FinTech Trends Report: Payments

Lopez: What are the top forces that you anticipate will impact payment companies this year? 

El Naggar (Egypt & MENA): Driven by a combination of demographic trends, technological advances, and regulatory developments, the MENA payment landscape is poised for significant transformations in the coming year. With a population where 60% are under the age of 35, the region’s younger population remains a central driver for innovation and growth in the sector. Notably, the region boasts one of the world's highest smartphone penetration rates, reaching 97% in countries like Saudi Arabia and the United Arab Emirates, which is facilitating a swift adoption of mobile wallets and electronic payment solutions.

In Egypt, the convergence of high mobile penetration and low banking and credit card penetration (below 33% and 5%, respectively) paves the way for mobile payments to outpace traditional plastic cards. Simultaneously, Buy Now, Pay Later (BNPL) and consumer finance options are rapidly gaining popularity. The growth in e-commerce in the region will be another contributing driver setting higher expectations on convenience and value of payment solutions.

On the enterprise front, governments are actively advocating for financial inclusion through digital platforms, particularly in areas like e-invoicing, taxation, and electronic payments. However, regulators are also intensifying their focus on data privacy and cybersecurity to safeguard customer information and ensure secure online transactions.

Hernandez (U.S.): Global cashless payment volumes are projected to surge by over 80% from 2020 to 2025 and nearly triple by 2030. As the world accelerates towards cashless transactions, we can anticipate several major forces that will shape the payment industry in the coming year:

• Inclusion and Trust: Expanding financial access and ensuring data privacy to build trust among users.
• Digital Currencies: Central Bank Digital Currencies (CBDCs) and private cryptocurrencies have the potential to disrupt the traditional financial system.
• Digital Wallets: Digital wallets are becoming central to transactions as consumers shift towards account-based and QR code-based payments.
• Transformation of Payment Processing Infrastructure: Known as the 'Battle of the Rails,' this force involves a shift towards digital wallets and cloud outsourcing.
• Cross-Border Payments: Currently undergoing a revolution with the introduction of instant, low-cost solutions and standardized messaging protocols.
• Financial Crime: Lastly, financial crime remains a pressing concern, necessitating collaboration among industry players to combat fraud and money laundering.

In navigating these forces, payment companies must embrace innovation, foster trust, and adapt to an ever-changing landscape to thrive in the evolving payment ecosystem.

Lopez: Based on Boyden’s recent executive talent study, innovation is strongly cited as a top driver of growth, while lack of innovation is noted as a top three internal risk. How do payments companies build and harness a culture of innovation? 

Chang (China): Building and nurturing a culture of innovation within payments companies hinges on a strategic approach encompassing several critical components:

• Strong leadership commitment and a clear vision serve as the foundation, setting the tone for innovation within the organization.
• Resource allocation plays a pivotal role, with companies needing to judiciously allocate resources to support innovation initiatives.
• Cross-functional collaboration fosters a diverse exchange of ideas and expertise, while open communication channels encourage employees to freely share thoughts and suggestions.
• Continuous learning and development keep employees abreast of industry trends, nurturing innovation. Encouraging experimentation and rapid prototyping allows for the swift testing of new concepts.
• A user-centric approach, prioritizing customer needs and pain points, guides innovation efforts.
• Leveraging extensive data resources informs decision-making, particularly in fields like AI and machine learning.
• Dedicated innovation teams or research institutes are common among successful payment companies. Investment in talent, both locally and globally, broadens expertise.
• Ecosystem partnerships accelerate learning, resource sharing, and collaborative business opportunities.
• External pressures, including competition, mergers and acquisitions, scalability needs, and regulatory compliance, continue to drive the necessity for innovation within payment companies.