Banks across MENA must not be thinking they have all the advantages in the digital payments space. They have lots of ground to cover to bring themselves up to speed. Image Credit: Shutterstock

The payments industry has witnessed remarkable growth, fueled by the surge in digitalization, new payment methods and technologies, as well as from demand for instant and cross-border payments.

The MENA digital payments market is expected to grow from $204.17 billion in 2023 to $343.27 billion by 2028, at a CAGR of 10.95 per cent. Globally, payments have become a key area for investment in innovation. A recent study revealed that 94 per cent of banks plan to invest in payment technologies to keep up with fintechs and evolving customer demands.

Real-time payments have gained immense popularity, with consumers and businesses expecting fast, seamless, and frictionless transactions. The Central Bank of the UAE has launched an instant payment platform, compelling banks to accelerate their strategies to remain competitive.

Financial institutions must continue to meet, and exceed, customer expectations to grow and thrive. Banks not investing in future-proof payment capabilities may fall behind in customer retention and acquisition, and stunt long-term growth.

New opportunities with new technologies

Although the financial services industry is experiencing a perfect storm of challenges - regulatory scrutiny, tough economic conditions, data security and privacy concerns, increasing competition, and shifting consumer behaviour - banks are also presented with growth opportunities through new technologies.


McKinsey estimates that the annual potential value of AI and analytics for global banking could be as high as $1 trillion. This is hardly surprising, given the power of applying AI and machine learning to solve real-world challenges or for specific use cases, offering financial institutions the opportunity to better serve their customers.

Consider document checking and processing as an example. Using machine learning, computer vision, and natural language processing technologies, banks can automate this task by extracting data from paper-based documents.

This can be used, for example, to ‘read’ identification documents or financial statements to automate Know Your Customer (KYC) procedures or credit decision-making. This ultimately helps banks to reduce operational overheads and decrease the risks associated with human errors.

Fraud and money laundering prevention are other major use cases for AI and machine learning. Financial institutions can strengthen their digital security and safeguard their customers by deploying solutions that fight financial crime - in real-time. Such technology can learn and understand the payment behaviour of each customer to detect anomalous transactions as they occur.

By tapping into an ecosystem of third-party applications from specialist fintechs, facilitated by Open Finance and open APIs, banks can implement these services at a reduced cost in comparison to building these internally.

To accommodate the requirements of instant payments, we are also seeing increased adoption of cloud-based Payments as a Service (PaaS) solutions to provide banks with the required resiliency, security, scalability, and availability for supporting 24x7 payments services.

Personalised experiences through data

Underpinning the move to instant payments is ISO 20022, a global open messaging standard designed to provide a common messaging language across banks and geographies. This new format provides access to better-structured data elements across the payment chain and helps speed up processing, support regulatory reporting and compliance.

Access to stronger and broader datasets can lead to a better understanding of customer behaviour and, as a result, a more personalized user experience. For example, with ISO 20022, financial institutions can create a more accurate picture of a customer’s ‘true’ creditworthiness by using alternative data not used by traditional scoring methods.

The ISO 20022-compliant solutions that include micro-services and open APIs to integrate with existing financial systems, can help banks seamlessly implement instant payments and offer enhanced experiences that strengthen customer relationships.

The payment landscape comes with constant changes in customer, regulatory and industry demands, and with new technologies emerging that require new skillsets to deploy.

By partnering with technology companies and fintechs, banks can benefit from expertise, resources and capabilities beyond their own, leveraging technological advancements that may not be feasible to develop internally.