On today’s episode of the podcast series, we’re joined by RMB’s Head of Telecommunication, Media & Technology Advisory, Arun Varughese. There is so much happening in the payments landscape, and not many people are aware of the plumbing that exists behind contactless payments. It may happen in mere seconds, but is actually a very complex web of electronic communication both locally and internationally.

Cash is still dominant in Africa and South Africa; 60% of payments are made using physical cash, so the market for card payments and alternative fintechs is massive. The proliferation of smartphones using digital wallet services such as Apple Pay, has enabled consumers to pay for things in a much more convenient manner. Around the world there are payment options such as WeChat, Alipay, PayPal and ever-growing cryptocurrency solutions. With all this innovation and change occurring, there is a trend of moving towards financial inclusion for most of the planet, and the move away from cash is really going to be driving it.

Data is now very much at the fore; within banks there’s a lot of analysis of consumer behaviour, such as where you swiped your card, what you purchased, how often you shop etc. When you tie that up with things such as location data, even from an economic and aggregate perspective, you can see with real-time data which direction the economy is moving.

A new development on South African shores is ‘Buy Now Pay Later’ – a method of payment that’s a direct replacement for credit cards, where everyone benefits – the fintech, the consumer, and the merchant. This system allows one to borrow money on an interest-free basis over a period of time, where you can opt to pay it back in equal installments over a 4-8 week period. It’s a very real threat to traditional banking where interest is made on credit cards and fees. It’s a closed-loop system – the data is extremely valuable; fintechs can build up a much clearer picture of their customers, allowing them to target better products and services.

From an advisory perspective, Arun’s role is to consult players in the value chain on a variety of choices, particularly around capital and how to expand their businesses. As a bank, RMB hopes to grow with their clients in this increasingly active space.