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Europe vs the Middle East: Where Are the Next Fintech Hubs?

Fintech is growing in locations worldwide. How do new European fintech centres compare with their Middle Eastern rivals?

Someone who has thoughts on this topic is Anil Uzun, a successful Turkish / British national and fintech entrepreneur who has founded and sold a number of companies in the burgeoning fintech sector. This has included digital currency (Gobaba), b2b banking and international payments (Settlego, OpenPayd, Techtopay), electronic wallet, (Ozan) and a digital design company (EFT software).

Here he shares his thoughts about fintech in Europe and the Middle East.

Anil Uzun

The essence of the fintech sector is speed – speed of innovation, speed of growth, and, recently, the speed with which new centres of activity have emerged. While the US leads the way in fintech, with the UK in second place, other jurisdictions are proving attractive to fintech entrepreneurs. In the search for locations with the ingredients for commercial success – sympathetic regulators, the right demographics, favourable business environments – many innovators are looking to other European destinations and increasingly to the Middle East to establish and grow their businesses. 

Digital hubs are appearing across Europe to challenge Britain’s dominance, with their growth driven by favourable regulatory environments, strong support for fintechs, plus skilled workforces. As the UK struggles with the disruption created by Brexit, as well as Covid-19, other European cities such as Berlin, Paris, Barcelona, Madrid, Dublin, Stockholm and Amsterdam are actively competing to attract both new and established fintechs, promoting their friendly regulation regimes, innovative attitudes and relative affordability.

I have been particularly struck by the efforts of Germany and the Netherlands in establishing themselves as credible fintech hubs within Europe. German banks are being hugely progressive in their offering to fintechs and the country has an increasingly positive attitude toward cryptocurrencies. The Netherlands is a very welcoming jurisdiction, boasting an extremely skilled workforce and highly experienced compliance people. But both are increasingly strict in their requirements, with high barriers to licences being granted and not inconsiderable costs. 

An increase in fintech activity is in evidence in several parts of Europe. Lithuania’s central bank approved many UK fintechs seeking specialised banking, electronic money institution (EMI) or authorised payment institution (API) licences ahead of Brexit. Cyprus’s central banking institution also has many applications pending. But critics point out that each jurisdiction has drawbacks as well as attractions. Estonia has done great work on crypto licences but is not so strong on payment licences. Poland boasts lots of skilled people working in fintech, but its licensing regime is sluggish. Elsewhere, great technical efforts are being made and there is clear evidence of a desire to attract new fintech business, but full authorisation can be slow to achieve or local talent with the required skills may be lacking.

The Middle East is another mixed picture, though fintech development in the region faces some specific challenges. State-owned banks are big and powerful and tend to be conservative by nature. They express interest in fintech developments but are often reluctant to invest much or integrate them into their business strategy. The irony is the young populations of the Middle East are eager to adopt fintech products, as was highlighted in a Deloitte report into fintech in the region last year. But as long as Middle Eastern banks preserve their legacy systems, they will lose out to innovators elsewhere. There is also a tendency in the Middle East for businesses to take inspiration from existing fintechs then try to set up copycat entities. These are often destined to fail due to a lack of expertise, experience and genuinely innovative in-house thinking.

All of this presents the real danger that Arab countries could be left behind in the fintech race. The Middle East paints itself as a fintech friendly destination, but it looks less competitive than many of its European rivals. Fintechs change and adapt their business models rapidly. Often, Middle Eastern investors, regulators and banks maintain a more conservative mentality. For example, it is not unusual to find Middle Eastern fintechs raising funds from Swedish investors rather than locally. I have witnessed many fintech businesses going to places such as Bahrain, the United Arab Emirates (UAE) or Saudi Arabia to get licences to operate, attracted by what appear to be friendly regulators, only to find their efforts hindered by an inability to get a bank account locally or a lack of understanding of their innovative offering on the part of local funders. For their part, regulators should give investors confidence, but in the Middle East too often they are inexperienced or have frustrating requirements, such as companies having part ownership by a local, as is the case in the UAE. 

All of these hurdles make other, more flexible jurisdictions look more appealing to fintech entrepreneurs and not just locations in Europe. Singapore, Canada and Australia are the ones to watch, as was pointed out in the recent Kalifa report into threats to UK fintech. I would add many countries in Latin America to that list. Fintech around the world is moving fast and the places that will succeed in attracting its businesses will be those that prove as adaptable and innovative as the industry they seek to serve. 


  • Polly is a journalist, content creator and general opinion holder from North Wales. She has written for a number of publications, usually hovering around the topics of fintech, tech, lifestyle and body positivity.

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