Back in 2017, 30 FinTech companies in the Middle East raised a total of $80 million. Today, it is projected that Middle Eastern FinTech companies could reach up to $2 billion in venture capital by 2022. This huge rise in value could easily be attributed to the ongoing Coronavirus pandemic which subsequently led to the world diving deeper into the digital ecosystem, benefitting from its virtual advantages and avoiding physical interaction to curb the impact of COVID-19.
With FinTech products and services seeing a tremendous increase in growth around the world, the Middle East is no exception; the region is seeing huge adoption rates due to relying on digital platforms for basically all aspects of life including work, education, entertainment, and general communication as a result of the global crisis. Add to that a young tech-savvy population, international educational standards, a hunger for innovation, and notable venture capital funding, and you get the full recipe for the Middle East to become the next big FinTech hub and establish itself on the international stage.
Powered by its youth where 2 out of every 3 people are under 24, the MENA region boasts around 300 million young people that are expected to make a significant impact on the region, elevating its economy to new heights through innovative FinTech applications empowered by a hunger to adopt new and emerging tech trends to facilitate their lives.
With more than 250 FinTech startups expected to emerge in 2020, the Middle East’s young digital natives are the fuel that should propel the region into international stardom. Mobile industry insights platform GSMA Intelligence stated that unique mobile subscribers are expected to increase from 275 million in 2017 to 459 million by 2025, as well as an increase in smartphone connections from 49% to 74% during the same period. Furthermore, research conducted by The Milken Institute Centre for Financial Markets reported that the Middle Eastern FinTech sector has an annual compounded growth rate of 30%, largely due to the rising popularity of FinTech applications and general technological platforms in the promising MENA region. Considering that the current average deal size is at $2.5 million, with the UAE being responsible for 47% of all FinTech deals in 2019, all these numbers are indicative of seeing a huge boost in FinTech applications (and startups) adoption rates across the Middle East in the near future.
Looking at individual countries and their contributions to the region, we see leading nations like the United Arab Emirates and Saudi Arabia receive significant support from their respective governments in order to develop their FinTech sectors. Dubai has quickly become the leading FinTech hub through the incorporation of the Dubai International Financial Centre that established a fund of $100 million in 2017 in support of FinTech startups in the country, whereas the Saudi Arabian Monetary Association launched a similar initiative called Fintech Saudi aimed at developing and growing FinTech companies in Saudi Arabia, as well as encouraging them to join incubator and accelerator programs such as the sandbox to test out their services.
In further efforts to boost FinTech innovation, both countries have created facilities to attract global talent that can help them achieve their objectives, such as visa system expansion schemes to make it easier for foreigners to stay in the countries, and the Tomorrow 2021 vision established in Abu Dhabi in 2018 that focused on attracting global talent to grow their domestic market. By bringing together their youthful local population and striking international talent, Middle Eastern countries are poised to elevate their role in the FinTech world and attain the global position they seek.
As the world keeps on adapting to the uncertainty of the COVID-19 crisis, technology is at the core of this adaption and most changes are occurring in favor of it. The Middle East is presented with a great opportunity to become an international FinTech hub, empowered by its young and innovation-hungry population, its significant VC funding and investment environment, and its various initiatives to attract the right foreign talent through the support of their governments. With predictions stating that the FinTech market in the MENA region is set to reach $2.5 billion by 2022, the Middle East is on the way to becoming a remarkable source of outstanding FinTech products and services in the near future.
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