Key Takeaways from Mastercard MENA Business Forum
Mastercard MENA business forum was held on 28–29th November in Dubai, with participation of MC partners in the region. The motto of the program was Alchemy of Minds. There was presence by banking card professionals from GCC countries and Pakistan. Speakers were Mastercard experts and MC partners in the region.
Innovation, Gen AI, NFT, Loyalty & Engagement, Digital Assets, ESG, Fintech Partnerships, Open AI were the catchy topics that took audience attention. Here are some takeaways from sessions that I participated:
Economic Outlook in a Nutshell: MC economist has presented economic outlook globally and for GCC region specifically. Although economic growth is below expectation globally, in GCC region non-oil growth looks promising. Global inflation will continue to be a problem in 2024. US has outperformed expectations this year in terms of growth. Euro Zone recession seems flying by. China’s 2023 economic growth is disappointing. Consumer spends in apparel, experiences, lodging and restaurants is booming in both GCC and Kuwait. Home furniture, electronics and jewelry have a negative spend trend in 2023.
GCC travel index (2019=100) is currently 122 and global travel index is 96 (2019=100). That means, GCC travel booking trend has differentiated positively from global trend. Kuwaitis are ranking first in terms of travel spend per person in London, Dubai and Paris. In 2023, Kuwaiti’s Luxury and experience spend increased more than 200% compared to 2019. Essential items spend share has increased in Europe due to recession and inflation, however it did not change in GCC region compared to 2019 pre-pandemic levels.
Retail Banking of Tomorrow Session: AI, Digitalization, Open Banking and Fintech Partnerships are still key trends for 2023. AI can help to hyper personalize communication with customers and improve C/I ratio via automating back-office processes. Predictive analytics capabilities have increased more via AI involvement especially for real time actions such as on spot instalment plans, cross sell and up sell based on card spends. One of the areas that AI is involving currently is Fraud prevention. There are still doubts about generative AI’s role in banking, and they are trying to understand more.
Innovation in Action Session: Buy-now-pay-later market is growing very fast, and banks are trying to be the first entrants with fintech partnerships. Compliance and regulators are key players in the Fintech collaborations. Fintech’s are problem solvers via finding the gaps in the regulation and proposing a solution to partnered bank. Essentially, one bank is enough for a fintech in the same market.
Evolution of Embedded Finance Session: Now, payments are defined by experience. Open banking is the main catalyst for embedded finance and it's a global phenomenon. Banking as a service is the way to utilize open banking. Buy now pay later is a good example of embedded finance. As a bank or partner, you can own whole journey (moving home example). Main principle is reaching customers before they reach you. Starbucks is a good practitioner of embedded finance. TVs, commercial vehicles, voice assistants are kind of embedded finance actuators. VR , AR , XR will be powerful communication medium in the future. MC product called ‘embedded finance in receipt’ is a good kind of implementation which is connected to geo location when customer finish the purchase. Then it starts to give some offers based on integration with Google. Data is the next asset and NFT will have much more realistic cases in the future (Nike might be the first one). Partners/banks should decide which ecosystem they will be part of. Partnerships, APIs and data are new key assets.
Partnerships in Action Session: FinTech's main role is solving problems. They can understand a situation quickly and take agile actions.
Loyalty and Engagement Session: Experiences and emotions are new notions that loyalty can focus on. Simplified and sleek user experience for loyalty is important. Subscription based loyalty membership can be thought of as new way for top segment customers to touch their emotions. Amazon prime is a good example for this. Chat GPT, Gen AI can help to simplify customer interactions. IOS, Android might be replaced with new gen AI solutions as operating system. Humans might have their special assistants soon. MC travel assistant prototype based on Chat GPT plug in was a good example which integrates wallet with assistant itself.
Digital Assets Session: GCC / Bahrain is more flexible in terms of crypto currencies adoption. Central Bank might allow for UAE dirham backed stable coin in future term. This will be catalyst to digital assets adoption in short term. Some banks in region have established teams for NFT and digital asset creation already.
ESG Session: Google’s sunroof project to target individuals and SMEs collaboration regarding solar power finance is an interesting implementation of ESG awareness. UAE banks has promised MC to print all cards with sustainable material (recycled plastics) by 2028. This type of promise is first in the world which coincided with COP 28 meeting in Dubai. In next 2–3 years CO2 emissions regulations will be much more visible in end user products (such as emission amount written on the packages etc.)
In conclusion, the evolution of banking sector is now much faster and more visible in GCC region. Key development areas are highlighted clearly which might change next year as well. On the other hand, AI and open banking were stars of the forum as catalysts of the growth.
