Inclusive Innovation Drives MENA’s Financial Services into the Digital Age

The digital landscape in the Middle East and North Africa (MENA) is currently in the midst of a substantial transformation, as outlined in The Fintech Times. Mastercard reports that a staggering 85 percent of people in MENA have already embraced at least one alternative payment method within the past year. This surge in digital payment usage is projected to elevate the region’s digital payments from $204 billion in 2023 to a whopping $343 billion by 2028.

Inclusive innovation is at the forefront of this monumental growth, extending access to financial services to a broader cross-section of the population. To delve deeper into this evolving paradigm and its driving forces, we engaged in a conversation with Mostafa Menessy, co-founder and CTO of Paymob, a leading digital infrastructure provider in the MENA region.

MENA’s unique demands have set it apart from the payment ecosystems of Europe and the United States, laying the groundwork for numerous organizations to spearhead the transition from cash-centric to digital-first approaches. Paymob’s platform is instrumental in facilitating this transformative journey while embedding inclusivity into the burgeoning digital landscape.

Merchants in MENA face the intricate challenge of integrating a wide array of payment methods, including cards, digital wallets, account-to-account payments, Buy Now Pay Later (BNPL) schemes. The establishment of an infrastructure capable of seamlessly integrating these payment methods is daunting and riddled with inherent risks.

However, Paymob’s omnichannel digital payments infrastructure elegantly and securely streamlines this process, alleviating the burden on merchants. The linchpin is a single API integration that empowers merchants to offer a comprehensive range of payment methods through a unified interface.

MENA’s surge in digital payments is propelled by supportive government policies and a shared aspiration for cashless societies across the region. Other contributing factors include high internet penetration rates, widespread smartphone usage, the rise of e-commerce, and youthful, tech-savvy populations. Notably, mobile wallets have played a pivotal role in the increased adoption of digital payments in certain parts of the region.

It’s noteworthy that while mobile payment adoption, driven by platforms like Google Pay and Apple Pay, is skyrocketing in the UAE, consumers in Saudi Arabia and Egypt still favor debit card payments. Nevertheless, digital payments overall have played a crucial role in advancing financial inclusion, welcoming many previously unbanked individuals into the digital economy.

In the swiftly evolving digital payments landscape, the integration of Artificial Intelligence (AI) has proven indispensable in combating fraud and reducing the occurrence of false positives.

According to Menessy, AI’s strength lies in its ability to analyze extensive datasets in real-time, differentiating genuine transactions from potentially fraudulent ones with remarkable precision. Machine learning algorithms, a core component of AI, continuously refine their ability to detect irregular patterns and anomalies, thereby reducing false positives—where legitimate transactions are mistakenly flagged as fraudulent. This historic industry challenge is substantially mitigated through AI, fostering trust and satisfaction among customers and creating a more secure and efficient payment ecosystem in MENA.

AI also ensures that Paymob’s merchants can process transactions seamlessly. By harnessing machine learning, the platform anticipates potential disruptions by analyzing historical data and proactively rerouting transactions, circumventing compromised channels to ensure that financial services remain accessible to a broader population without interruptions.

For Menessy, the interplay between data and AI is paramount. He underscores, «The evolution of payments is intrinsically tied to data and AI. Fostering inclusivity in the fintech sector necessitates the responsible utilization of data to enhance AI capabilities. Organizations that overlook this shift or hesitate in adopting these technologies risk obsolescence within a remarkably short timeframe.»

Drawing parallels to the progression observed in autonomous vehicles, Menessy outlines a five-tiered framework charting the evolution of AI in banking. At level one, specific tasks are automated under human direction, while at level five, human intervention is completely eliminated. This vision promises a more secure, intuitive, seamless, and user-centric banking experience accessible to all.

Menessy concludes on an optimistic note, «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.»

Facilitating seamless, secure, and diverse payment methods through innovative AI integration is the driving force behind MENA’s ongoing digital transformation. As the region transitions from cash-centricity to a digital-first approach, technology, guided by responsibility and collaboration, is redefining the boundaries of banking and financial services, paving the way for a more inclusive financial future.