Digital transformation will be one of the most significant value drivers unlocking major economic value and enabling the diversification that the Saudi Arabian economy requires going forward under Vision 2030, Mastercard General Manager for Saudi Arabia and Bahrain J. K. Khalil said. As a trusted partner to the Saudi government, Mastercard has been at the forefront of supporting the Kingdom's digital economy agenda and has played a key role in enabling digitization through cutting-edge payment innovations and solutions, he pointed out. In an interview, Khalil said Mastercard recently collaborated very closely with the national payment system of the Kingdom, mada, on the roll-out of Apple Pay, which is answering consumer needs for new and innovative payment solutions that offer enhanced convenience as well as greater safety and security. "Earlier last year, our partnership with mada has also enabled over 30 million Saudi mada cardholders to shop online for the first time, thereby contributing to the opening up and growth of the e-commerce sector," he said, adding that "in the past, as another example, we had supported the Saudi Post's branch network to digitize transaction acceptance across all their online and physical challenges." Excerpts of the interview follow: • What factors will accelerate the development of a cashless society in the Kingdom? A cashless society is among the top objectives of the Saudi government and an essential pillar of the Financial Sector Development Plan (FSDP) supporting Vision 2030. In fact, one of the key objectives of FSDP is to increase non-cash transactions to 28% in 2020 and 70% by 2030. Mastercard is responding to the evolving needs of consumers in the Kingdom through mobile payment solutions that allow them to make safe and easy payments at their fingertips. At the same time, the government's efforts to digitize key sectors will also play a central role in accelerating the country's shift to a cashless economy. By increasing the use cases that utilize digital payments in the economy, beyond just retail and e-commerce, and expanding these use cases into mobility and transit, smart cities, as well government flows (G2B, G2C, etc.) will all be key requirements to achieve the vision for a cashless society. Additionally, and as a key equipment as well, expanding the acceptance side of the payments, across all channels and leveraging all kinds of new technologies, from online, to QR, to mPOS and other emerging acceptance technologies will make all the difference when opening up new merchant categories or sectors to acceptance. Finally, with continuous support from the regulators to enable new fintech players to come in and complement the work that banks do, as well as by introducing new regulations that create preference for non-cash vs cash transactions will all be major catalysts in that journey that the Kingdom has embarked on. • How can a thriving fintech ecosystem enable the Kingdom's digital economy? Mastercard understands that the development of a fintech ecosystem is a critical enabler for any economy in its diversification efforts. A thriving fintech sector will not only support the objectives of the Kingdom's vision, but also help strengthen the country's position as a fintech hub, talent and capital attraction, as well as on having a significant positive impact on Saudi Arabia's to unlock new sectors of the economy such as the SME sector, helping diversify the local economy and creating new job opportunities. Local fintech players are in an excellent bellwether to understand the pain points faced by both SMEs and consumers in any given market and, therefore, are best suited to create solutions that address and respond to these challenges. In addition, fintech players bring outside-of-the-box thinking and creative approaches to problem-solving, growth hacking and busting into new sectors, if not creating new sectors or service lines and business models altogether, making them a critical enabler for innovation and to increase the overall economic pie. The great news is that, if you were to believe some of the research being produced recently, private funding investments in GCC-based fintech start-ups is expected to reach $2billion over the next 10 years, signaling a massive opportunity for the Kingdom's fintech ecosystem.[1] Government initiatives such as Fintech Saudi, launched by Saudi Arabian Monetary Agency (SAMA), are boosting the local fintech platform and seeding the ecosystem in preparation for the fintech explosion we are due to see over the next decade. At Mastercard, we work heavily with the startup and fintech community through our global Start Path program, where we identify later stage commercially viable startups on the cusp of scaling up their businesses. As part of this program, companies benefit from our deep knowledge and industry experts, gain access to our global network of partners and partner with them exploring opportunities to innovate across all markets. • How are emerging technologies shaping the future of the payments ecosystem? Is the region ready for a major disruption in the payments space? Emerging technologies are disrupting and expanding the payments sector globally and regionally, making it one of the fastest areas in banking and finance by miles. By leveraging the power of big data, machine learning and predictive analytics, emerging disruptors are able to build new business models that provide data-driven and real time customer experiences with enriched content and decision-making abilities. Other disrupting platforms like blockchain, for instance, have also started to emerge as powerful technologies with the potential to create new opportunities to revolutionize various industries. At Mastercard, we are able to leverage on these emerging innovations and weave them into our product and services roadmaps, redefining the commerce and payments experience for our consumers, banks and merchants through greater convenience, enhanced safety and security and increased simplicity. We are, in fact, leading in new technologies such as Blockchain and AI and are currently ranked 3rd globally with 70+Blockchain patent submissions. From a regional perspective, fintech startups, which are today close to 100 – almost 4 times the number 8 years ago – are starting to pave the way for a potential fintech rising. However, we don't believe that their rise will lead to significant disruptions, given the maturity of the markets and the state of regulation. But rather, fintechs, that are today quite closely guided and overseen by the various regulatory frameworks in the region, are finding other more convenient ways to establish themselves by partnering with existing and well-established financial institutions leveraging various models, ranging from arm's length investments to close partnership and collaboration. These models will surely help the overall fintech ecosystem gain muscle, scale and in the long run, the trust of the regulators to hopefully allow for bit more liberalization as markets and consumers mature further. — SG
