Technology is helping us achieve things previous generations could only dream of – or couldn’t even have imagined. We’re able to send messages in real-time from an aircraft 30,000 feet above the ocean, stream a movie immediately from a library of thousands on a miniature telephone with a 4HD TV screen, listen to music on headphones without wires, switch on smart lightbulbs from the other side of the world and open bank accounts immediately from the comfort of our own homes.
The latter of these extraordinary innovations – financial technology – is one of the most transformative and important digital inventions because of its inclusive potential. In the age of Covid-19, fintechs allowed us to carry on shopping, paying, banking and transacting safely without needing a branch or a signature. According to PwC, the digital payments market in the Middle East was already the fastest growing in the world in 2019, a trend that persisted until the start of 2020 when it dramatically accelerated as people swiftly moved more of their lives to the digital space during lockdown.
We now regularly work online from home, we join virtual meetings, we educate children remotely on tablets, we are entertained via streaming services and online content, we switch seamlessly between devices and wearables, we buy groceries online and make contactless payments in-store. According to McKinsey, we vaulted five years forward in consumer and business digital adoption in a matter of weeks. The victim in this rapid evolution is cash.
Thanks to the age of Covid-19, cash is viewed as risky, inconvenient and expensive – it also remains a barrier to financial inclusion and growth. In comparison, digital payment methods are secure, seamless, cost-effective and inclusive. With so many physical markets, particularly those in the informal sector, being closed down in 2020, there has been a rush to get online. More people and small businesses can now be welcomed to the formal economy, setting the foundation for sustainable, inclusive growth.
The ease of contactless and QR payments has made this rapid transition incredibly easy for individuals and business owners. Mastercard has helped partners make a seamless transition into the world of digital commerce by providing omni-channel payment capabilities and experiences. Not only will 90 per cent of consumers carry on shopping this way, the company’s research data shows 54 per cent of people in the UAE believe a preference for e-commerce over in-store shopping is here to stay.
Today, the world faces a $5.2 trillion cyber breach problem, which is one of the biggest threats to consumer trust. The good news is that digital solutions to these problems already exist and are being innovated by companies like Mastercard, which in 2019 alone saved stakeholders $20 billion in fraud prevention through its AI-enabled cyber systems.
Safety is priceless to SMEs – and it has to be because they are the lifeblood of economies, providing a livelihood for the majority of people in our societies. Yet the Global State of Small Business survey, published by Facebook in partnership with the OECD, found that 50 per cent of small and medium businesses in the UAE have reduced the number of employees as a result of the COVID-19 pandemic, compared to 35 per cent in Saudi Arabia and 51 per cent in Egypt.
Access to SME financing is part of the challenge - according to the IMF, in the Arab world, SMEs represent 96 per cent of registered companies and employ half of the workforce yet lending to SMEs in the region is only 7 per cent of total bank lending.
Connecting the UAE’s small businesses to the digital economy is crucial if we are to ensure inclusive growth that can change communities for the better. This means helping businesses and merchants, while playing a vital and stabilising role in enabling commerce. Financial institutions and payment solutions providers have to partner to connect small businesses with the technology that can help them generate income, fulfil payments and gear up for growth.
Companies like Mastercard are powering technology solutions, platforms and propositions to enable a superior digital experience and drive greater inclusion for communities across the globe: for job creators and employees alike. Business owners and individuals must become digitally empowered and financially included.
However, this is not a solo journey. A digital future is only possible through the power of collaboration and innovation. By harnessing the exponential impact of partnerships, the private and public sector can come together to create a brighter, more connected and more inclusive future for all.