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Sriranga Sampathkumar, VP and General Manager – Middle East and Africa, Infosys provides a compelling account of the transformative power of the modernisation of payments in the region, and the role that Infosys Finacle in playing in this.

Where does our region rank in payments modernisation when compared with the rest of the world? 

The GCC holds a prominent position in payments modernisation in many aspects.

The Middle East region is positioned as one of the fastest-growing real-time payments markets, with transactions expected to surge from $675 million in 2022 to $2.6 billion by 2027, showcasing an impressive CAGR of 30.6%.

The GCC’s success is propelled by a young, tech-savvy consumer base, with 70% of millennials and Gen Z favoring digital payments over traditional methods. Instant payment frameworks like Saudi Arabia’s “Sarie” and UAE’s Instant Payment Platform (IPP) drive this adoption. The vibrant fintech ecosystem plays a pivotal role in advancing instant payments, fostering innovation through API-driven developments.

However, the region faces challenges, including concentrated markets hindering innovation and cash reliance in segments like migrant workers. Addressing competition and ensuring financial inclusion will be crucial for the GCC to solidify its global leadership in the evolving payments landscape.

How do you see Gen AI shaping the payment industry and influencing the payments ecosystem in the region?

Gen AI is poised to revolutionise the payments industry, weaving its transformative threads into the very fabric of the payments ecosystem. Its potential to personalise, streamline and secure transactions promises a future of frictionless and intelligent financial interactions. Gen AI’s impact spans various dimensions:

  1. Frictionless Payments:

By analysing past behavior, Gen AI can ensure intuitive and personalised payment journeys, enabling automatic selection of preferred methods. Gen AI-powered chatbots for support can enhance customer satisfaction and reduce operational costs.

  1. Enhanced Security:

Gen AI can provide Adaptive Fraud Identification with real-time analysis of transaction data detecting anomalies, thwarting fraudulent activities proactively. It will also push the boundaries of biometric authentication beyond fingerprints for secure and convenient payment verification.

  1. Operations Streamlining:

Gen AI can elevate Automated Reconciliation and Insightful Reporting across disparate systems with unprecedented speed and accuracy. The dynamic approach of Gen AI will also enable a more efficient and personalised payments risk management framework that works in real time.

  1. New Product Frontiers:

Gen AI can craft personalised financial products and services, providing personalised loan offers or investment recommendations based on individual payments transaction history. The future promises a revolutionised innovation landscape, marked by personalisation, security and efficiency.

What work is Infosys Finacle doing in this space?

Infosys Finacle offers an AI Platform that simplifies the process of integrating AI into businesses, making it easier to develop, initiate and apply contemporary AI use cases. The Finacle AI platform brings forth a unique yet powerful combinatorial approach that harnesses the power of emergent generative AI technologies, offering nuanced propositions across a host of use-cases and business applications, creating contextual value.  This platform is designed to be flexible and scalable, allowing data scientists with varying skill levels to use it, whether on a cloud-based or on-site infrastructure. Built on open-source technologies, the Finacle AI platform continually evolves and improves with input from a large user community. The platform provides pre-built AI models for tasks like classification, regression, clustering and forecasting. Finacle AI platform aims to bridge the gap between development and business decisions, ensuring transparency and explainability throughout the entire ML lifecycle. Banks can tailor AI solutions with different models and features to find the most impactful outcomes.

How should banks go about building a robust payments ecosystem that not only meets the current demands but also is future-proof?

As the payments landscape continues to evolve, banks need to stay relevant with new payment rails and fend of competition from emerging players.

However, most banks are not ready, or equipped, to change. Many still operate disparate payment systems, siloed products and inefficient manual processes. This unpreparedness hampers growth in open payments and ecosystem innovation, posing security risks and compromising customer experience. To thrive, banks must swiftly address these challenges and adopt agile, integrated solutions for the evolving payments landscape.

To excel in the digital economy, banks must promptly overhaul their payment technology foundations. This necessitates an enterprise approach guided by five essential virtues:

  • Open Platform: Bringing together a host of APIs to foster collaboration, facilitate participation in open payments ecosystems, and drive innovation.
  • Scalable Platform: Empowering banks for prepare for burgeoning digital payments volumes and accelerating the development of complementary payment capabilities.
  • Unified Platform: Processing payments from various business divisions, agnostic to instruments, channels, hosting modules and payment networks.
  • Real-time Platform: Offering comprehensive real-time processing and out-of-the-box connectivity to leading real-time rails for agile adoption.
  • Cloud-native Platform: Supporting limitless scaling, providing robust data processing and delivering real-time insights-driven capabilities for customer-centric innovations. Swift adoption of these virtues is crucial for banks to remain relevant and prosper in the evolving digital landscape.

To build a payments ecosystem for today’s evolving landscape, banks need to start from the ground up by recomposing payments, i.e., moving individual blocks in their payments infra to recompose the elements and derive value. Such a composable platform gives banks the needed flexibility to mix and match components like Lego blocks, to build the infra necessary for their business needs, often reducing the time-to-market for launch of new products, lowering their total cost of ownership (TCO), and overall enhancing system resilience.

Banks can start by building solid foundations with their architecture and embracing cloud-native, microservices-driven constructs. A composable payments platform will also make a banks’ architecture amenable to technologies like artificial intelligence (AI), generative AI (Gen AI) and machine learning, powering enhancements in customer engagement, operational efficiency and fraud and risk management.

With the availability of BUNA payments in the region, what are the tangible impacts of cross-border payments and trade and economic integration within the region?

Buna’s introduction to the GCC financial scene signals a pivotal shift in cross-border payments, transcending traditional models. The platform streamlines multi-currency transactions, offering instant settlements that redefine how businesses and individuals transfer money globally. By employing a direct settlement system, Buna eliminates the need for multiple correspondent banks, ensuring faster and cost-effective transactions. The platform’s real-time processing capabilities and transparency enhance trust and reduce fraud risks. Buna facilitates direct trading in Arab currencies, saving on conversion fees and easing access to foreign currencies. Its transformative impact is evident in cost savings, enhanced speed, inclusivity for SMEs and a thriving ecosystem. The collaboration with UPI further promises substantial benefits, reflecting Buna’s role as an architect of a more connected and prosperous GCC. The platform’s journey has just commenced, promising a significant impact on the Arab world’s economic landscape.

As the world moves to real-time payments (RTPs), from a GCC perspective, how do you see banks leveraging RTP to drive value across the board?

For banks globally, their revenues from payments, despite regional headwinds, have remained a growth factor. Now, given the ease and convenience of RTPs, its adoption is accelerating worldwide. Estimates suggest in the next five years, RTPs in developing economies that are heavily dependent on cash will expand the share of RTPs to approximately half of overall payment transactions.

The GCC is not left behind and is making significant headway in adopting RTPs. The UAE leads the way with significant proportion of retail payments processed through the country’s Instant Payments Platform (IPP) launched in Q4 2022.

Some potential ways that banks in the GCC can leverage models of RTPs to drive value across the board in different areas:

  • Retail consumers expect immediate settlements, especially with e-commerce. RTPs enable instant order fulfillment and improve customer satisfaction. In subscription models, consumers’ recurring payments can be instantly processed, minimising churn and improving revenue predictability. As for micro-donations and crowdfunding, donors can support causes instantly, making the process more impactful and transparent.
  • For its business customers B2B, banks can help them have improved supplier relationships. Imagine a manufacturer instantly releasing payment to a supplier upon delivery confirmation. This can boost trust, foster timely deliveries and optimise inventory management for the business. RTPs can reduce clearance times and transaction costs compared to traditional correspondent banking networks, streamlining global trade. Businesses can also further leverage real-time data to offer personalised pricing adjustments or enable instant access to content and services on payment. With instant refunds and chargebacks, customer disputes are quickly and seamlessly resolved, building trust and loyalty.
  • In the gig economy and freelance payments, banks can enable payments to independent contractors in real-time after completing tasks, enhancing engagement and attracting talent.

As the payments landscape continues to evolve globally, what is your strategic vision for the future of payments in the GCC region?
The burgeoning payments landscape is an opportunity for the GCC. My vision for the region’s payments future rests on:

  • Inclusive access: Real-time AI-powered payments can empower the unbanked and underbanked by facilitating microfinance, micro-insurance and digital wallets. Imagine Hajj pilgrims accessing personalised travel insurance seamlessly or Yemeni farmers receiving agricultural subsidies directly through their mobile phones. With robust regulatory frameworks, it can ensure responsible and secure participation for all.
  • Transformative innovation: While real-time transactions offer undeniable convenience, true innovation lies in harnessing technology to address deeper challenges. BUNA can catalyse cross-border commerce, bolstering regional competitiveness. AI-powered fraud detection can shield both consumers and businesses, fostering trust and confidence in the digital ecosystem. Open banking has the potential to unlock value from fintech, tailoring financial solutions to the unique needs of the GCC’s diverse population.

Will more agility and speedier payments in themselves add to economic growth in the region?
There will be Impactful outcomes. Payments are not simply metrics of speed; they are the arteries of economic activity. By making them smarter and more inclusive, we can unlock real and sustainable economic growth. For example, streamlining e-commerce transactions can empower SMEs and entrepreneurs, while targeted digital subsidies delivered through real-time payments can directly enhance social welfare programs. The possibilities are vast, but the overarching goal remains the same: building a more equitable and prosperous future for the GCC. So, while agility and speedier payments have a role to play, they are instruments to accelerate economic growth.