The battleground between traditional banks and innovative fintech apps is heating up, with predictions suggesting the UAE’s fintech sector could surge to $80billion by 2028.
This was the hot topic of conversation this week when Mark Walker, editorial director at The Fintech Times, was invited onto The Agenda, a daily news show on Dubai Eye 103.8, a leading Dubai-based radio station, hosted by Georgia Tolley.
Mark and Georgia’s conversation followed an appearance on The Agenda from Mohammad El Saadi, VP of Careem Pay, who announced the removal of fees and member rates for CareemPlus members.
During the show, Mark explained how fintech is changing the game by making financial transactions not just cheaper but simpler. He provided a straightforward breakdown of the complexity behind transaction fees in financial services and outlined whether fintech leads to lower fees for remittances.
“The fees are the fees. But the fees are not as straightforward as you and I would think about it. Where it’s a per cent of the transaction fee, there are lots and lots of players within sending money from one place to another. It could be up to 10 or 12 different companies or services being used, which are all taking sort of 0.001 per cent of what’s going on. So what a lot of fintech is about is actually streamlining that process and getting rid of a few of the middlemen and a few of those extra charges.”
Digital wallets
Mark also highlighted the key role digital wallets play in fostering financial inclusion.
“A major trend we’re seeing now is about financial inclusion and the birth of digital wallets. These are wallets where value is stored within them, but it’s not like a traditional bank account.
“That’s a positive thing, because what it means is that they don’t have to have branches, for example, they don’t have to have large capital reserves on their balance sheet to be able to offer these services. And these digital wallets can then be accessed by people much quicker, much faster and much more cheaply.”
Fintech’s shift
Mark then discussed how fintech firms are now expanding their offerings beyond single services to encompass a full suite of financial products, reflecting a significant shift in the industry. He described this transition as moving from ‘unbundling’ to ‘rebundling’, where fintech companies are not only focusing on one aspect of banking but are bringing various services like loans and credit cards back into their platforms.
“So what happened at the beginning of the fintech movement, probably like 10 years ago or so, was that people wanted to go to a bank and strip out all the different banking services and focus on one of them, such as a current account.
“Now what we’re seeing is the great rebundling, where a lot of these fintech companies are actually bringing in all the other services, such as loans and credit cards, back in to their ecosystems – sort of rebuilding it in a more efficient and seamless way.”
Watch Mark and Georgia discuss the UAE fintech scene in full
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