The Middle East, South Asia and Africa region (MEASA) has rapidly become, and will continue to be a focus for companies looking to capitalise on growth opportunities – FinTech is no exception. Recent market research suggests that the region’s FinTech market is expected to increase threefold, from USD 6 billion in 2017 to USD 20 billion by 2022, when the number of FinTech ventures is expected to exceed 1,800 companies.
This growth is being fuelled by the rapidly increasing demand for smarter, more accessible financial solutions in the region that is home to the world’s fast-growing population, two thirds of which are currently unbanked. Only one percent of the more than USD 50 billion that has been invested in the global FinTech market was deployed in the Middle East and Africa. The potential is huge.
The opportunity for FinTech in the region is clear and the need for smarter, creative solutions to solve the financial inclusion challenge is more pressing than ever before. Cutting-edge concepts, such as Blockchain and Artificial Intelligence solutions, have the capability to overcome the challenges of accessibility and affordability, and the role that major financial centres, like Dubai International Financial Centre (DIFC), governments and the financial sector at large can play to allow for this to happen, is crucial. While each of these enablers are already contributing to the growth of sector, there is room for more efforts. Four building blocks are fundamental to accelerating this growth and optimising its impact on the MEASA region.
Firstly, talent. The FinTech sector is driven by innovative minds that are constantly looking for an enabling environment to establish and grow their ideas. Accelerator programmes, such as FinTech Hive, incubator schemes delivered by Startupbootcamp and professional training courses, like those delivered at The Academy, are playing an increasing role in nurturing innovative talent and amplifying its presence in what is today MEASA’s largest hub of financial talent – DIFC. Undoubtedly, more can be done by both the public and private sectors to support the growth of this talent, and to communicate its potential amongst the region’s youth.
Secondly, offering access to a large ecosystem is key. DIFC offers is access to over 2,000 companies who are embracing FinTech and want to work with companies who have developed technology solutions.
Thirdly, effective regulation is fundamental to the development of the FinTech sector, and instilling its credibility in the market. Governments and regulators in the region are working hard to create a regulatory environment that is conducive to the development and adoption of FinTech solutions. DIFC’s independent regulatory, Dubai Financial Services Authority (DFSA) is at the forefront of these efforts with its Innovation testing License (ITL). In fact, Sarwa Digital Wealth Limited, an automated investment advice service that was part of FinTech Hive’s 2017 cohort, was the first company to be granted an in-principle approval for the ITL and first graduate from DFSA sandbox.
Finally, providing innovative businesses with access to funding is key to unlocking their growth. To support the rise of FinTech in the region, more funding channels must be open and an effective venture capital ecosystem must be nurtured in order to address the funding gap that the region is facing. DIFC has been fortunate to secure the presence of a number of Venture Capital companies. Additionally, over USD 16 million in funding have been raised by finalists in FinTech Hive’s 2017 cohort since completing the programme, and in early 2019, startups will be able to apply for funding from the USD 100 million fund that DIFC has dedicated for FinTech companies.
Today, Dubai is the region’s most comprehensive FinTech market and one of the world’s top 10 FinTech hubs. Dubai will continue to be a pioneer for FinTech and be the place that the region can learn from.