Tuesday, November 29, 2022
Published 1 Month Ago on Wednesday, Oct 26 2022 By Mohamad Hashisho
Financial innovations are happening globally, with telecom companies aiming to be critical players and thrive alongside and by utilizing fintech solutions and finding a footing in the fintech space. Experts note that the shift into digital aspects will be permanent. Smartphones currently power financial services and payments, allowing access to revitalized data, embracing technological innovations, and expanding users’ mindsets. Telecom giants aim to achieve peak fintech integration, especially in the middle east.
In our current technologically advanced era, most developed markets are highly digitized. Subscription models are on the rise, and the intensity of communication when it comes to time spent using telecom is set to grow by more than 60 percent, as by research done by Informa Tech. It increases the pressure poised on profits and growth rates for telcos. The Compound Annual Growth Rate, CAGR, for traditional telcos was estimated to be only 0.7 percent in 2020, before Covid-19.
Furthermore, such pressure can be traced back to developments in digital technology that threaten the current traditional telcos investments and compresses their cost baseline. Telcos will continue to be pressured into significant investments in future tech solutions, especially Fintech. But this decision is complex and will require huge investments and financial commitment. The world is offering technological solutions, primarily through Fintech, and telecom companies aim to capitalize on it.
Orange, one of the giant operators of mobile and internet services across Europe and Africa, was among the first adopters of such opportunities and rushed into launching its first Financial Services (FS) offering in 2008. And proceeded later in 2013 to offer international mobile-to-mobile money transfer service connecting Mali, Senegal, and Ivory Coast in the needing market of Africa. A simple service allows money to be sent by dialing #144# and entering the Orange phone number and the amount to be sent.
The Middle East and North Africa (MENA) experienced the most substantial growth in fintech adoption in 2020. Displaying a 40 percent increase did continue to grow in 2022. The fintech investment is powering the growth in MENA’s digital economy. Consumers gravitate toward cashless payments leading to improved regulations benefiting the sector. In contrast, according to a McKinsey survey focused on the middle east payments sector, 30 percent telecom backed digital wallets had a significant impact on the future of payments. This proves that telecom companies are notable players in the fintech sector, hoping to deliver peak fintech adoption.
A worthy example to mention is STC pay. A leader fintech player in the MENA region, some hailed it as the first financial unicorn in Saudi Arabia. Powered by the investment, trust, and reputation of STC Group. The company now has around 8 million users. Through digitizing international payments via a partnership with the money-wiring giants Western Union, STC Pay addressed critical customer-voiced concerns. It made sending, tracking, and even canceling transactions at any point in time accessible and easy through the platform. Said platform is currently in the process of shifting to become a digital bank.
Furthermore, Etisalat, the UAE giant, has signed an agreement with emerging leaders and players of Fintech to create and launch a digital banking platform. Wio. the platform received in-principal approval from the Central Bank of the UAE. The partnership presents Etisalat with the opportunity to invest in the blooming digital marking sector and maximize synergies in the field. Providing a broader portfolio of services. Etisalat owns a quarter of the stakes joined with ADQ, which provided the First Abu Dhabi Bank (FAB) with enough data to back up Wio, allowing it to offer customers in the UAE a fully digital banking choice alongside tailored products and services selection to satisfy the needs of consumers. Achieving peak fintech integration in the UAE.
Utilizing smartphones to optimize payments has transformed the dynamics in the MENA region. Tipping the balance to favor non-cash contactless transactions. Back in 2007, Safaricom launched its mobile money transfer app, M-PESA. It rapidly found its way among urban workers hoping to send money to their loved ones. The app significantly expanded financial inclusion by providing a safe, secure, and cheap platform for around fifty million users. The app was such a success. Later in 2020, Vodafone acquired the platform, recording 15 billion transactions in the same year.
Telecoms around the globe are in a permanent race to offer content that will generate enough revenue to bring them a profit on their investments in infrastructure. Even though media and entertainment are possibilities. The screen on a smartphone (even when talking about bulky smartphones) is small. is not the optimal way to experience and provide these services and content. Furthermore, consumers are unlikely to pile up extra internet data charges to play games or watch movies when they cannot access Wi-Fi.
Moreover, and in contrast, financial content fits a smartphone like a glove. It is enough for them to check their balances, pay bills, and manage accounts. As technology advances, such tasks will be easier to perform on the phone. Mobile Banking and its mobility will alwasy attract consumers to the on-the-spot, wireless and quick aspect of mobile payments and banking.
Finally, from a telecom perspective, Fintech is a goldmine. Very attractive since it combines banking and mobile communications in perfect harmony. That’s why big players in telecom are improving their tech, expanding their services to include more fintech solutions, and achieving peak fintech integration.
Telecom giants will try to adopt more Fintech simply because that is logical. Fintech and telecom must work together. One can even say they have no choice but to work together. It is an undergoing process in a world with loads of uncertainties. Access to your financial needs in the palm of your hand is critical. In the future, we will see more and more telecom companies offering banking and financial services. And in due time, bank visits will be a thing of the past.
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