migrants) or SME banking or teen banking products. On the transaction costs, the cost of products like bank accounts or investing as well are remittance continues to decline but not at a fast enough pace. Finally, the emergence of infrastructure platforms like open API banking is beginning to enable a new wave of fintech’s to launch quickly and target markets.
How have you developed your subject matter expertise and helped to share it across in your home country?
At rise, we set out to support 250 million migrants and the billion people that depend on them to gain access to a unified, seamless platform to manage their finances across host and home countries.
In doing so, we first built a community around migrant financial needs and habits. We built a free tool to allow migrants to gain a quick insight into their financial health and goals, which has been taken by more than 200K migrants and is probably the largest database of migrant financial health globally. We used this data and insight to build tailormade products for migrants in partnership with regulated financial business; be it hospi-cash insurance for their families back home, since migrants are terrified of hospitalisation expense for their families; cross border pay later platforms allowing migrants to buy products on instalments for their families; or Xare – a new alternative to remittances which allows them to share access to their amount with their families instead of remitting.
All these products are based on understanding not only how migrants currently manage their money, but also how they would like to manage their finances going forward.
What are future trends and predictions you see happening in your country? And the region as a whole (And specifically with your company?)
Milind: Not just in the UAE, but globally, payments in 2021 are poised to be significantly disrupted across these three dimensions:
- The emergence of native payments: This will significantly disrupt the payments ecosystem with more and more transactions being native to the platform you are on.
- Growth of crypto: With the imminent launch of Libra from Facebook plus multiple cards which pay you in bitcoin awards, accepting payments in crypto will become more mainstream even though it will still be small.
- The sustained decline of cash: Given COVID-19 has driven the push to e-commerce and contactless payments, we have seen a sustained decline in cash usage this year; this will
For us at Xare, all the three trends provide us tailwinds of growth helping us bring sharing into the financial services world and helping tribes bank each other.
Any advice or recommendations you would give to other future fintech companies and entrepreneurs based in the Middle East and Africa (MEA) region?
The most important component of a fintech product is not the tech, but the fin part of the product set. Future success will come from people who build fit for purposes financial products for their target community and do so using the best tech available out there. Tech alone or digitising existing products is no longer a differentiator and will get disrupted in the coming days easily. Banks are the biggest fintech’s there is and the only way to compete with them is to focus on niches that matter.