With technology moving at breakneck speeds, financial technology or fintech companies have found massive success disrupting industries previously dominated by legacy banks. While this does pose a challenge for regulators struggling to keep up with the pace, the net positive comes in the form of increased financial accessibility, mainly benefiting untapped markets. The Middle East and North Africa (MENA) region is particularly ripe for development, as 67% of the population is either underbanked or unbanked – compared to only 4.5% of unbanked Americans.
Over 60% of the MENA population is under 30, the age group most likely to frequently rely on fintech. For instance, a survey of residents of the United Arab Emirates (UAE) – where 27% of the population is under 25 – revealed that 58% use their digital wallet for bill payments. In comparison, 55% use it to purchase groceries. MENA finance startups are capitalizing on this market opportunity, receiving $1.73 billion (E£53 billion) of funding in 2022, while emerging financial technology companies in Egyptian attracted investments worth $800 million (E£24 billion) in the same year. Here are a few key areas where fintech will be making its mark in the region:
In Egypt, where 44 million (39%) of its 112.7 million inhabitants remain unbanked, key national figures emphasized the need for inclusivity in a recent Digital and Financial Inclusion Summit for Youth. Both public and private sectors are working to break preconceived notions of exclusivity in the financial sector. Gone are the days when stock, indices, and forex trading were thought to be for the ultra-rich. Today, brokerages and forex trading apps have enabled Egyptian and MENA residents of various financial backgrounds to participate in the markets, even with a humble amount of capital.
Moreover, this market participation can go global with fintech. تداول فوركس apps from brokerages offer investors access to the largest financial market in the world, with a daily trading volume exceeding $5.5 trillion (E£169.9 trillion). Those who want to benefit from the constant price movement of major currency pairs can execute trading orders in less than 25 milliseconds. On the other hand, longer-term traders who keep abreast of fundamental economic trends in specific markets can hold their positions without swap fees. Forex facilitates international trade, attracts foreign investments, and can boost a country’s economy.
Qatar has a National Vision aimed at building a digital economy and cashless society by 2030, which is why it has hyperfocused on digital transformation via comprehensive 5G broadband coverage and training 50,000 people in advanced digital skills, among other initiatives. A major catalyst for these developments was the country’s host preparations for the 2022 FIFA World Cup. During this time, the Qatar Central Bank (QCB) issued landmark licenses to Vodafone and Ooredoo, two widely used telco providers in MENA. This decision allowed the providers to support digital payments under QCB supervision for the convenience of international sports fans accustomed to digital payments.
The country is also looking to follow the footsteps of India and China and be the first MENA nation to implement a Central Bank digital currency, which would be tied to the Qatari Riyal. This would reduce the use of banknotes and enhance payments via mobile phones and e-wallets, which have gained significant traction since the World Cup.
Buy Now, Pay Later
In the UAE, Buy Now, Pay Later (BNPL) arrangements are expected to reach $2,531.1 million (E£78 billion) this year. Unlike cash payments, BNPL rewards consumers with discounts, points, and cashback. Recognizing its growth, the Commercial Bank of Dubai entered a financing agreement with BNPL provider PostPay, another example of the collaboration between banks and fintech to improve the purchasing power of consumers. These methods can teach UAE citizens how to use credit responsibly and build a good credit history that they can leverage over time.
The future is only beginning for fintech in MENA. And with its robust and young population leading the charge in accepting modern ways to pay, save, and invest in a cashless society is truly within reach.