Cover story: Why this man is seeking to create the ‘world’s largest digital bank’

If there has been one word that has now become a cliché for discussing the economy during the Covid-19 pandemic, it is arguably ‘digitisation’. The crisis forced companies to innovate and accelerated digital transformation plans. Every sector has had to adapt to changing consumer demands while also ensuring cost efficiencies.

“Digital transition has been the main focus during this past year and will remain a focal point for many industries and businesses in the future,” says Mountaser Hachem, CEO and founder of Monty Holding – the parent company of regional telecoms solutions provider Monty Mobile.

“It helped organisations overcome most of the challenges – not just those set by the pandemic. Without this major development, many companies and even industries would have experienced a distressed period. But the challenge resides in the ability to not just develop digitisation to meet current demands and improve services, but to also keep up with new future trends,” he elaborates.

It is to tap into the future that Hachem has now diversified his business by entering into the fintech space – an industry that is set to take off in the region. According to consultancy PwC, although smartphone penetration is at 96 per cent in the GCC region – well above the global average of 58 per cent, fintech has not developed at a similar pace. However, that is rapidly changing, driven by evolving consumer preferences.

A survey of more than 1,000 respondents in the UAE, Saudi Arabia and Egypt by PwC last year found that 53 per cent had used smartphone payments for online deliveries during the pandemic. More than 90 per cent of those respondents also stated that they would continue using smartphone payments even after the crisis had subsided.

“Regional governments have understood the scope for rapid fintech growth and have sought to introduce regulations to facilitate market development,” says PwC. In Saudi Arabia, for instance, the Financial Sector Development Program (FSDP) is spearheading the move towards a cashless society by targeting 70 per cent of transactions to be cashless by 2030.

“Entering the world of fintech was not an easy decision nor an easy implementation. However, this step was much needed to cope with current global demands and trends. This line of business will offer us new challenges in terms of new products and services to forge, and, at the same time, it will open new opportunities for Monty Holding,” explains Hachem.

The company has set up Monty Capital, a Swiss financial institution based in Geneva through an acquisition, as part of wider plans to establish and launch its own global neo digital bank, My Monty.

“There is now a clear demand for banking processes based on a simple and straightforward approach with consumers moving towards digital banking services to perform a lot of their daily needs. Many tools are offering features that were not doable through traditional banking methods. The evolution in fintech technology is expected to further trigger the growing demand for such services,” states Hachem.

“The ability to perform banking services anywhere on the planet is what My Monty is targeting. Our new services will strengthen our presence and reach new regions in the emerging markets. Our new fintech products will incorporate many banking and financial services that go beyond the need for any traditional bank access. From payment gateways and financial advisory services, to digital and core banking as well as direct carrier billing, our fintech solution will enable us to target and offer financial inclusion to many unbanked regions with over one billion residents who have no access to traditional banking services, thus fulfilling our main purpose and mission.”

Some of the services that My Monty will offer include allowing customers to open a paperless account without a minimum amount; physical and virtual “any currency” payment cards; online banking services; money transfer and remittances; bill payments and nano-lending.

Meanwhile, planned features of the new venture, aimed to be implemented this year, include digital onboarding (covering ID verification and profile management); payment instruments (link to different cards, forex transaction management and payments); AML and anomaly detection; and personal finance management.

Additional features including loyalty management, AI and digital lending are slated to be added on next year, with future plans also envisioning an expansion into wealth management, stocks and cryptocurrency.

For the new venture, Hachem is looking to collaborate with banks – starting July – to capitalise on their facilities and help the sector transition from a traditional mindset to a digitalised and technology-oriented standing. He is primarily looking to tap into banks and investors interested in entering the South East Asian, Middle Eastern and African markets, who are keen to explore the fintech space. My Monty is also seeking to partner with mobile operators who would like to manage their wallets and offer a wider range of services to their subscribers.

“My Monty will give banks and mobile operators the opportunity to manage their wallets across two aspects. On one side, they can develop their wallet capabilities by allowing a better customer experience. And from the other side, it will give them the ability to increase the digital aspects of their wallet services, to a wallet-tech futuristic approach,” he says.

According to Hachem, “as of July 1st, we will start welcoming investors and partners aiming to become part of the largest digital bank in the world”.

Despite not being part of the traditional banking ecosystem, Hachem is confident that the company has the scope to run the new venture successfully. “This is not the first launch of such an entity by entrepreneurs coming out of the traditional banking institution. Our past experience, innovation and willingness to invest in advanced knowledge that meet current demands as well as future trends will be our assets to gain ground in this new rising industry,” he states.

“Fintech is the future, and it is grabbing a lot of attention these days by many different industries which are complementing their operations in one way or another to achieve higher efficiencies and better services. In addition, the demand for such services is rising exponentially. It is a good time to ride the wave in this direction and develop ourselves in creating this futuristic technology,” Hachem adds.

He is also confident that Monty Mobile and the new fintech venture will be able to combine their strengths to offer new synergies.

“Mobile operators and fintech are without a doubt two different types of businesses. They come from different industries, operate and target different markets, have different sizes, and different cultures. However, there are several areas in which they can collaborate and offer creative and new technologies to the market even though they are so distinct in every aspect. They complement each other. Operators, through their marketing and distribution expertise, would offer a wide access to the market, while fintech will bring about fast, innovative and flexible competence,” he explains.

Making the connection
An interesting exhibit at Terra – the Sustainability Pavilion at Expo 2020 Dubai, which was open to the public between January to April, was an area where visitors were asked to pick three things they would carry with them in case their houses burned down/got submerged in the ocean. There were all kinds of items listed, but a popular choice – not surprisingly – was their mobile phone.

For most of us today, the day starts and ends with our mobile phone. Its usage has moved from being a good-to-have to a must-have, with manufacturers scrambling to add new features and make us ever more connected with the devices.

The increasing use of the mobile ecosystem has in turn put more pressure on network operators, who have been forced to constantly repurpose their offerings in line with market demands. “Revenue growth from traditional mobile services is coming under increasing pressure because of price competition and market saturation, particularly in the highly penetrated GCC markets,” industry body GSMA said in a 2020 report.

But it also credited the mobile industry in the Middle East and North Africa (MENA) of “rising to the challenge of sustaining social and economic activities in the region during the pandemic, despite the unprecedented growth in data traffic”. By the end of 2020, nearly 280 million people in the region (45 per cent of the population) were connected to mobile internet.

As someone deeply connected with the regional telecom industry for over 20 years, Hachem knows the market well and has seen its rapid evolution.

“The telecom industry has been at the centre since the beginning of the digital evolution that started a couple of years ago. Since then, many forces were building pressure on mobile operators’ businesses,” he says.

“The past year was exceptional; it was full of unexpected circumstances that led to major changes in consumer behaviour. Put simply, consumers shifted to digitisation through their phones to fulfil most of their daily basic needs. Communication, shopping, banking services, and even remote work all became accessible at the palm of their hand.

“This situation, which affected the telecom industry as much as the subscribers, prompted Monty Mobile to take action through the development of innovative products offered to mobile operators that meet subscribers’ current demands in this particular phase,” he explains.

Monty Mobile, as a VAS (value added services) provider and an international SMS wholesale intermediary hub, introduced products such as Mobile Virtual Credit Card, Story RBT (and Video RBT) and M-Health (including the Corona app) to support operators.

That the market is booming is no secret; the number of unique mobile subscribers in the MENA is set to grow from 394 million in 2019 to 458 million in 2025, expanding at a CAGR of 2.5 per cent, according to mobile industry expert GSMA. The mobile penetration rate during the period is also estimated to increase from 65 per cent to 68 per cent.

Looking specifically at mobile internet users (excluding licensed cellular IoT), numbers are set to grow at a CAGR of 5.1 per cent, from 264 million in 2019 to 357 million in 2025, with the penetration rate rising from 43 per cent to 53 per cent. Meanwhile SIM connections (excluding licensed cellular IoT) in the MENA region are also slated to increase from 636 million in 2019 to 709 million in 2025, at a CAGR of 1.8 per cent, according to GSMA.

“Currently the telecom industry in the Middle East and Africa is going through an inflection point. In the last couple of years, the sector was growing rapidly. We witnessed many telecom companies expanding through regional mobile operators’ acquisitions for the purpose of promoting their proper networks,” Hachem explains.

“The rapid population growth in this region, especially in the youth segment, combined with a growth in smartphone penetration, will lead to a booming subscriber growth. Thus mobile operators have to keep up with such growth and new upcoming service requirements by updating their services and upgrading their infrastructures as well as protecting and reducing leakages in their networks to increase efficiency of their systems and decrease losses on their revenues.”

According to GSMA, $70bn will be spent in the MENA region on infrastructure rollouts between 2019 and 2025.

“To keep up with such a growth rate will not be easy and will come at a definite cost. I believe that the telecom sector in the GCC specifically will likely go through some sort of consolidation given the huge investment required to secure and structure a new business model.

“New revenue generation models as well as new advanced businesses have to be meticulously explored. The future will be defined by this new form of digitisation. Operators in this region having a suitable infrastructure will be able to take advantage of those trends wherein lies most of the future growth,” says Hachem.

However, while the telecom sector has been instrumental in bringing about digital transformation, they have not been able to reap significant financial benefit from it, opines Hachem.

“The role that mobile operators are playing in translating this digital service to subscribers has not returned the full value for mobile operators. The digital shift has posed key barriers for the telecom industry that include the need for new revenue generating opportunities.

“Revenue generation from traditional communication channels are severely affected and it is now important for operators to broaden their focus and reach services in the internet of things, digital services and new models of digital communication structure featuring interfaces such as augmented and virtual reality,” he states.

In its report, GSMA similarly states that due to the increasing saturation in mobile markets across the region, particularly in the GCC states, operators are seeking new revenue streams – because of which momentum for enterprise services is growing.

“Competition in this industry has been very tight. A race to win long-term customers and subscribers’ loyalty always exists. It is driving most mobile operators to become more disposed towards searching for new products and services to guarantee different sources of revenue,” adds Hachem.

Looking ahead, Hachem remains optimistic that the key to progress will remain innovation – but only when it’s combined with the very basic values that any service provider offers.

“As I always convey to my team, never give up no matter the difficulty of the situation. While innovation is the main key to our progress, the continuous availability and quality of our service will remain the key driver to retain our customers’ loyalty,” he says.

Hachem certainly appears to be headed in the direction of the future.