Customer demand, technology and innovation
Raghu Malhotra, President, Middle East & Africa at MasterCard sat down with Banker Middle East at the Innovation Forum in Budapest to discuss its direction going into 2017.
What is your outlook on the UAE market and how does it compare to its global peers?
For us, the Middle East has been an engine of growth in relative terms to the rest of the world for two reasons. First—the predominant way of how payments were made in the Middle East was cash.
Then a major shift took place—from a manual way of conducting transactions to the digital form.
Second—many governments in the Middle East especially in the GCC and Egypt have been very forward thinking in terms of what the digital economy would look like. They started introducing policies to establish the infrastructure for that change to take place. On top of this is the high level of mobile penetration in the region. Putting these things together have created the impetus for growth.
Therefore, the growth in the Middle East is relatively more dynamic that the rest of the world. It’s a fairly large portion of how businesses is run and going digital also helps a country during economic downturns.
We’ve had a great experience in the region. We’ve had good growth and I expect the country to continue this trajectory in the next four to five years going forward.
Does this have anything to do with the upcoming Expo 2020 & FIFA?
This is a very complex business and if you talk about consumers, there are millions of them and they all have different ways of thinking and what they find convenient and how they want to pay. So it’s hard to say that it’s only one reason—it’s a series of reasons. Do these events spur the demand and spend in different ways? The answer is yes—it is cyclical.
There are a few types of growth that takes place—domestic consumption, inbound tourists and business activity. At this point all three vectors bode well for us.
What is MasterCard’s focus for the Middle East in the coming year and what is the company’s strategic direction in the short term?
As mentioned earlier, this is a very complex industry that is currently going through a lot of change. Our number one objective at this point of time is to ensure that we get the best-in-class products and services for our consumers across the region. This means that if they are ready to jump onto the digital bandwagon, then we will provide a converged experience. I this regard we are committed to making sure that our partners—financial institutions, merchants and governments—have the proper infrastructure that allows for these transition to take place.
According to a poll that is been done by the Business Innovation Forum, 73 per cent of the respondents prefer to have their mobile phones used as a payment tool. This is obviously going to be a focus area for us. It goes back to the same things—providing what the consumers want (a converged experience) with safety and security in their transactions. We aim to ensure that the infrastructure which allows for these transaction exists in countries that we are expanding into and most importantly to maintain the safety and security of the system.
What are your views on innovation in the region?
Innovation used to be something that was developed in other parts of the world and adopted in the Middle East. However, I believe that this is no longer the case. We are now in an era where the region itself is a pioneer in innovation. For example, the mobile ecosystem that Egypt has. In Pakistan on the other hand, they are a leading pioneer in biometrics.
I actually feel that things are starting to change. Innovation will begin to spur that are very region-specific and in turn other countries will start adopting the same mechanisms. From now on, I believe that a lot of innovation will start developing in the Middle East and Africa instead of the other way round.