Middle East Unbanked and Underbanked ‘Offer Growth Opportunities’

The Middle East and North Africa (MENA) region’s unbanked and underbanked sectors remain a major retail banking frontier that offer major growth opportunities, says Lafferty Group.

The knowledge services provider for the financial industry recently held its annual international council meetings for the international cards and Payments council, the international retail banking council and the global merchant services council. Organised by the group in conjunction with Middle East payment solutions provider Network International, the meetings were held for the first time in Dubai.

The councils assessed the opportunity for regional retail banks to explore ‘partnerships beyond payments’ with mobile network operators (MNOs) and the evolution of the prepaid card into a bank-lite core payment product. Discussion focused on how retail banks can use innovation to consolidate profits and reach the unbanked and underbanked sectors.

The councils highlighted the potential for retail banks in the region to partner with MNOs to provide loans, deposits and other services to mobile clients in the context of an increasingly ‘mobile’ environment, where the payments business is being transformed worldwide. It was stressed that the MNOs need banks for their capital and risk management strengths while banks need the MNOs for their ability to deliver financial services without a physical infrastructure and because the MNOs’ client data was the most up to date and reliable.

The councils also stated that prepaid will play a major role in banking the unbanked in India, most of Asia and Africa. They concluded that the prepaid card is evolving into a bank-lite core product, sometimes linked to bank accounts and sometimes with its own line of credit attached. It was felt that this appeals not only to the unbanked and underserved sectors, but also to those that want a product that helps them manage their financial lives. The councils opined that prepaid could become the comprehensive payment card – the ‘bank account of the future’.

“The banking and payments markets in the Middle East and North Africa are among the fastest growing in the world and the United Arab Emirates (UAE), in particular, leads the region in the adoption of online and mobile payment systems,” said Bhairav Trivedi, chief executive officer (CEO), Network International.

“In a highly competitive environment, banks, financial institutions across the region and solutions providers like Network International are all looking toward new growth areas to capitalise on inherent opportunities.”


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