As per a recent study, RTP market in the Middle East is expected to grow at CAGR of 13.7% over the next 5 years till 2027. PwC also had earlier predicted that the Middle East RTP market would grow from $1.2 Bn in 2018 to $5.2 by 2023. And from the present trends, it seems the numbers will be met easily.
The Middle East region has seen some massive growth in real-time payments (RTP) over the past few years, with banks and other financial institutions rapidly adopting the technology to provide customers with faster and more efficient payment solutions. This shift can be attributed to a variety of factors like:
- The rise in adoption of digital banking,
- The dominant digital native population,
- The emergence of new payment technologies, and
- The increasing demand for convenience and speed.
Evolution Of Digital Transformation in The Middle East
The shift started with the adoption of digital banking in the region which transformed the way people in the Middle East accessed and used financial services. Even after being a country with one of the highest smartphone penetrations, the consumers were limited and habituated to traditional banking and payment methods such as cheques and cash. However, with the rise of digital banking, consumers could now access a wide range of payment services easily. This has had a huge impact on the way people made payments and completed transactions in a matter of seconds, digitally.
Moving ahead, technologies such as mobile wallets, contactless cards, and digital currencies made it easier for consumers to make payments quickly and securely. These innovations are now leading towards massive behavioural shifts and growing consumer expectations from governments and payment service providers.
Middle East and The RTP Bandwagon
The demand for real-time payments in the Middle East is increasing rapidly and there is a strong reason for it. Globally, RTP has revolutionized the way people make payments, do commerce, and has opened up a great wealth of opportunities for banks and other financial institutions. Additionally, increasing number of partnerships between banks and other financial institutions is making a highly integrated, conducive environment for digital payments to flourish at fast pace in the region.
Finally, governments and financial regulators in the region are increasingly introducing regulations and initiatives that are aimed at making payments more secure and efficient and promote real-time payments in the region. They are also investing heavily on the development of infrastructure that supports real-time payments, such as digital banking platforms, payment gateways and other related technologies.
Take UAE for example. UAE has recently released an innovative payment platform called the UAE Instant Payment Platform (UAEIPP). This platform is designed to facilitate faster, easier, and more secure payments for individuals and businesses within the country. The platform allows users to quickly send and receive payments without the need for intermediaries, such as a banking professional or money transfer services. The platform also features a range of services, including instant money transfers, bill payments, and the ability to set up recurring payments. It is primarily designed to facilitate instant funds transfer at the smallest denomination and initiate a population level behavioural change. The current rollout and the given trends are expected to generate a high CAGR of 36.5% in the coming 5 years.
Similarly, there are other success stories as well from the region. For example, Bahrain at 34.2% recorded one of the highest RTP shares by volume in the region. Saudi Arabia, even though a new entrant to the market, witnessed a massive RTP acceptance and is expected to grow at 22.1% CAGR for the next 5 years.
Given these trends, the Middle East is set to be the next playing ground for RTP led growth and innovation.
Playground For Innovation – Opportunity for The Banks
To add to that, further innovation, and policies around ideas like Open Banking, Blockchain, Digital Currencies, etc. will accelerate this growth by manifolds and that is where banks can hope to win the customers. Customers today are looking for a highly integrated, digital payments journey which the modern-day Fintechs are providing, but the consumer also seeks trust and assurance, which the banks provide.
Banks today need to forge strategic partnerships with technology providers who can not only help these banks create integrated payment journey and seamless experience for their customers, but also help them build solutions that are better suited to cater the needs for fast, connected, borderless commerce environment of tomorrow. Mobile is slowly becoming the primary channel of all payments, and banks that can operate with a mobile-first approach and deliver payment and banking services to the customers on the go, will be creating strong moats for themselves.
The real-time experience is no longer just about faster payments. It is about a growing ecosystem of payment services, built on the strong foundations of a dynamic digital infrastructure - which multiple countries in the Middle East are investing heavily upon. It is only a matter of time now before we witness the growth of a completely new generation of payment service providers offering a host of innovative solutions on the back, of this infrastructure for the digitally native population of the region. Banks and payment service providers who are actively working with the technology providers to equip themselves for this future will reap the benefits of it in the long run. FSS as a payments technology provider for over 32 years and a strong presence in the MENA region, is actively working with the top banking institutions of the region and helping them realise this dream
To learn more about it, write to us at sales@fsstech.co.in
