A cashless society in the UAE cannot happen without financial inclusion

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Hind Al Soulia - Riyadh - Anouar Bourakkadi Idrissi is the CEO of Edenred UAE

At the onset of 2020, implementation of the wide-scale lockdown and social distancing measures in the fight against Covid-19 triggered significant changes in consumer behaviour. From crisis to recovery and the reopening of economies, businesses have witnessed a profound change in the way consumers behave. While some of these changes were temporary, others are expected to have long-term repercussions, and since many of the changes in consumer behaviour are still being formed, it gives companies an opportunity to help shape #TheNewNormal.  

Online shopping and food delivery are obviously not new trends; however, lockdown would have necessitated participation from even their biggest opponents. Hidden behind these obvious developments was another digital trend: digital payments. According to a survey by Standard Chartered, 47 per cent of the UAE respondents said they prefer making online payments now over in-person card transactions or cash payments and almost two-thirds of people in the UAE (64 per cent) expect the country to become fully cashless by 2030. Globally, the volume of ATM cash withdrawals tumbled at least 12 per cent in the second quarter, according to research firm MoffettNathanson.

Recent trends show that there is an increasing tendency and trust in the digital payment solutions in the UAE, but the age-old saying 'cash is king' still rings true and is still holding an important amount of share in the economy because modest income workers are struggling to participate in the economy, with no access to a bank account or mobile banking solutions. In the UAE, close to 60 per cent of the working population is unbanked or partially unbanked, earning less than the minimum usually required for opening a bank account.

The fintech industry in the UAE is developing and offering comprehensive solutions embracing both the digitally savvy and cash users.

According to the recent report by Fintech Consortium, Bahrain Fintech Bay, and Jordan Fintech Bay, in the GCC region, the UAE has the highest financial inclusion rate at 46 per cent, followed by Bahrain at 39 per cent and Saudi Arabia at 31 per cent.

The UAE’s relatively good results are due to the numerous initiatives launched by both the public and private sectors to foster innovation and improve access to financial services. These initiatives have been mainly focused on the financial literacy, with, for example, the UAE Bank Federation launching in 2018 a public handbook on financial literacy, as well as financial access for minorities, including communities with disabilities. To build on the initiatives launched by the government to reduce the knowledge gap, Edenred UAE conducts workshops for modest-income workers to educate them on topics such as personal finance management and enhance their financial wellness along with a WhatsApp support channel launched to reach out in case they need any personal assistance.

The UAE is known for its high percentages (around 91 per cent) in smartphone penetration and around 92.17 per cent of active mobile internet users. This provides a fantastic opportunity for banks and fintech companies to build innovative solutions that are available digitally and on mobile while leveraging technologies such as digital know-your-customer (e-KYC) to allow individuals to open accounts seamlessly with minimum barriers, leading to greater financial inclusion. Inclusion in the financial ecosystem can be a key factor of the increasing trends in digitisation in the banking industry, especially for payment methods.

Additionally, the government is launching initiatives, establishing appropriate policies and legislations and playing an active role to nullify the detractors to a cashless economy. Even for businesses in the UAE, the rising need for faster, more economical, smoother and safer payment processes was getting more crucial and urgent.

The shift to digital services is becoming increasingly important as we move towards 2021. With more than 60 per cent of the working population in the UAE sitting outside of the financial system, especially in manufacturing, trading, F&B and construction, it is important to cater to this market as well. Joint efforts of government and solution providers based in the UAE are becoming more important than ever to have a smooth move to the cashless economy providing the solutions catering to all categories of residents. In this perspective, to support businesses along with their employees, one solution for example, is to offer modest-income working professionals within those organisations, a salary card so an individual can use it for withdrawals and purchases in the UAE and across the globe, providing them with financial security. This card is linked to a mobile app, where they can access essential financial services such as real time balance, transaction history and instant international money transfers, which contributes to integrate them in the digital economy.

The combination of the rapid pace of innovation in financial services technology and the commitment to financial inclusion of an unprecedented number of leading policymaking institutions in developing and emerging countries, is a unique opportunity to resolve some of the most intractable challenges for financial inclusion and reach ‘last mile’ consumers with high quality financial services.


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