DIGITAL DISRUPTOR

Morocco 2020/21 | ICT & MEDIA | INTERVIEW

With a presence in more than eight countries in Africa and a portfolio of services that covers the entire value chain, HPS is revolutionizing the digital space one step at a time.

Abdeslam Alaoui Smaili
BIOGRAPHY

Abdeslam Alaoui Smaili is the CEO of HPS and has overall responsibility for all of HPS' activities. With more than 25 years of experience in the industry, he co-founded two IT services companies before becoming one of the founding members of HPS in 1995. He has been involved in countless implementations of payment
systems in various countries and has helped clients design and launch new and innovative payment instruments and implement challenging transformation programs across multiple countries, currencies and languages.

How would you evaluate the fintech sector in Morocco?
In Morocco, we are fortunate to have financial regulations that have helped payments advance. Only after the payments industry developed did regulators step in. This allowed innovation to enter the market. The central bank and financial regulators in Morocco have been extremely forward thinking. For example, the PIN system for ATMs had no legal framework until a few years ago, which meant legal disputes were difficult to settle; however, the country chose to let legal structures develop naturally rather than forcing implementation in a way that might not have served the industry as a whole. This allowed the system to figure out the areas most in need of oversight in an organic way. In terms of fintech, the impact of the internet has only had a significant influence on Morocco in the last six to seven years. We have been lacking in terms of infrastructure, incubators, and other necessary aspects that are needed to support a fintech ecosystem. There is now a process for supporting public and private initiatives. The next question is how we can develop this space.

Who are your main partners in Morocco?
We partner with banks, though we also work with new actors, namely payment system providers (PSP). Today, PSPs are the real players in the payment landscape. At present, telecoms firms are the main competitors of banks. Our customers include banks, PSPs, and telecoms firms. We also have special customers such as the highway authority in Morocco. In total, we have around 15-20 clients.

What are the main sources of revenue for your company?
Our technology covers the entire value chain. Either we provide the software and train the company and they pay us for maintenance, or we cover every area of the process on our own. It is the same distinction between using Microsoft Word on your desktop or using Windows 365 on the cloud. We have also shifted to the cloud. This is what we call the software-as-a-service (SAAS) model. We advise customers to move toward the SAAS model because it allows them to experience innovative solutions without large CAPEX expenditures.

Do you still allocate 10% of your revenue to R&D?
We are proud to say we allocate 16% of our revenue to R&D. We want to create a culture of innovation. This 16% goes into making our products better and improving every aspect of our business.

Can you tell us more about token payments?
We have been in the tokenization business for the past five or six years. We work with numerous partners across the world, including a major contactless player in Japan. Our work outside Japan has predominantly been on the Android platform. There is a huge market in Morocco for mobile payments, but less so for tokenization because fewer people own advanced phones. We are developing an e-wallet that is not registered to a physical card, but rather an account. This system will challenge the cash-based economy and promote financial inclusion. If we are able to increase the number of transactions on our platform, there will be tangible changes to our economy and society. Additionally, electronic payments ensure easier tax collection, which explains why the government has announced a three-year tax holiday for those who enroll in electronic payment systems.

Can you elaborate on the potential in Africa?
We provide payment services for eight nations in West Africa with the same central bank, the Central Bank of West African States. We are also heavily present in South Africa, so much so that we have an HPS South Africa subsidiary. Business-wise, Africa represents more than one-third of our global revenue. Africa is not in the midst of a digital transformation, but a digital birth. We are creating this environment from the ground up, and, therefore, we are not facing the same hurdles that we saw in other more advanced payments marketplaces.