According to a new report, the FinTech (financial technology) sector is rising globally, and has already arrived in the Middle East and North Africa (MENA). In fact, the number of startups offering financial services in the region doubled from 46 to 105 in the last three years (2013-15).
FinTech startups have sprung up in 12 Arab countries, yet 3 in 4 startups are based in the UAE, Lebanon, Jordan or Egypt. The UAE is the most dynamic hub with a 4-year CAGR of almost 60%, and payments are the most popular sector, accounting for half of all MENA-based FinTech startups.
The rise of FinTech in MENA is driven by four opportunities: 86% of adults don’t have a bank account, and SME lending stands at half of the global average; at the same time, the volume of e-commerce is set to quadruple over five years, and 1 in 2 bank customers is interested in new digital services.
Declining customer loyalty is not necessarily bad news for banks though: the three main obstacles for FinTech startups are visibility, customer education, and trust. This is why almost 9 in 10 FinTech startups seek collaborations with corporations, and banks are well positioned to integrate into the growing FinTech ecosystem.
MENA’s FinTech startups provide a wide range of services to private, corporate and governmental partners. The most mature sector, payments, includes startups offering bill payment, mobile and online payment solutions as well as wallets. Payment service providers (PSP) have sprung up as well, integrating a variety of services into a platform.
Lending startups include crowdfunding, money circle, peer lending and loan comparison platforms. Finally, second wave startups specialize in international money transfer, wealth management, insurance solutions and blockchain-based services such as cryptocurrencies.
FinTech is poised for greater visibility by 2020. With the payment sector showing early signs of consolidation especially in the GCC region, it can be expected that second wave startups enter the game wherever FinTech gains a foothold.
This report was created with the aim to inform entrepreneurs, investors, policymakers, large corporations and the general public about the opportunities and challenges for FinTech startups in MENA.