It’s safe to say that the FinTech arena has been maturing lately, with the sector slowly shifting its reputation from a disruptive sector to a collaborative one across the traditional finance industry.
FinTech startups by definition are flexible and adaptive to their environments, developing custom solutions for e-finance without adhering to the same rigidity and bureaucracy of traditional financial institutions. This resulted in FIs evolving over the years to accommodate companies that specialize in emerging FinTech concepts, joining forces to reach mutually beneficial agreements and gain access to new markets.
In 2018, the FinTech sector thrived more than ever, with VC-backed companies raising around $39.6 billion across 1,707 global deals. In the Middle East & North Africa region however, FinTech as an industry is still at the budding stage, but the pace of innovation in the sector is rapidly increasing and shows great promise in the near future, especially in the GCC.
The last decade has seen MENA-based FinTech startups raise investments worth around AED 550 million, 35% of which was attained in 2017. Although the funding gap, when compared to the global average, is at approximately AED 36.7 billion, it is expected that the MENA region will witness several FinTech unicorns over the next few years.
Rising regional FinTechs are increasingly gaining traction and popularity, with e-wallet companies such as CashU, HalalaH, BitOasis, HyperPay and MadfooatCom benefitting from the increasing e-commerce transactions. In the Crowdfunding branch of FinTech, we find Eureeca, Aflamnah, Durise and Zoomaal. Financial comparison websites like Yallacompare and Souqalmal are also attracting attention, while P2P lending platforms like Beehive are emerging as potential disruptive game-changers for SMEs. Financial advisory services (robo-advisory) are also happening in the region, with companies like Sarwa, Wahed Invest and Solfeh exploring the branch. Islamic finance is also seeing some attention from FinTech startups in the Middle East.
Banks such as Emirates NBD, Emirates Islamic Bank and First Abu Dhabi Bank are increasingly adopting FinTech initiatives to improve customer experiences and generally reduce costs. Other banks like Bank Al Etihad, the Arab Bank and Bank Al Ahli are dedicating notable amounts of capital to FinTech startups as investors. Emirates-based RAKBANK has teamed up with C3 to launch a payroll card which offers low-income workers better services, for both the banked and unbanked population.
First Abu Dhabi Bank became the first MENA bank to announce real-time, cross-border payments using Blockchain technology by partnering up with Ripple, and following suit are Saudi British Bank (SABB), National Commercial Bank, Kuwait Finance House and National Bank of Kuwait that also established a partnership with Ripple to expand its global Blockchain reach in terms of cross-border payments.
In conclusion and going forward, the MENA market is likely to witness a FinTech rush very soon, with expectations surrounding FinTech players to double from the current 130 companies over the next three years. Currently valued at $2 billion, the MENA FinTech industry is projected to reach around $2.5 billion by 2022.
MENA, Middle East, North Africa, CashU, HalalaH, BitOasis, HyperPay, MadfooatCom, Eureeca, Aflamnah, Durise, Zoomaal, Yallacompare, Souqalmal, Sarwa, Wahed Invest, Solfeh, Emirates NBD, Emirates Islamic Bank, First Abu Dhabi Bank, Bank Al Etihad, the Arab Bank, Bank Al Ahli, emCash, UAE, Saudi Arabia, Bahrain, Bahrain Fintech Bay