ACI Worldwide, the real-time payments software provider, has partnered with Arab Financial Services (AFS), the Middle East and Africa region’s digital payment solutions provider and fintech enabler, to collaboratively drive digital payments modernisation for banks, fintechs and merchants across the region.

During a 10-year strategic partnership, AFS plans to leverage the ACI Worldwide Enterprise Payments Platform, a single transaction processing platform for all payment types, backed by cutting-edge security, flexible cloud-ready technology and multi-language, multi-currency, multi-institution capabilities to drive the retail banking modernisation for its banking and fintech customers.

Regulated by the Central Bank of Bahrain, AFS is owned by 37 banks and financial institutions, serving over 60 clients across the Middle East and Africa region. The company provides numerous groundbreaking, end-to-end digital payment products, services and solutions to banks and merchant groups.

Samer Soliman, CEO of Arab Financial Services, commented: “As the payments landscape becomes ever more intricate and prone to disruption, a reliable technology partner offering industry-leading solutions is crucial.

“Together, AFS and ACI Worldwide are committed to empowering our customers with cutting-edge technology that streamlines operations, fosters growth and also unlocks new levels of profitability.”

AFS’ approach to the provision of financial services is evidenced by a series of market-leading payment services that span card processing services, merchant acquiring, fintech solutions and value-added services.

Optimising conversion rates

AFS will also deploy the ACI Payments Orchestration Platform, enabling its merchant customers to orchestrate payments using one solution, one platform and one API integration for optimal conversion rates at minimal operation costs. It will enable merchants and payment service providers to provide customers with more seamless and secure customer journeys.

Santhosh Rao, senior vice president of MEASA at ACI Worldwide, also explained: “ACI’s partnership with Arab Financial Services is an important milestone in our strategy to support banks and merchants in the Middle East in their quest for digital payments modernisation.

“Our flexible, agile and innovative payment software solutions will now be available to banks, financial institutions and merchants across the region. AFS is now in a strong position to support all customers in the region on their quest for digital transformation and innovation while enabling the resiliency and service quality required by next-generation payment systems.”

This March, The Fintech Times is shifting its spotlight towards insurtech, exploring the potential impact of blockchain technology on insurance processes and its role in instilling trust in digital transactions.

Navigating the intricacies of regulatory frameworks presents a formidable challenge for insurers operating on a global scale, as regional variations significantly influence their strategies and operations worldwide.

These regulatory disparities dictate product development, distribution methods, capital requirements, risk management practices, and market entry decisions.

To delve deeper into this, we consulted industry experts for their insights on how regional regulations shape insurers’ approaches and activities across diverse markets.

Unified approach

Regional variations in regulatory frameworks have significant impacts on insurtechs and insurers’ strategies and operations worldwide, says Caroline Hanotiau, general counsel at insurtech Qover.

“The operational complexity of managing compliance efforts and monitoring updates and changes in regulations can be resource-intensive. Additionally, stringent regulatory requirements in certain regions may act as a barrier to market entry, limiting potential expansions for insurers.

“Innovation can also be constrained by regulatory requirements in certain regions, which may restrict product development and distribution rules.

“However, at Qover, we have developed a unified API that allows us to navigate these challenges and ensure compliance across all countries, while still innovating and providing consumer protection.”

Central bank regulation

Mustafa Melhem, business development manager for insurance at Eastnets, a global provider of compliance and payment solutions for the financial services sector, addresses the importance of central bank regulation in fostering stability and mitigating fraud in well-regulated insurance markets.

“In many regions, the insurance sector is regulated directly by the central banks through a dependent or independent insurance authority. We consider these regions as well-regulated insurance markets.

“They offer a strong and stable insurance market, empower the local insurance sector, foster better partnerships with the global reinsurance and financial sectors, and protect policy holders and beneficiary rights.

“These markets also offer protection of any third parties’ rights, such as healthcare providers and other insurance service provider. They also empower the insurance companies’ solvency margins and ensure strict control of fraud and money laundering.

“In other regions, where the insurance sector is reporting to different governmental departments or ministries, the central banks are not fully involved and therefore these regions are poorly regulated. So, these markets are lacking the above benefits, which encourages increased fraud.”

Robust IT systems

“Insurers are, and have always been, under enormous pressure to make their products conform to the regulatory needs of every geography they serve,” says Sam A. Shay, creative director at Socotra, which provides a modern enterprise platform  to insurance businesses.

“Even a small insurer that sells only one basic personal auto product in the U.S. has to create a variant of that product for each state, greatly increasing the complexity of doing business across any kind of border. The resulting amount of compliance work, product definition and more that goes into growing into larger regions or offering a more expansive product portfolio can be incredibly cumbersome.

“The insurers best-poised to handle this are the ones that use IT systems with robust insurance product inheritance models that allow them to easily configure each of their products to suit every regulatory environment the product is offered in – rather than offering unique products for every geography.”

Managing compliance

“Regulatory differences significantly shape the strategies and operations of global insurers, influencing product development, distribution methods, capital requirements, risk management, compliance, and market entry, including mergers and acquisitions (M&A),” says Ryan Cox, senior director and head of AI Business at digital transformation consulting firm Synechron.

“Insurers must customise their products to comply with various regulations, align distribution strategies with legal frameworks and maintain adequate capital to meet solvency requirements. They also need region-specific risk management strategies to navigate varying compliance standards and associated costs from one region to another.

“Market entry decisions hinge largely on regulatory landscapes, with insurers preferring markets with more favourable regulations while acknowledging regulatory challenges.

“M&A activities require thorough assessment of regulatory impacts and approvals across jurisdictions. Despite regulatory complexities, insurers can find opportunities by proactively managing compliance, maintaining operational flexibility, and using technology to enhance regulatory processes’ efficiency.”

Adaptable strategies

Highlighting the dynamic impact of regional regulatory variations on insurers is Javed Akberali, co-founder and managing director of insurtech Wellx, who said:

“Regional variations in regulatory frameworks significantly impact insurers’ strategies and operations worldwide. Differences in data protection laws, licensing requirements, and compliance standards require insurers to adapt their business models and strategies to each jurisdiction.

“This variation necessitates a flexible, informed approach to global insurtech operations, underscoring the importance of understanding and navigating these disparities to succeed on the international stage.”

ACI Worldwide, the real-time payments software company, and Security Bank Corporation, a universal bank in the Philippines, are working together to transform Security Bank’s real-time payment hub.

The partnership involves implementing ACI’s cloud-native Enterprise Payments Platform solution, which aims to unify the Bank’s payments platform and enable interoperability of payment services and gateways for various payment types including InstaPay, PDDTS, PESONet, Swift, and PhilPaSSplus on ISO2022 standards.

With this modernised payment hub, Security Bank aims to offer innovative products and services to its customers quickly as well as cost-effectively.

According to ACI Worldwide’s 2023 Prime-Time for Real-Time Report, real-time payment transactions in the Philippines are expected to experience significant growth from 2022 to 2027. As of 2022, real-time payments represented only 0.7 per cent of the payments volume, and the market is yet to reach its inflection point.

The Bangko Sentral ng Pilipinas (BSP) has set targets under its Digital Payments Transformation Roadmap (DPTR) 2020-2023 to increase electronic payments and the number of banked adults. The partnership with ACI also aims to support these goals and foster financial inclusion in the country.

‘Crucial for progress’

Leslie Choo, senior vice president, managing director – APAC at ACI Worldwide, says embracing digital real-time payments is essential for the Philippines’ economic progress, especially with its growing tech-savvy consumer base.

“Security Bank is at the forefront of driving customer centricity and redefining the digital real-time payments landscape in the country, and ACI is proud to support the Bank with cutting-edge payment hub technologies in leading this transformation,” said Choo. “Our robust solutions go from powering country-wide real-time payment ecosystems to interconnecting cross-border real-time payment networks and enabling the integration of different types of payments, such as the convergence of high-value and low-value payments into a single, unified, intelligent, cloud-native payment hub.”

Stephen John Bell, SVP and channels network group head at Security Bank, highlighted that digital real-time payments are becoming ubiquitous, and ACI’s modern and cloud-native architecture will meet customers’ dynamic demands in the digital era.

“This initiative and our investment in innovative payment technology are testament to our unwavering commitment to customer-centricity,” said Bell.

ACI Worldwide has extensive experience in powering payment hubs for major banks across Asia Pacific, including critical real-time ISO 20022 payments ecosystems and central infrastructures. Security Bank, on the other hand, is on a comprehensive digital transformation journey, investing heavily in technology upgrades to enhance its services.