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The Potential of Peer-to-Peer Lending in the Middle East

23 December 2019
The Potential of Peer-to-Peer Lending in the Middle East

(FinTech Egypt – PYMNTS.com)

Community-based and peer-to-peer (P2P) lending digital solutions have been increasing in popularity for a few years now, and innovative disruption is the name of the game in this area of FinTech. Digital initiatives and mobile tech have certainly enabled those solutions, however that does not mean they come without their corresponding obstacles and challenges.

Craig Moore, CEO of Beehive – the Middle East’s first regulated peer to peer (P2P) lending platform based in the UAE - stated in an interview that he believes in providing more P2P opportunities in MENA and went on to elaborate on the FinTech situation in the region. He stated that Beehive has faced a challenging environment since it deployed its SME and P2P lending services, where they encountered credit and trust issues that were dealt with as quickly as possible; an issue faced by most entrepreneurs in the Middle East and surrounding Gulf countries.

Despite these traditional challenges, FinTech companies are increasingly interested in filling financial gaps for the under-served and unbanked population, including startups and SMEs that need these gaps filled. When it comes to lending initiatives, the current regulatory environment in the MENA region is relatively young and still trying to cope with the fast-paced digital world. This leads to marketplace lenders being overwhelmed with maintaining compliance rules and tracking regulations as they adapt themselves to high-speed changes in the market.

Taking the UK as an example, the country’s P2P sector has lent £6.7 billion (more than $8.5 billion USD) over the last year but that was also accompanied with major issues in that area. A company called Lendy collapsed and property investment specialists BondMason have withdrawn from the market. Additionally, the English market became aggressive following the FCA’s new rules to limit marketing while boosting governance and credit underwriting, prepping lenders for a potential crash.

Switching back to the Middle East, Beehive is regulated by the Dubai Financial Services Authority (DFSA) and is the actual first regulated online marketplace for P2P lending in the MENA region. A prominent reason for their acceptance in the region is that they claim to be a sharia-compliant P2P platform, seeing as Islamic banking requires it and dictates specific considerations for FinTech companies in the region. Craig Moore stated that Beehive hasn’t “reinvented sharia finance” but that it’s “the first to bring that concept to the P2P financial world

Islamic finance is on the rise in the region and subsequently so is the presence of FinTech. Reuters have reported that the market size has witnessed an increase of 11% YOY in 2017 and that it “is set to sustain double-digit growth buoyed by capital market products and the adoption of financial technology.” 

No matter the current situation, P2P lending solutions are definitely in demand as FinTech entities are solving problems that were previously thought too complex to be handled. In that same light, lending solutions will meet their obstacles but eventually they should be widely accepted just like their predecessors in the MENA region.



P2P, peer to peer, lending, Craig Moore, Beehive, UAE, MENA, Middle East, UK, Lendy, BondMason, DFSA, FCA, Islamic finance, Reuters



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