M2P sets sights on ME expansion, creating ‘ecosystem’ for fintechs to thrive

Being a financial services provider in an industry which is heavily regulated, yet a prime target for innovation, can be a bit challenging, especially with buzzwords such as agility, flexibility, and convenience making the rounds.

So, what do you do to ensure that your business is steadily growing, while meeting and anticipating the needs of your consumers? You turn to fintech, says Madhusudanan R, co-founder and CEO of M2P Fintech.

Speaking to Khaleej Times in an exclusive interview in Dubai, he highlighted the role of fintechs in bringing dynamic solutions to the industry, and the role that M2P is playing in creating an ecosystem where fintech is seen as a key enabler for businesses.

“Banking, and payments in general, are going through what I like to call a ‘Cloud moment’; 15 years ago, large businesses invested hundreds of thousands of dhirams into buying hardware and creating a system which only a technology officer could understand,” Madhusudanan explained.

“Today, we have gradually seen all of this move to the cloud. Nobody planned for this transition, but we are at a point where it has completely taken over the world. Likewise, banking is also going through this shift where we are seeing a massive transformation in the way that banks are procuring technology. This is where we come in and say that we can provide the new technologies that they are looking for, and that we can help them with proper distribution.”

M2P, which is today Asia’s largest payments API platform, started from very humble beginnings in India back in 2014. Madhusudanan says that the company, which raised $35 million in a Series C Fund earlier this month, is looking to translate its success and expertise into the UAE and Middle East region.

“The way we look at the UAE market is as a hub for all that we can achieve in the wider GCC and Africa region. One of the things that we realised over the course of our journey over the past few years is that a lot of these markets behave similarly; banks operate a certain way and credit cards also all work the same way.”

While many banking and finance products are built in a similar way, what differs is the way in which their distribution happens, the customer service that is offered, and how the customers ultimately adopt and use the products.

“The underlying theme of our business is to be an enabler of fintech, and we have seen this play out in India over the past few years, where there has been an explosion of innovative ideas. If you look at the macro factors that are driving this trend currently in the UAE, one of the key ones is policy and the government taking an active role in enabling proper infrastructure and ecosystem.”

As a result of this, the investment community has started to take notice and is coming together to seek opportunities in the market, he noted. In addition, SMEs are also attracted to the enabling environment of the UAE, and wish to establish themselves in the country with plans to expand to the rest of the region. Having worked with several fintech companies, M2P is looking forward to expanding its presence in the UAE market and working with several key players.

“We have insight into what ideas have worked well, what has not worked at all, what you can do to save time and money, and what is valuable from a startup’s point of view,” Madhusudanan said.

“Fintech creates this fear of missing out in banks; it forces them to be more proactive rather than reactive. Because of the nature of the business – banking is a heavily regulated industry – innovation is often stifled and banks end up having very similar offerings.”

Smaller fintechs provide an answer, because they are agile with their solutions, Madhusudanan noted.

“The challenge we feel is changing this mindset of not being able to innovate because you are heavily regulated because, from our experience, it is possible.”

Access to finance, he added, is one of the most critical things that you can enable today. “A lot of the work that we do is not just innovating, but helping banks put out their products and reach different demographics such as underbanked segments. Cards used to be one way of doing that, but mobile is slowly taken over. Plastic will not exactly go away because of the ease of its use, but mobiles are proving to be very popular as a form of payment among digital natives. Of course, there are challenges because mobile apps can be a bit overwhelming because of the number of different features that are present and many more being added constantly. If businesses can simplify it, then there will be an acceleration in adoption.”

Looking back at the Covid-19 pandemic and its impact on the financial services industry, Madhusudanan noted that the pandemic saw lots of opportunities for an acceleration in digital transformation. It was also a key moment for M2P, which had just launched in the Mena region with an office in Abu Dhabi.

“We saw a decade of action happen in a year. As for ourselves, we did four rounds of financing over the past 20 months, mainly focused on our global expansion. The UAE is an obvious choice for us to access the rest of the Middle East and Africa. We are committed to investing close to Dh100 million over the next 24 months at a company level in the UAE. We believe that we have to create an ecosystem where fintechs can come and thrive.”

He revealed that the company is already working with a number of banks in the region at various stages of execution on various projects. Most of these involve products revolving around remittances, payments, and credit cards.

“Over the past 20 years, we have gone from bank branches to mobile, and now we believe that the future of banking over the next decade or so will see financial services be embedded into products that we will use on a day to day basis. It is already happening and will only accelerate with people looking for solutions that involve just a few clicks.”

Asked about the role that cryptocurrencies will play in the industry, he said: “There is a lot going on in the crypto world. The issue is that the very nature of cryptocurrencies is at odds with central banks trying to write regulations for them. The argument is how to ensure that the common man does not suffer for something that they did not sign up for. Since there is an ambiguity about how money comes in and goes, and how it is essentially borderless, there is a fear about ensuring adequate control around safety.”

“There is a need to create a global regulator that will help with exchanging information,” he theorised.

“There have to be standards around this in terms of compliance. We are moving in the direction that sees it recognised as an asset class and there is a lot of palatability now for it compared to two years ago.”

— rohma@khaleejtimes.com