IMF forecast suggests India will overtake the UK in dollar terms on an annual basis this year

India surpassed the UK to become the fifth largest economy in the world, according to reports on Friday.

Indian media quoted Bloomberg in reports, saying the country overtook the UK in the final three months of 2021 to become the fifth-biggest economy, just behind the US, China, Japan and Germany.

Online shoppers increasingly opting for Buy Now Pay Later (BNPL) services when purchasing various products and services

Consumer appeal, accessibility, and the assurance of no interest or fees – as long as payments are made on time – have been the main driving forces behind the growth of Buy Now Pay Later (BNPL) services across the UAE and MENA region, experts have said.

Nick Curran, head of Endava in the Middle East, and North Africa, says that BNPL has become one of the most prominent retail trends due to the effects of the Covid-19 pandemic and the exponential growth of e-commerce.

Consumer appeal, accessibility, and the assurance of no interest or fees – as long as payments are made on time – have been the main driving forces behind the growth of Buy Now Pay Later (BNPL) services across the UAE and MENA region, experts have said.

Nick Curran, head of Endava in the Middle East, and North Africa, says that BNPL has become one of the most prominent retail trends due to the effects of the Covid-19 pandemic and the exponential growth of e-commerce.

Curran says that BNPL is well-liked among all demographics for many reasons, but it is particularly well-liked among millennial and Gen Z customers as a tool for financial empowerment. “Customers benefit from rapid gratification, a flexible return policy, easy access to credit, and the ability to manage their finances by spreading the cost of purchases over a predetermined time frame.”

For retailers, he noted that BNPL boosts sales, adds stickiness, and lowers basket abandonment without risk. BNPL providers pay retailers upfront and lend money to customers while taking on all of the program’s administrative costs and credit risk. “Aside from the fact that embracing BNPL can improve sales, the appeal is that it can be used for much more than just payments. BNPL firms have vast amounts of data that retailers can use to enhance customer loyalty by offering more targeted products.”

Looking ahead, he said that BNPL will continue to grow across various industries, including banking, luxury retail, travel, hospitality, insurance, trading, and healthcare. This is because the ecosystem is becoming more saturated with big banks, payment schemes, and new entrants vying for a market share. The introduction of banks into the BNPL market is another trend poised to disrupt the industry. BNPL lenders are stealing a portion of banks’ credit card and consumer loan revenue.

“The time is right for banks to enter the BNPL market; nevertheless, having the correct market entry strategy and business model is critical to succeeding,” Curran noted. “Banks are experienced in regulatory compliance and credit underwriting and have the data and client base to compete in this market. Banks are also well-positioned to ascertain affordability and can tailor BNPL offers based on a customer’s risk profile using financial data. However, they must move quickly or risk missing the boat.”

Furthermore, as BNPL players scale and enhance engagement, Curran says that consumers can expect to see super apps that combine retail, financing, payments, and banking offerings. Globally, Klarna, Affirm, and PayPal have already jumped in with their super apps. Super apps distinguish themselves by providing an integrated, fluid, and efficient experience without the need to transition between applications. As competition intensifies, these solutions will become a significant differentiator in the BNPL market.

Security has to be ‘top of agenda’

Saeed Ahmad, managing director, Middle East and North Africa, Callsign, cautioned that as the BNPL industry grows and providers increase their capabilities, it is expected to become a more attractive target for fraudsters.

“While the financial repercussions are troubling, the long-term consequences are far more concerning,” he said. “Fraud undermines consumer trust and, as a result, the long-term potential of the BNPL ecosystem. The most prevalent way users have been victimized by fraud is through the creation of a false BNPL account using stolen card information and identities. Due to the fact that consumers are not invoiced billed immediately, it may take a while for the victim to realise they’ve been targeted.”

Another tactic frequently used by fraudsters are account takeovers, in which they hack into a legitimate user’s account to order items. The dangers are heightened for retailers and BNPL as they are typically held accountable for BNPL fraud consequences. Retailers and BNPL providers are often left to bear the consequences of fraud and repossession, while the fraudsters receive items they have not paid for. Furthermore, because BNPL providers have partnered with various mainstream retailers, consumers often open multiple BNPL accounts. This broadens the field for fraudsters. Account takeover or credential theft is a common precursor to BNPL fraud.

Ahmad says that cconsumers should be cautious of responding to SMS text messages or emails claiming to be from their favourite stores, as they may contain links that lure them to disclose personal information.

“These ‘Phishing’ attacks are frequently the first tool in a fraudster’s toolbox when conducting BNPL and other forms of fraud,” he said. “Consumers who use the same password for all their BNPL accounts are more vulnerable to BNPL fraud. As a result, to decrease the possibility of ATO fraud, consumers should use different passwords for their BNPL services.”

“Along with raising customer awareness of security best practices, BNPL providers need to improve their knowledge of each user interaction’s associated identification and how much trust can be placed in it,” he added. “Layering in approaches such as device fingerprinting, behavioral biometrics, and location analysis helps to build a more comprehensive understanding of the risk level associated with each user. BNPL providers can make more informed and precise decisions throughout onboarding, login, and payment by having a better grasp of users’ digital identities. Apart from preventing fraud, this can also help reduce false decline rates.”

Source: https://www.khaleejtimes.com/tech/uae-to-see-increased-demand-for-bnpl-services?_refresh=true

Startups that will thrive in this evolving ecosystem will become the ecosystem, thus fuelling the two economies

In 2009, I visited the UAE for the first time on a family trip that was planned on a whim. I had little time to think about what to expect in the UAE. At the Dubai airport, I was surprised to find myself exchanging pleasantries in Hindi with the immigration officer. At that moment, the shared history of the UAE and India became obvious. Over the past many decades, the UAE and India got plenty of trading done between them. But it was in the last few years that the UAE-India synergy has reached its full potential.

I recently met a couple who had recently set up their own company in Dubai. They were filled with excitement about following their dreams. I also spoke to an entrepreneur who successfully incubated his startup in the UAE and was now looking at scaling it in India. This constant flow of talent, enterprise, and funding between the two nations has motivated so many entrepreneurs like me to take chances, seek new opportunities, dream bigger, adapt, and try harder. This means pooling of resources within industries such as food, technology, retail, which straddle both countries.

The movement of talent between India and the UAE has not been a one-way street. Indians have tended to move back and forth between the two countries, to take up jobs, conduct business and invest. When Covid normalized remote working, several large companies in the UAE, especially banks, set up their back offices and development centres in India. A virtuous talent bubble between India and the UAE has driven innovation for several years. This transnational bubble is now fostering a startup ecosystem, where funding could come from one country and talent from another; incubation could happen in one country, and growth in another.

Startup success stories spread across the two countries have diverse scripts. Sometimes the UAE serves as a petri dish for a new idea. At other times, entrepreneurs start out in India by tapping an abundant talent pool. They later extend to the UAE to get better access to capital and infrastructure. The UAE gives them an international presence and access to new markets. Sometimes such decisions are driven by regulation and policy. For example, uncertain regulation in India has prompted many Web3 startups to set up their headquarters in the UAE. Polygon, the Ethereum-based layer 2 aggregating platform moved to Dubai, while still nurturing talent in India.

Centuries ago, Arabs took advantage of the monsoon winds and sailed through the Suez Canal to trade with Indians. This commercial inter-dependence left an imprint on both cultures, to an extent that it is hard to establish the origins of certain shared cultural practices and food habits. Trade tended to flourish where the political dispensation made it conducive for traders to operate unhindered. Traders historically would flock to ports that offered a favorable environment. Likewise, startups today want a transnational presence to maximize opportunities. They look for ease of doing business, access to finance, favorable policies, and modern infrastructure.

An idea that germinates on a kitchen table or within a dorm needs resources to grow into a full-scale business. These resources could exist in any country. The startups’ digital foundation allows them to seamlessly operate across international borders. They often rely on accelerator programs to become viable transnational businesses from their early bootstrapped days through to late-stage venture funding.

International cooperation is creating new accelerator programs with influential networks. Under the India-UAE Comprehensive Economic Partnership Agreement (CEPA) that was signed in early 2022, India and the UAE pledged to jointly nurture startups by strengthening relations with ecosystem stakeholders such as accelerators and incubators.

The two governments followed through by launching the India-UAE Startup Bridge. This will allow UAE startups to explore incubation opportunities in India and vice versa. Additionally, investors in one country can fund startups in the other’s jurisdiction. Dubai International Financial Centre (DIFC) and FICCI LEADS India’s major incubator, have launched the India-UAE Start-Up Corridor. They have agreed to identify 50 promising early-stage startups from both countries in the next 5 years. A $150M fund has been launched with an aim to develop at least 10 such startups into unicorns by 2025.

The UAE-India startup synergy has happened at a decisive moment. In 2022, India celebrated its 100th Unicorn, while UAE ranked No.1 worldwide in the latest Global Entrepreneurship Index. Both countries have stepped up from a position of strength when building a shared startup ecosystem.

Startups that will thrive in this evolving ecosystem will become the ecosystem, thus fuelling the two economies. They will help create new jobs and attract capital. However, in tough market conditions, they will be the most vulnerable. Such inter-government initiatives can provide a protective padding to fledgling startups in tough times, and the thrust to help them take-off in the new digital world of Metaverses and Blockchains.

Source:https://www.khaleejtimes.com/opinion/uae-india-innovation-bubble-boosts-startup-ecosystem?_refresh=true

Recent visa reforms, change in weekend in line with international markets and conducive environment for business will attract high net worth individuals (HNIs) and worldwide investors in key sectors of the economy