Lockdown measures imposed everywhere in the world have impeded some sectors, but have boosted others that were able to leverage the new normal and come out of the situation a winner. The FinTech sector is one of the sectors that are winning in the times of COVID-19. In the Middle East, statistics showed that consumers are increasingly willing to choose online shopping and digital payment methods.

COVID-19 pandemic has changed a lot of things, including customer behavior. Safety has become a top priority and businesses had to adapt by adopting methods that weren’t always new. Online shopping has been an efficient option for shopping even before the pandemic, however, with COVID-19, it has become part of the new routine.

In a recent PwC survey, 53% of Middle East respondents said they are shopping more online using their smartphone (computer 39%, and tablet 31%) in response to the pandemic, compared with 34% for all territories in the survey. The results highlight that while mobile shopping continues to be a growing trend here in the region, the impact of COVID-19 has forced change. Consumers who were previously resistant to using mobile payment channels discovered that purchasing goods and services on their smartphone was not only easy but convenient too.

The pandemic has predictably strengthened the online grocery shopping habits of consumers in the Middle East: around half (51%) of the respondents said they were shopping for groceries online or by phone, either to pick up in-store (18%) or, more commonly, to be delivered to their homes (33%). Of those, 92% said they are likely to continue purchasing online after the pandemic is over.

“The lockdown has prompted more urban consumers who were previously resistant to change to try out online retail channels, with most willing to continue to use them once the pandemic is over. In this increasingly digital market landscape, retailers will need to leverage insights gained from data analytics to target consumers and meet their expectations as closely as possible,” said Norma Taki, Middle East consumer markets leader at PwC.

In the aftermath of the pandemic, consumers are also expected to use cashless payment methods. Dubai Police, Dubai Economy (DED), and the world’s leader in digital payments – Visa, conducted a survey on the impact of COVID-19 pandemic on payment behavior of consumers in the UAE. Forty-three percent of consumers surveyed believe they will continue to use contactless payments more in-store post the pandemic and 48% said they will continue to opt more for paying online with card or digital wallet over COD.

“The study shows that consumer behavior changes due to the pandemic – such as shifting online and increasing use of digital payments, are likely to continue even after the pandemic – an important take-away for businesses developing strategies for the post-COVID-19 consumer and market overall,” Ahmad Al Zaabi, director of consumer protection in the commercial compliance & consumer protection (CCCP) sector, Dubai Economy, said.

Securing digital banking

Security concerns were one of the main reasons why some were reluctant to shift to digital banking. However, the same survey by Dubai Police, DED and Visa showed that up to 53% of respondents were comfortable sharing personal data with banks, telecom operators and government owned entities. Name, demographic data and contact information were cited as data that needs to be protected the most. Sixty-three percent find biometrics secure and for 55% biometrics is convenient to use. Sixty percent trust paying with mobile wallets such as Apple Pay and Samsung Pay. These wallets use Visa’s tokenization technology, which replaces sensitive card data, including the 16-digit card number, with a random number, also known as a “token”, to protect cardholders’ account information when paying in store or online.

However, it’s important for consumers to remain aware of the security threats and share their personal data with reliable sources.

“The pandemic has changed how consumers shop and pay with increased reliance on and preference for digital commerce. With increased usage both among experienced and first-time users, cybercriminals too are keen to capitalize on the increased activity and vulnerability, especially of first-time online shoppers. That is why educating consumers about safe payment behavior is critical not only for the moment but as we move forward and adapt to the new normal. We are delighted to partner with Dubai Police and Dubai Economy to continue our mission of empowering consumers to continue using digital payments and online channels with full confidence,” commented Neil Fernandes, Visa’s head of risk for Middle East and North Africa.

In spite of all those positive statistics, studies show that banks are still reluctant to integrate FinTechs into their strategy. A study commissioned by Deloitte shows that customer behavior across the Middle East, especially in KSA, is characterized by a willingness to adopt innovative solutions offered by banks; in particular, when it comes to peer-to-peer money transfers, account aggregation and automated investment advice. Banks, however, are not leveraging the full suite of FinTech solutions and features to address customers’ needs and requirements to enhance the daily banking journey and experience.

One important thing to mention here is the gap that exists today at the level of Fintech solutions’ adoption. According to Deloitte, 82% of Middle East banking customers surveyed are willing to start using FinTech solutions however only 22% of Middle East banking customer use FinTech solutions today; there is a significant growth potential to address this gap.

According to Anthony Yazitzis, financial services and FinTech partner, Deloitte Middle East, “The way forward for the Middle East FinTech Ecosystem to reach its full potential goes through regulatory harmonization and development of strategic partnership between Banks and FinTechs.”

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