Digital payments are attracting more investments – the latest example from Prism Group AG

by Josh Biggs in Finance on 23rd November 2021

When a crisis of the magnitude of COVID-19 comes along, it’s normal for investors to change their strategies and focus on industries that have a good track record of withstanding challenges. FinTech withstood the challenges of the 2008 global financial crisis and found a way to thrive; likewise, the current pandemic will bring about opportunities for digital transformation and investors. 

After a complicated year that disrupted not only the economy but also many investors’ approaches to investment, FinTech stands out as one of the few fields with a positive growth outlook, and digital payments are one of its most lucrative sub-sectors. Due to social distancing restrictions and the growth of e-commerce, people have become increasingly aware of the benefits of digital payments (defined as…/ give examples of digital payments), propelling this technology forward.

Recent data shows that:

  • According to the State of Fintech Q2 ’21 Report from CBInsights, Q2 2021 was the largest funding quarter on record, and the 657 deals raised an impressive $30 billion – more than 30% than the previous quarter. 
  • FinTech companies have received over $25.6 billion in investment in the first half of 2020 alone
  • The vast majority of traditional financial institutions are concerned that they will be replaced by FinTech companies by 2025
  • Although Europe and North America continue to be the leading FinTech markets, more and more investors are looking towards the MENA region (the Middle East and Northern Africa), where tech adoption is on the rise

Consumer trends

  • The total transaction value of digital payments now stands at $5.2 trillion
  • Nearly half of consumers use digital payments exclusively (has there been any growth from this) According to McKinsey research, more than half of Americans use two or more types of digital payments, and their number could grow even more in the following five years.
  • Anything else to add here?
  • Most people who choose digital payments over traditional payments cite safety and convenience as their primary drivers. 

Prism Group AG creates Wizz Financial

In this context, Prism Group AG has entered the market to address emerging market consumer demand for more FinTech services. With offices in Great Britain, UAE, and Switzerland, Prism Group AG has a fresh and innovative approach to investments, focusing on promising startups in emerging markets from disruptive fields such as financial services. Last year, Prism Group AG announced that they would be acquiring Finablr – a digital payments company with innovative tech and an expansive global presence, focused on providing financial services to the digitally excluded. 

After a period of reimagining Prism AG recently announced Finablr’s transformation into a new powerhouse FinTech, Wizz Financial. As part of its transformation and growth Wizz Financial will merge with the Bahrain digital banking leader BFC Group Holdings (BFC), which offers money transfers and currency services in Bahrain, Kuwait, and India. Prism Group AG has also acquired its subsidiaries, BFC Bahrain, BEC Exchange (Kuwait), BFC Payments, and BFC Forex and Financial Services (India) and plans to integrate them into the Wizz Financial platform, creating the largest money transfer group in the MENA region.

As a result of the merger, Wizz Financial boasts a strong presence in over 30 countries, and will become a regional powerhouse, having over 5,000 employees and relationships with 140 banks.

Why this matters 

The MENA region is becoming increasingly attractive for FinTech investors. According to a recent report, the FinTech sector has grown by 40% in the Middle East in 2020 and by 21% in North Africa. In North Africa, there was a 50% increase in VC funding for FinTech startups, which has led many to believe that the MENA region is the new innovation hub for financial services. There are many factors behind this growth, including the rising penetration of smartphones, increasing consumer education, and the growing popularity of cashless payments.

There is also increasing regulatory support for FinTech startups, and people have easier access to the internet. One study estimates that, by 2025, over 475 million people in North Africa will have internet access to their phones. Additionally, during the pandemic, FinTech-based services such as digital payments and money transfers have filled the gap in the market, offering a convenient alternative for the local population. 

Things are slowly starting to change. As more and more people become aware of the benefits of digital payments and more startups choose to cater to the needs of the local market, it’s normal for investor sentiment to change too. The digitalization of the FinTech market in North Africa and the Middle East is on the rise, and we’ll definitely see exciting ventures coming from this area in the future.

Categories: Finance