A look into the rise of digital banking and payment systems in the Middle East yields a captivating story. There is a notable change in the financial services landscape of the Middle East although digital banking and payments took a little more time to get off the ground in this region. Over the past few years, there has been a proliferation of digital banks and payment initiatives in the region. This rise in digital banking and payment is propelled by growing literacy and wide access to smartphones. The desire of customers to break away from the hassles of traditional banking has also played a pivotal role in this digital growth.
Amongst GCC countries, the UAE leads the digital financial services innovation with several banks investing in multiple digital ventures. These investments encompass the launch of digital-only banking platforms and the improvement of the existing net-banking services. The first digital bank to rise in the UAE is CBD Now, an innovation launched by the Commercial Bank of Dubai. Liv, a mobile banking app that is the ultimate digital dream of millennials followed closely after CBD Now.
Mashreq Neo, which is the full-service digital child of Mashreq Bank comes a close third and targets the same consumer group as the two mentioned above. The Abu Dhabi Islamic Bank (ADIB) and the Fidor Bank have come together to develop the Middle East’s first community-based digital bank known as Xpence. Xpence is a neo bank that provides the first completely digitised business account for Startups, solo entrepreneurs, and freelancers.
The growth of digital banking and payment services in the Middle East is not a story that is confined to the UAE alone. There is a growing wave of digital banking and payment initiatives coursing through the whole region. In Oman, for instance, the nation’s largest bank was able to launch the first-ever mobile wallet referred to as bmWallet in August 2017. The bmWallet app currently has over 10,000 downloads in the short term since its launch. Another new wallet is the Meethaq Wallet launched by Bank Meethaq, the Islamic banking subsidiary of Bank Muscat. Customers can easily fund their mobile wallets via ATM, mobile banking, internet banking, or debit cards.
Transferring, receiving, or making payments to merchants becomes very easy after the wallet is loaded, all you need is the recipient’s mobile number. The Central Bank of Oman is actively involved in the wave of digital innovation; to ensure that digital payments flourish, they have introduced the mobile payment clearing system known as MpClear, the first of its kind in the GCC region. The duty of MpClear is the provision of interoperability, clearing services, and unified switching between all the existing mobile wallets and banking services offered by several banks within the Sultanate. They aim to simplify transactions across several wallets and make it more convenient for customers.
In Bahrain, giant strides are being taken in the realm of digital banking and payments. The launching of Meem, the first Sharia-compliant digital bank in the world through the concerted efforts of the National Bank of Bahrain and Almoayyed International Group is a remarkable feat. Meem is targeted at the corporate population within Bahrain. The most popular digital banking initiative in Bahrain is bWallet, launched by the financial company AFS and Balteco, a telecom company based in the region. bWallet has grown into a most welcome innovation, beloved of most people in the Kingdom as evidenced by the over 50,000 installs recorded already. Registration can be done with ease and loaded through a debit card without the need to visit a physical branch, this digitised experience is another reason the app is loved by many. With bWallet.
Customers can make both local and international money transfers but for most customers, the best use of the bWallet is merchant payments. bWallet users can easily make payment to over 1200 domestic and global brands simply by keying in a mobile number or scanning a QR code generated by merchants on their mobile phone (Dynamic QR code). Several discounts and cashback which users have enjoyed with bWallet have helped to improve bWallet’s popularity.
One of the leading banks in Kuwait is taking the path of contactless payments. With host card emulation technology (HCE) and Tokenisation, the bank delivers a fast, secure, convenient, and seamless contactless payment to holders of its cards. Most customers can create a virtual version of the physical card on their mobile phone and utilize this for making payments. All they have to do to generate a virtual card is simply to tap the phone at an NFC POS. With Tokenisation, a customer’s card information is transformed into a device-specific digital token. This means that a digital token will be shared while the customer’s real card information is masked thereby ensuring a secure transaction. This service is likened to many others available in the West. The bank has also been able to go beyond mobile phones, launching a service that facilitates contactless payments at merchants with the aid of Fitbit devices.
In Middle Eastern countries, beyond the GCC, where banks have very little penetration, you have such services like the AsiaHawala in Iraq and Orange Money in Egypt both of which are leading the digital payment revolution in these regions. Both innovative banking services are comprehensive services catering to the financial needs of their diverse consumers. These services always come in handy for managing airtime purchases, online shopping, evoucher purchase, transportation, and data recharge especially for millennials and Gen-Z who are the major targets of the digital transformation.
From another angle, these digital payment systems make remittances for the unbanked, and financial aid for orphans and refugees easier. There are more than 15 humanitarian organizations in Iraq such as the UNHCR, WFP, and ICRC all of whom have been able to make their contributions to over 200,000 households through the services provided by AsiaHawala. The digital options these banks provide make disbursement of aid easier, eliminating middlemen and corruption.
Countries are doing everything possible to encourage the growth of digital financial infrastructure. Such extra effort can be found in Egypt where the Central Bank of Egypt enabled interoperability between digital financial services within the country to make their sphere wider.
With such an enabling environment, Banks and fintech are swimming into the wave of digital banking and payments, driving the Middle East towards a cashless era and a completely digital economy.
