Rise of Digital Banking and Payments in the Middle East

Rise of Digital Banking and Payments in the Middle East
Rise of Digital Banking and Payments in the Middle East

The story of digital banking and payments in the Middle East is a rather interesting one. Although digital banking and payments in this region had started a little later than most other places, the financial services landscape is rapidly changing. The recent years have seen an unprecedented increase in the number of digital banking and payments initiatives. A high literacy rate coupled with wide access to smartphones and customers wanting to avoid the hassles of conventional banking has accelerated their growth.

In GCC countries, UAE has taken lead in digital financial services space with many banks investing in multiple digital initiatives. These range from the launch of digital-only banking platforms to the strengthening of the existing net-banking services. CBD Now, an initiative by the Commercial Bank of Dubai, is UAE’s first digital bank. This was followed by the launch of Liv. Liv. is a mobile app that is the ultimate millennials digital proposition. Targeting the same customer segment, we have Mashreq Neo, the full-service digital bank of Mashreq Bank. The collaboration of the Abu Dhabi Islamic Bank (ADIB) with the Fidor Bank has paved the way for Middle East’s first community-based digital bank. Xpence, is another neo bank, that is offering regions first digital only business account for freelancers, solo entrepreneurs and start-ups.

However, the story of the growth of digital banking and payments in the Middle East does not revolve around the UAE alone. The entire region is abuzz with initiatives on digital banking and payments. Take Oman for example. Bank Muscat, Oman’s largest bank has launched country’s first mobile wallet bmWallet in August 2017. The bmWallet app has more than 10,000 downloads in short time. Bank Meethaq, the Islamic banking arm of Bank Muscat has also launched its own wallet – Meethaq Wallet. Sohar International and telecom operator Omantel have launched eFloos. These services allow customers to load money into mobile wallet using debit card, mobile banking, internet banking or ATM. With their mobile wallet loaded, customers can send money, request money and pay merchants instantly just using recipient’s mobile number. Not just banks, the Central Bank of Oman is also putting its best foot forward to provide an enabling digital payments environment with introduction of mobile payment clearing system MpClear, a first in the GCC region. The MpClear system provides interoperability and unified switching and clearing services between various mobile wallet and banking services operated by different banks in the Sultanate, making transactions across different wallets simpler and convenient for consumers.

Bahrain is also making great strides in the field of digital banking and payments. National Bank of Bahrain and Almoayyed International Group has launched Meem, first Sharia-compliant digital bank in the world. This digital initiative is targeted at the corporate population of Bahrain. In terms of popularity, bWallet, provided by financial company AFS and telecom operator Batelco, has emerged as one of the most liked mobile wallets in the kingdom with more than 50,000 installs. Customers can self-register for the bwallet app without having to visit the nearest bank and load it through a debit card, makes the experience truly digital. bwallet supports both domestic and international money transfers. But the most popular use case is merchant payments. bwallet users can use their mobile phone to pay to more than 1200 domestic and global brands by just typing merchant’s mobile number or scanning the QR code generated by merchants on their mobile phone (Dynamic QR Code). The numerous discounts and cash-back that come with bwallet has played an instrumental role in encouraging the service.

In Kuwait, the one of the leading banks in the country is focusing on contactless payments. The bank is using host card emulation (HCE) technology and Tokenisation to deliver swift, seamless, secure and convenient contactless mobile payments to it card users. Customers can create a virtual version of the physical card on their mobile phone and can make payments at merchants by just tapping the phone at an NFC POS. Tokenisation converts customers’ card information into a device-specific digital token. Hence, while executing a transaction, a digital token is shared and the customer’s actual card information is masked, thus securing the transaction. This is similar to the digital payment services as seen in the western world. Not just mobile phones, the bank has also launched a service that facilitates contactless payments at merchants using Fitbit devices.

Beyond GCC, in Middle Eastern countries where banking penetration is low, mobile money services like AsiaHawala in Iraq and Orange Money in Egypt are bringing a revolution in digital payments. These are comprehensive services serving financial needs of diverse consumer segments. On one hand, mobile money services provides instant anytime anywhere payments for online shopping, eVoucher purchase, transport, airtime and data recharge to millennial and Gen-Z consumers enabling digital revolution. On other hand, they facilitates remittances for unbanked, donations for orphans and financial-aid to the refugees helping them to sustain. For example, In Iraq, over 15 humanitarian organisations like UNHCR, WFP and ICRC have leveraged AsiaHawala mobile money service to provide financial aid digitally to over 200,000 households. Digitizing financial aid disbursement has removed middlemen making these payments timely, secure and corruption free.

Countries are developing digital financial infrastructure to accelerate the growth of digital financial services. In Egypt, the Central Bank of Egypt has enabled interoperability between digital financial services in the country widening their reach.

The banks and fintech embracing digital banking and payments are growing continuously leading Middle East towards a cashless society and truly digital economy.