REGIONAL REVIEW
ecosystem that balances innovation with regulatory oversight .
From incumbent to innovator
Yes , smaller businesses have freedom of movement that larger incumbents do not . But that does not mean that there are no paths for banks and PSPs . There are , in fact , several strategies that larger FSI companies can employ to capitalise on the open banking revolution .
The first of these is collaborating to create ecosystems that provide users with frictionless experiences . Established FSIs already have access to a wealth of information about their customers and must now consider how to integrate data sources to create highly streamlined and frictionless workflows . A customer applying for a loan could then see their details auto populated and credit history already accounted – all without the hassle of lengthy phone calls , application forms or submission requests . In an age when instant is everything , it ’ s easy to see why the former approach could foster loyalty , while the latter would only serve to drive customers towards more capable competitors .
Card companies and issuer banks could also work with acquirers to smooth out the rough landscape that has arisen from the advent of digital payments . Acquirers traditionally acted on behalf of the merchants that accepted payment methods to recoup funds from the PSP through the issuing bank . This system has served the industry well , but with more payment methods emerging , acquirers have branched out into mobile wallets , QR codes and gateway services . Gradually the relevance of established players has dwindled as their lack of representation at the critical checkpoint has diminished their significance . Incumbents must work to turn back the tide by recognising that acceptance and acceptance ownership are becoming increasingly important for maintaining market relevance . payments innovations which have already shown the most promise .
Moreover , if they diversify their portfolios through acquisitions , innovations , and partnerships , they can secure their future . Mastercard presents an excellent example with their US $ 200 million investment into MTM payments . This single move has given the company access to MTM ’ s 290 million strong subscriber base , allowing these customers to become familiar with Mastercard products before getting entrenched with mobile wallet alternatives .
Who ’ s on top ?
If we look at the rise of BNPL services , we see an origin story with – at least – major supporting roles for large card providers . But open banking has sidelined them in just a few years . BlackBerry was a stock market darling just five years before it sought a buyer . Traditional FSI players must innovate ; they must collaborate with emerging disruptors ; they must diversify . They can survive and thrive if they do these things – after all , they already have much of the infrastructure , and experience required for success .
Middle East banks and PSPs have the existing user bases , so they have the scale to get out in front in the era of open banking . All they lack is the kind of compelling use cases that will entice the banking public . PSPs and their issuers could offer embedded payments , for example . The right services at the right time will be warmly received by consumers , no matter the scale of the offering institution , so there is every reason to believe that incumbents will come out on top against FinTech and BigTech . �
Another strategy is diversification . Veteran FSIs may feel like they ’ ve lost ground to nimble start-ups and Neo Banks , but history shows value in patience – established FSI players now benefit from the investments of early innovators , and double down on
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