Is 2017 to be remembered as the year of bitcoin? The Internet of Things?
Perhaps the more overarching shot heard round the world – beyond consumer products and currencies – can be tied to digital payments: The wholesale embrace of bits and bytes to bring goods and services, and financial inclusion, to billions of people.
It’s a movement gathering global force on the tailwinds of joint efforts between governments and various private sectors, between policymakers and entrepreneurs.
In an interview with PYMNTS, Promoth Manghat, CEO of the UAE Exchange Group, said that India has helped set an example of how to embrace new payment methodologies.
The past year, he said “saw a significant push in the adoption of digital payments, powered by governments and the commercial sector alike.”
India’s demonetization initiative, dating back to November 2016, he said, “demonstrated how a nation can jump-start a new leap in its development and innovation adoption, with all stakeholders taking radical actions towards new standards” – transforming consumer habits in the process.
“Just in the first months of this transformative ruling, digital payments by various electronic means in the country have jumped multi-fold,” he told PYMNTS.
Against that backdrop, he said, emerging markets will be a driving force for digital payments adoption in the years ahead.
After all, he told PYMNTS, citing some statistics, digital payments grew by 21.6 percent in the developing world as measured between 2014 to 2015. But that is a pace that will be well eclipsed by emerging markets, where the growth rate might be as much as three times that rate.
“This is testimony to the transformative power of mobile and digital payments,” said Manghat, “as a means to further financial inclusion and financial empowerment across emerging economies.”
The financial impact will be significant, adding $3.7 trillion in additional growth to emerging market economies by 2025, he estimated.
Within the Middle East, he continued, there has been strong support by various governing bodies to help facilitate digital payments adoptions within various nations.
Regulatory sandboxes, he said, have opened the path for talented entrepreneurs to bring their solutions into local markets without facing often prohibitive regulatory barriers.
One example he offered was the regulatory laboratory (RegLab) by ADGM, which launched in November 2016. Earlier in 2017, that lab accepted its first batch of FinTech startups that will be tied to its new innovation center.
ADGM, he said, has in turn played what he called a “pivotal role” in positioning Abu Dhabi as a global center for business and finance, a hub that connects economies across the Middle East, Africa and South Asia.
More recently, there have been the debuts of the FinTech, among the largest hubs in the region – and the Hive at Dubai International Financial Centre and Bahrain FinTech Bay, which both launched in November.
Getting a bit more granular within payment flows themselves, said Manghat, there has been a strong uptake in international remittances, which the executive said “has led to the transformation of traditional business models.Collaboration has become key, and we are seeing ecosystem participants across the board coming together to innovate,” across a continuum that includes regulators, industry participants, legacy players and emerging start-ups.
In an example of innovation, there is what Manghat termed the “socialization” of financial services, where a collaborative push from financial service operators and technology corporations are bringing payments to social channels.
Any discussion of this past year must mention what he said is “the astonishing push of the distributed ledger technology (DLT)” beyond potential use cases, proof-of-concepts to real-world applications. And alongside that expansion, he said, the world has seen the value of one bitcoin rise from $963 to over $19,000.
Among the most notable features of blockchain and DLT lie in experimentation, said Manghat: “Whether it be R3, J-coin, or Saudi Arabia and UAE – financial services are working with each other on blockchain initiatives.”
Though it seemed like not a week went by without some major blockchain or DLT announcement, Manghat said, “It’s good to temper the hype by remembering only 8 percent of blockchain initiatives are still active … as an industry, we’re just beginning to understand how blockchain – both public and permissioned implementations – will shape financial services in 2018 and beyond.”