Online payment card secure
Once the IPP is established centrally, the segment’s five-year CAGR of 14 per cent is very much achievable. Image Credit: Shutterstock

As the MENA region’s fintech hub, the UAE’s vision for 2023 and beyond is quite exciting.

The backbone of this vision is the imminent rollout of the Instant Payments Platform (IPP) under the National Payment Systems Strategy (NPSS). The IPP aims to facilitate a real-time mechanism to transfer funds person-to-person and, most importantly, person-to-business, person-to-government and business-to-business, which makes it a game-changer of sorts.

From a regional perspective, this transformational initiative will mirror what has been achieved in India, Malaysia and GCC countries such as Saudi Arabia and Bahrain, where real-time domestic payments have led to millions of dollars in economic output and greater financial inclusion for the SME community.

As stakeholders of the financial services ecosystem, we are confident that the benefit of such a universally interoperable mechanism will eventually carry over to payroll processing and cross-border payments, while simultaneously influencing healthy competition to improve operational processes and customer experiences.

What adds credence to this expectation is the fact that over 28 million real-time transactions have already been processed in the UAE over the last couple of years without this framework in place. Meaning, once the IPP is established centrally, the segment’s five-year CAGR of 14 per cent is very much achievable.

The Central Bank of UAE has also taken the lead to instil a sense of assurance around data protection and compliance by partnering with SupTech (supervisory technologies) propositions. Considering its consumer-centric approach over the last couple of years, it is safe to say the IPP will follow a similar path of being a reliable and trustworthy system without hindering innovation.

Launch of digital currencies

Another much awaited rollout is that of Central Bank Digital Currencies (CBDCs), which will play a crucial role in optimising cross-border payments. Recent initiatives such as ‘Project Aber’ between UAE and Saudi Arabia and the Project mBridge between UAE and multiple countries of Central and South Asia show that various governments are serious about exploring alternative distributed ledger technologies.

The UAE Central Bank’s spirit of global collaboration gives us hope that 2023 will mark the debut of a scalable digital currency solution in a corridor or two.

Getting to these innovations and more will of course require a world-class workforce that combines local and international knowledge. In this regard, the UAE’s Emiratisation drive, including in the financial services sector, has its heart in the right place.

The UAE has been investing heavily into capacity building among its citizens, and it is only fitting that companies build for the region and beyond by embracing the knowledge of the local workforce and their deep understanding of consumer habits.

It’s going to be an exciting new year for the country’s financial services sector, and I wish everyone a memorable and prosperous 2023.