By Thomson Reuters / Entepreneur Middle East - Image Credit: Shutterstock
SOURCE: Entrepreneur Middle East - Getting The MENA Ready For A Fintech Revolution
In the Middle East and North Africa (MENA), a vast proportion of the population is excluded from the traditional banking and finance sector. This means many people do not have access to financial services such as credit, payments, insurance and pensions. As many as 86% of adults in the region do not have their own bank accounts.
Enhanced financial inclusion is required for greater economic diversity and growth across the region– and this is a key area of focus for many of the MENA’s policymakers. At the same time, financial technology (fintech) is emerging as a new and innovative way to bridge this divide.
Affordability, accessibility and relevance
In the age of increased internet connectivity and smartphone penetration, fintech can extend much-needed financial services, like electronic payments, micro-insurance and remittances, to people traditional banks have struggled to reach. Fintech can also unlock new funding avenues for small and growing businesses, which often battle to access finance –and meet stringent reporting and compliance requirements– in a risk-averse banking sector. In these ways and more, fintech can provide the region with financial services that are more affordable, accessible and relevant.
Today, fintech is an emerging field of innovation and entrepreneurship in the MENA region, where the number of fintech startups in the region more than doubled between 2013 and 2015– increasing from 46 to 105. Growth is expected to accelerate over the next few years, with some studies predicting that there will be 250 fintech organizations in the MENA by 2020.
Local fintech ventures have also been attracting investors’ attention. They have dedicated US$100 million to MENA’s fintech startups over the past decade. In 2017 alone, another $50 million is expected to flow into the local fintech ecosystem, fueling further transformation in the financial services industry.
Most of the region’s fintech activity is concentrated in the UAE, Lebanon, Jordan and Egypt– four nations that together host 73% of MENA’s fintech startups. The UAE is home to the largest fintech sector, comprising 29% of MENA’s finance-focused technology businesses.