How mobile network operators can drive the next wave of financial inclusion in MENA

2020 witnessed a huge shift in the payments sector.

The way that we pay for goods and services has rapidly changed to a digital model, bringing convenience and security to consumers. Across the region, the use of contactless payments and e-commerce has grown, indicating an acceptance of digital payments, and a user base that is ready for more innovation and new payment services.

But not everyone has been able to participate in this payment revolution. According to The World Bank, in 2017 there were 1.7 billion unbanked adults worldwide without access to bank accounts or banking services.

Access to banking can greatly improve people’s lives by enabling them to save for healthcare or education, to build a business, to manage their financial risk and to get easier access to government payments or pay bills online. All of these factors can create a direct improvement in quality of life and increase economic activity.

Mobile telecommunication companies have played a leading role in bringing many different types of services to consumers. As mobile phones have proliferated and increased in capabilities and features, so has the ability of mobile network operators (MNOs) to create an impact on the way that people access financial services. Today, MNOs are empowering consumers in countries around the world, and through partnership with payments providers, they are bringing new services to developing markets.

Payment ecosystem

There are many inherent advantages that mobile operators have when it comes to innovations and delivery of financial services.

MNOs have direct access to a large customer base that includes the harder-to-reach segments of the underbanked and unbanked. Adoption rates are likely to be high due to the MNO offering persuasive user benefits such as affordability and ease of use, and the majority of the customer base is likely to be comfortable with and have trust in mobile as a secure and easy to use transaction platform.

In addition, the MNO controls the technical platform to connect with the customer, the cell towers and other infrastructure, to make rollout easier.

The mobile industry in the Middle East and North Africa (MENA) has largely risen to the challenge of sustaining social and economic activity in the region during the pandemic, despite unprecedented growth in data traffic.

Currently, 60 per cent of internet access in MENA is through smartphones. The number of smartphone users in the region has almost doubled from 86 million in 2014 to an estimated 174 million in 2019.

In countries like UAE, smartphone penetration stands at 99 per cent of the total population with users spending almost six and a half hours a day on their smartphones.

With such a high penetration of smartphone usage, mobile payments are a viable solution to access life-enhancing services, especially for the underserved and underbanked segments. Ultimately, promoting financial inclusion not only helps alleviate poverty, but enables entire economies to thrive. For the region as a whole, the rapid adoption of contactless payments suggests that people are ready to embrace advanced services that make their lives easier.

To bring the next generation of mobile digital payment services to life and offer the benefits of convenient and secure payments to people across the MENA region, collaboration between payment providers and leading MNOs is critical.

When payment providers open up access to valuable aspects of their network and technologies, including application programming interface (API), tools and support, MNOs are able to develop faster and more secure payment solutions and platforms.

Payment providers can support MNOs with proof of payment for issuance and network capabilities for remittances, person-to-person (P2P) and person-to-merchant (P2M) payments, and digital wallets.

Through the collaborative approach, MNOs are able to combine payment and financial services with other digital solutions to create ‘superapps’ that offer multiple services in one app.

With the large user base and trust in MNOs, these ‘superapps’ have tremendous growth potential and can reach a very broad market, including underserved segments, increasing the potential for meaningful and responsible growth.

As the economy continues to struggle, it is more important than ever to expand merchant access to payment acceptance and drive financial inclusion for those in need. And MNOs can help move the needle on that front.

Akshay Chopra is the vice president and head of Product Innovation and Design for Central and Eastern Europe, Middle East and Africa at Visa