fbpx
Now Reading
Digital Economy: UAE consumers to pivot away from cash – report

Digital Economy: UAE consumers to pivot away from cash – report

Young and digitally savvy populations across the Middle East and Africa region are key to long-term growth outlook

Between 20-30 per cent of the surge in e-commerce activity propelled by the Covid-19 pandemic is here to stay, and will find a permanent slot in overall retail spending a recent study has revealed.

The Mastercard Economics Institute has released its Economy 2021 – a global outlook report that offers an insight into the economic impact of Covid-19 including potentially permanent changes in digital consumer spending habits, growth of online banking, fintech disruption and opportunities to boost financial inclusion.

Key trends
A sharp shift to digital platform use, propelled by changed consumer behaviour, mobility restrictions and the need of business revenues beyond brick-and-mortar locations are identified as the key trends in the MEA region. The shift in e-commerce was also highlighted in a recent Mastercard e-commerce study, which revealed that 73 per cent of consumers in the UAE, as well as in the wider MEA region, were shopping more online than they did before the pandemic.

The continuing trend away from cash is also expected to be more persistent in economies such as the UAE, which operates a robust e-commerce infrastructure and a young, technically-savvy consumer base. Additionally, adoption by older generations, greater convenience and lower costs will contribute to the continued growth of digital demand in 2021.

Continued digitalisation in MEA is instrumental to financial inclusion. According to Economy 2021, the need to bring the population into the digital economy first through online banking solutions is key to growth over generations to come. Fintech disruption in online banking is also identified as a key driver. Meanwhile, brick-and-mortar business creation is expected to decline further in 2021 in favour of online business creation and the adoption of initiatives that connect a merchant’s sales data with access to capital, the report added.

Leveraging technology to connect consumers to small businesses and micro-merchants is another aspect of advancing financial inclusion. With the progress of digital innovation, digital payment solutions such as Contactless, Virtual Card Numbers and Quick Response codes offer added possibilities.

The region’s young population base offers immense potential and room for success in terms of e-commerce growth and financial inclusion. The Middle East & North Africa (MENA) region has the largest youth population in the world, with more than half of residents under the age of 25. In the UAE, this youth bulge stands at 34 per cent. However, growing youth unemployment is an associated risks, the report said. The link between high unemployment and social unrest is likely to remain an issue in 2021, so will the potential fallout from climate change.

Alongside e-commerce, the report anticipates automation around the Fourth Industrial Revolution (4IR), contactless interaction, local delivery services and ‘tele-everything’ to be other long-lasting trends. Eating out and leisure travel are among the trends that are expected to resurface as mobility restrictions are eased off.

“This growth of the digital economy represents a ‘coming of age’ for e-commerce, a turning point in bridging the digital divide. We are heading for a multi-speed global recovery that favors low-touch over high-touch,” said David Mann, chief economist, Asia and MEA, Mastercard.

“Small businesses and micro merchants are especially crucial to the region’s economies and by enabling them to accept digital payments, we can connect more people and communities to financial freedom and eventual prosperity.”

You might also like

© 2020 MOTIVATE MEDIA GROUP. ALL RIGHTS RESERVED.

Scroll To Top