The digital transformation of our economy has created a whole ecosystem of new services, new behaviors and new expectations among consumers and businesses. Smartphones and their new super apps have changed the way we shop, pay, travel and enjoy our free time.
Our new lifestyle comes with an expectation of immediacy. Consumers and businesses want him to be ‘on’ 24/7, and paying for goods and services is no exception.
Consumers and businesses increasingly expect the instant transfer of funds to be standardized. This is nothing short of a revolution in the payments industry. It is a huge turmoil and challenge facing banks and their partners.
I see three main factors enabling and accelerating the move to real-time payments (RTP) in the Middle East.
1. A central mandate to support the success of the GCC region
The rapid adoption of real-time schemes has often been driven by governments, regulators and central banks. The 2022 Prime Time for Real-Time report highlights the role of central authorities. In 2021, the governments of Saudi Arabia and Bahrain will launch real-time payment schemes, while the United Arab Emirates (UAE) plans to launch an IPP scheme in 2023. follow.
Initiatives always aim to promote best-in-class payment services, financial inclusion and increased financial stability, all of which will inevitably lead to stronger economic growth.
When Sarie, Saudi Arabia’s RTP system, was launched in April 2021, real-time trading volume reached 175 million that year. Cost savings to businesses and consumers he estimated at $23 million, with economic benefits calculated at about $166 million. In his more mature RTP market, Bahrain, 142 million real-time payments were recorded last year, resulting in a cost savings of US$39 million and an economic benefit of US$246 million. With the UAE’s Instant Payments Platform (IPP) going live, the government expects real-time transactions to account for 10.4% of his digital payments in the country by 2026.
We can expect these successes to continue. GCC governments have always demonstrated a willingness to encourage and incentivize private sector growth. As a result, the region is home to a strong startup ecosystem and a particularly vibrant fintech sector supported by cloud hyper providers. Our report shows a clear link between the government’s practical involvement in RTP and the speed of its adoption, suggesting that a strong central authority will lead his GCC region to success. is useful for
2. Request to Pay services create new revenue streams
Building value-added services on top of new payment rails is key to getting the most out of real-time payments and facilitating real-time transactions. This will enable banks to offer new and innovative products and services to consumers, businesses and merchants. Request to Pay digital overlay services (especially his UPI in India and Pix in Brazil) are very popular with consumers. This allows consumers to pay merchants directly and manage their finances in a completely different way.
Innovative banks that partner with fintech innovators to build RTP-enabled digital payment experiences can facilitate the largest number of real-time payment transactions and get the most benefit from their investments in real-time.
To take advantage of these opportunities, financial institutions must choose the right partners and new services will have to take into account new consumers who live in a post-pandemic hybrid workplace and who default to shopping and banking at home. Real-time payments should therefore be viewed not only as the core instant transaction proposition, but also as a set of services that enhance convenience and add value to consumers.
3. The cloud as a big enabler of real-time payments
It’s hard to imagine RTP working without a robust underlying IT infrastructure, and cloud computing stands out as a key enabler of instant payments for many reasons. As the RTP space becomes more competitive, the cloud, which accelerates infrastructure deployment and standardizes IT operations and security in a way that simplifies connectivity, will enable financial institutions to reduce time to market. The cloud is also renowned for its flexibility, allowing these organizations to introduce new digital experiences that resonate most with their customers and scale rapidly.
Additionally, in a highly regulated and security-conscious financial world, the fact that hyperscale providers in the region are able to manage and scale their data security and privacy requirements and provide near-automatic regulatory compliance is extremely valuable. Check the important checkboxes. As if this wasn’t enough, hyperscale providers offer economies of scale to reduce costs in many areas.
Greater security builds trust, and better analytics helps build more relevant use cases. The availability and selection of hyperscale cloud providers in the region will further accelerate the delivery of RTP services.
For these and other reasons, the cloud stands out as the exact environment RTP providers need to take full advantage of critical real-time opportunities. The cloud has established itself as the starting point for digital services across industries, and the payments sector must become cloud-first and data-centric to succeed.
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The payments revolution is already in full swing. As we have seen, governments want it because it drives economic growth, and FSI players want it because it helps build new revenue streams. And as it happens, the technology needed to implement it already exists. All that remains for FSI stakeholders is to decide when and how to move.
The RTP marketplace is designed by people who look beyond the essentials of the world in which their customers live. Whatever your use case, be it home shoppers, mobile banking customers, or whatever, there are a variety of RTP-enabled services waiting to be invented. And a wealth of new revenue streams awaits their pioneers.
Santhosh Rao is Senior Vice President – Sales – MEASA for ACI Worldwide.
Read: Ushering in a new dawn for real-time payments in the United Arab Emirates
