The Middle East: Fintech Is To Replace The Oil

The Middle East: Fintech Is To Replace The Oil

Although startups in the Middle East and North Africa (MENA) are way behind Europe and the USA, there are plenty of opportunities there. Especially since the Middle Eastern countries are decided to transform their economies, which currently highly depend on oil.

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Although startups in the Middle East and North Africa (MENA) are way behind Europe and the USA, there are plenty of opportunities there. Especially since the Middle Eastern countries are decided to transform their economies, which currently highly depend on oil.

Startups like Paytabs, Souqalmal and Beehive have raised together $35 million in 2017. Nevertheless, it is not only the investments that have doubled, the number of fintech companies is twice as large, compared to 2013. Predictions are that by 2020 fintech startups may number 250 in this area. It is interesting, however, that despite smartphones and internet the majority (86%) of the population is not using banks. Furthermore, most of the bank customers show willingness to ditch banks in favor of digital alternatives.

Bridg, a Dubai-based startup, provide users with the convenience of transferring money between smartphones via Bluetooth. Its co-founder, Moussa Beidas, suggests that fintech is able to comfort those who are unbanked. Though he admits that this task is a challenging one, since institutions require the use of banks in order to legalize financial services.

PayTabs founder and CEO, Abdulaziz Fahad AL Jouf, believes that fintech has the potential to grow as big as the oil industry. Saudi Arabia’s intention is to open up possibilities for small and medium business and be independent from oils by 2030. These politics of course are highly beneficial for fintech startups. Literally, they emerge every month. Dubai-based, Verify is one of those who insist that blockchain will undoubtedly change the game, since transactions are risk free for all parties.

This November, Dubai International Financial Centre (DIFC) together with the Monetary Authority of Singapore created $100 million fund, which focuses on fintech projects. In addition, Hong Kong’s Securities and Futures Commission began a cooperation with Dubai Financial Services Authority (DFSA) in order to facilitate the fintech industry. The whole region is getting fond of innovations, just as an example; there are now accelerators schools in Cairo, which aim is to breed startups.

Maybe it is because they fear the competition but banks are brutal towards fintechs. Yet, the conditions are not as harsh as they used to be, thanks to regulators such as DIFC and DFSA. Banks probably underestimate or just don’t understand the benefits of new technologies. In order to stay up to date, they should find a way to join the ecosystem; otherwise, some of them may perish. Al Jouf emphasizes that even though fintech’s impact on Islamic finance is still small, institutions should update and upgrade their systems accordingly.

Everyone familiar with fintech believes that traditional banking is surely coming to an end in the following years. Thus, financial institutions are forced in a way to catch up with the fast growing fintech industry. After all, the interest in the field is driven mainly by the businesses’ hunger for innovation.

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