a rising market

Middle East and Africa: Are you Ready for FinTech?

middle east fintech

From Israel to Iran, from Jordan to Morocco, the innovation of digital finance runs in the MENA area. Here 400 mln consumers ready to use smart and digital solutions

The MENA area (Middle East and North Africa) is one of the world's most heterogeneous regions, spanning different continents with a population of close to 400 million. Moreover is home to some of the world's most unbanked populations, that’s why FinTech is booming in this area. According to data, the UAE is the leader in FinTech innovation, comprising some 24% of the FinTechs in the region. Both Morocco and Egypt follow, with 12% and Tunisia with 10% of FinTechs.

The landscape is shifting rapidly. According to the GSMA, the MENA region has the fastest-growing mobile economy in the world, with mobile penetration growing from 280 million subscribers in 2012 to more than 456 million in 2019. Combine this with the world’s youngest population, rapidly increasing smartphone penetration, and a drive to increase financial inclusion and cashless payments, and you have a perfect storm for a thriving FinTech sector.

Without doubt the creation of a favourable FinTech ecosystem is still a work in progress in most regional countries and cities, but regulators had found a right balance among innovation, easy access to financial facilities and customers data protection as noted by Clifford Chance's Fintech in the Middle East – Developments across MENA. The central banks of Egypt, Bahrain, UAE and Jordan have adopted specific initiatives to regulate digital payment services. Lebanon, the Dubai International Financial Centre (DIFC), Bahrain and Abu Dhabi Global Market (ADGM) have introduced crowdfunding regulations. Meanwhile, the UAE securities regulator allowed the licensing of ICOs. But let’s see in detail some of the developments that have taken place over the last few years.

North Africa is Running Fast

Israel, with 750 fintechs, and the UAE, with over 400, took the top premier global fintech hub status as they both not only have strong advanced economies but also clear fintech and wider tech ecosystems that are mature. Right behind, Saudi Arabia, Bahrain and Qatar are consolidating their FinTech sector in MENA too, but we should pay attention to other emerging competitors.

FinTechs in Egypt

First of all, Egypt. The country is changing in such a dynamic and interesting FinTech reality due to its digital booming landscape. Let’s start from Paymob,  a fintech startup headquartered in Egypt that provides businesses with payment solutions that enable business owners to access a panel of financial services. Paymob also gives the employees some privileges, in that they have access to banking products and services and ensures that their salary is available all the time. Khazna is also Egypt-based new app that offers services to both employees and business owners. The business owners can use the Khazna app to pay the bills and salaries of people employed in their organization.

FinTechs in Tunisia

In Tunisia, the journey of We-Settle is on the stage. This startup offers payment and invoice processing solutions to businesses. With a user-friendly interface in its apps and website and offers its services in three different languages English, Arab and French language,,We-Settle solutions allow invoices to be digitally processed and payments collected virtually at a minute service charge.

FinTechs in Algeria and Marocco

Algeria is investing in FinTech too with its Kodepay, a kind of new e-wallet that provides tickets, vouchers and some pre-paid services, while in Marocco we have FinKeys, a FinTech startup that helps its clients save and then invest their funds into various ventures. FinKeys oversees these investments and ensures the returns are profitable to their clients. The investment areas include Real Estate, Crowdfunding, Equity, Bonds and so many others.

What’s Next? Eyes on Neobanks

Boosting financial inclusion is crucial for economic diversity and growth across the region. Moussa Beidas, co-founder of Dubai-based startup Bridg, says fintech has become an innovative way to bridge the divide and provide cheaper services to the unbanked and boosting the post pandemic recovery. Thus, what’s next? Surely, MENA’s fintech development will have different drivers than in the UK, East Asia and SEA, or the USA. Northern Africa has many of the world’s fastest growing, most youthful countries where many financial sectors are less well developed, more retail and corporate finance focused. Despite the huge range of options, the digital revolution has revamped the regional bank sector too.  Driven by changing consumer behaviour and new regulations, all eyes are on neobanks. Launched by Israeli Bank Leumi in June 2017, Pepper is a mobile-only banking subsidiary. The platform offers savings and lending products, with no checking account fees. Very appreciated its live customer service served by professional bankers available around the clock (24/7) via video chat, online messaging, or by phone.

In the Gulf Area, more precisely in Barhein, Bank ABC which stands for Arab Banking Corporation, in early 2018, unveiled its plans to launch a standalone neobank. Keeping to the timeline, in 2019, the bank launched ila Bank, foraying into the digital, mobile-only banking space, beginning with Bahrain with a roadmap to take it across the MENA region. Dubai is a forerunner too with its CBD Now. Launched in 2017, as a digital extenxion from Соmmеrсiаl Ваnk оf Dubаi (СВD), the main goal was targeting millennials and digitally friendly customers. The bank aimed to tap into the smartphone savvy consumer base.

As we know, the pandemic outbreak has created one of the most complicated challenges faced by the financial sector globally. The impact of the pandemic on banking services has been severe in MENA region too due to demand and income reduction, closure of public and private sector and the overall curb on economic activities.

The present situation has forced regional regulators, businesses, consumers and intermediaries to shift focus on crafting a strategic response across the fintech and banking ecosystem. The Covid-19 has acted as a catalyst in enabling rapid adoption and use of FinTech platforms as contactless offerings become the new norm.