Fintech (Financial technology) start-ups have raised over $100 million (Dh367 million) in Mena region in the last 10 years and the number of start-ups launched and investments raised will more than double by 2020, said an industry expert.
“105 fintech start-ups were launched in the region in 2016, and it will rise to 250 by 2020. The region is small when compared to the global proposition in finetch funding, which translates to one per cent,” Alan Kelly, commercial and strategy director at Informa Middle East, said at the preview event of the inaugural FinovateMiddleEast.
Taking place from February 26-27, 2018, during UAE Innovation Month and Dubai Innovation Week, the event will bring together early-stage startups, financial service institutions and funders drawn by the opportunity to see the future of fintech both regionally and globally.
Fintech describes tech-enabled products and services that improve traditional financial services. They are faster, cheaper, more convenient or more accessible. In most cases, they are developed by start-ups.
Kelly said that half of the fintech start-ups offer some form of payment solution, and a third are involved in money lending and capital raising.
Younis Al Khouri, Undersecretary of the Ministry of Finance, said that the Ministry will pursue its commitment to support and explore ways to increase innovation within government and finance more broadly.
“We have seen fintech enter the popular consciousness in a big way this year due to developments in mobile payment technology, and the introduction of blockchain technology that have ignited the public interest and pushed the sector’s growth,” he said.
In the Middle East, he said the fintech sector is predicted to grow by 270 per cent as the region seeks to keep pace with global peers. The UAE is the centre of the new frontier and the combination of accelerators, rising investments and cross-industry partnerships is likely to fuel the rise of financial technology over the coming years.
According to the State of Fintech report, fintech startups had launched in 12 countries by the end of 2015 (the study did not consider 2016 as most new launches take time to build visibility), shared equally between the GCC, Levant and North Africa. But four countries account for almost 75 per cent of all startups - the UAE, Lebanon, Jordan and Egypt.
Jagadeshwaran KothandaPani, Managing Director for Cash Management Head, Middle East North Africa and Turkey, Treasury and Trade Solutions at Citi, said that interconnectedness, technology’s role in reducing the overreliance on oil, smartphone penetration and a diverse and young population means the region is an attractive hub for fintech sector.
Instead of forcing customers to be banking clients, he said that fintech focuses on the customer experience by solving challenges one step at a time, thereby breaking down the ‘cocktail’ approach banks tend to follow.