Which Country in the Middle East Will Lead the FinTech Race?
Asia and North America are both widely known for being FinTech hotspots. However, over the last few years, another region is slowly becoming a hotbed for FinTech activity and regulatory development, and that region is the Middle East.
The FinTech industry in the Middle East will go from $150 million of investment in the last decade to attracting $2 billion over the next ten years, highlighting the rapid acceleration and growth the industry is set to go through across the region.
Below we’ll discuss why FinTech is growing in the region and look at which are some of the leading countries in the FinTech race.
The Growth of FinTech in the Region
As the world becomes more digital, technologies such as online payment services, open banking, and automated investment apps, are continuing to rise in popularity. Consumers in the Middle East want quick and easy solutions that can meet their financial needs, hence why we’re seeing more FinTech startups emerge.
The Middle East region is also home to over 400 million people. Out of these 400 million people, around half are younger than 25 years old. This youthful population makes the Middle East region extremely attractive for FinTechs, due to the fact younger populations tend to be more tech-savvy and have a very high smartphone subscriber base.
When you combine this with Middle East’s strategic location, which makes it easily accessible for FinTechs to enter markets across the Middle East, Africa, and South Asia, you can understand why the region is starting to see growth.
While the Middle East still currently only represents only 1 percent of global FinTech investment, the FinTech sector across the Middle East is growing at a compounded annual growth rate (CAGR) of 30 percent and this growth is only expected to accelerate.
Who Are the Leaders in the Middle East?
In the Middle East region, the UAE and Bahrain have emerged as two of the leaders. Between them, they receive the bulk of venture capital investment in the region, attracting nearly $90 million in FinTech funding from 2010 to 2017.
We’re now seeing more and more FinTech businesses being formed in the two countries in areas such as payments and remittances, online lending, digital banking, blockchain, and cryptocurrency. Some notable FinTech businesses from the two countries include PayTabs and Bayzat.
Both governments of Bahrain and the UAE are launching a number of initiatives to help facilitate growth in the sector. Bahrain has recently launched Bahrain FinTech Bay, the first and largest fintech hub in the Middle East and Africa. While the UAE has announced several startup funds and support programs to help develop the UAE into a regional fintech leader. Initiatives such as these have been key in accelerating the growth for the FinTech sector in these countries.
The Middle East on the World Stage
The Middle East is rapidly becoming a hotspot for FinTech-related activity, particularly in the UAE and Bahrain. With FinTech only set to grow in the Middle East, it’s exciting times ahead for the region. Although the Middle East still has some way to go to catch up with the likes of North America and Asia, it’s certainly making a strong effort to create a vibrant FinTech ecosystem.