At the Dubai Fintech Summit, Mark Walker, editorial director of The Fintech Times, chatted to Siobhan Byron, EVP of universal banking at Finastra, and Karim El Mourabet, head of solution consulting MEA, Universal Banking at Finastra, to discuss the dynamics of fintech in the Middle East and Africa.
The conversation highlighted Finastra’s longstanding presence in the region, the rapid growth of the fintech sector, and the unique opportunities and challenges faced by different markets within the area.
Finastra’s longstanding commitment and market potential
Byron and El Mourabet outlined Finastra’s deep-rooted presence in the Middle East, dating back over 35 years. This long-term engagement has fostered strong relationships and positioned the company as a key player in the region.
El Mourabet pointed out that Finastra’s historical footprint has enabled it to maintain its relevance despite the increasing number of fintech competitors. Byron noted the significant growth potential in the Middle East, driven by substantial market opportunities and strategic initiatives like Vision 2030, which prioritises innovation and aligns well with Finastra’s mission of fostering open finance.
Regulatory landscape and consumer behaviour
The discussion also delved into the regulatory landscape and consumer behaviour in the Middle East and Africa. Byron observed that the regulatory environment in the Middle East, particularly in the UAE, Saudi Arabia and Qatar, is more stringent compared to Europe.
This rigorous regulation for banks, coupled with credit scoring systems, provides a robust framework for fintechs to operate within. El Mourabet added that the Middle East consumer behaviour tends to favour spending beyond basic necessities, in contrast to the more conservative spending habits seen in Europe. This difference in consumer behaviour has driven the adoption of buy now, pay later (BNPL) solutions, with luxury brands being early adopters in the region.
Challenges and opportunities in Africa
Addressing the African market, El Mourabet highlighted the significant challenges, including limited access to credit and differing consumer behaviours. For instance, credit scoring systems are often non-existent in many African countries, and access to funds remains a major hurdle. However, digital banking initiatives have started to bridge these gaps.
El Mourabet cited the example of Zambia, where the launch of digital banking facilitated widespread access to financial services across the country’s numerous territories. This digital transformation underscores the potential for fintech to reach underserved and unbanked populations, promoting financial inclusion.
Technological adoption and financial inclusion
Byron shared success stories from other regions to illustrate the transformative power of digital banking. In the Philippines, Finastra enabled Tonik Bank to launch a digital platform that reached over a million customers within 24 months. This rapid adoption is indicative of the broader trend where digital and mobile technologies accelerate financial inclusion. Byron also mentioned the example of BKN301 expanding into MEA, further highlighting the scalability and impact of digital banking solutions.
The role of mobile and agency banking
El Mourabet elaborated on the different banking models gaining traction in the region, including mobile and agency banking. In areas with high smartphone penetration, mobile banking is becoming increasingly popular. However, in regions where smartphone access is limited, agency banking, which involves local agents providing banking services, is proving effective. This model is particularly relevant in rural and underserved areas, offering a practical solution to the challenges of physical banking infrastructure.
Regulatory and innovation dynamics
The conversation also touched on the regulatory and innovation dynamics in the Middle East compared to Europe. Byron noted that Europe is further ahead from a regulator perspective than MEA in approving cloud solutions in areas such as core banking, which are mission critical systems. However, the region has innovative Government initiatives that are helping to drive open finance and the fintech ecosystem. This proactive approach is evident in initiatives like Vision 2030, which aim to drive rapid growth and innovation in the sector.
Observations from Dubai Fintech Summit
Reflecting on the summit, both Byron and El Mourabet expressed admiration for the vibrant fintech scene in the Middle East. They highlighted the impressive scale and diversity of innovations showcased, from major players like Mastercard to emerging startups. El Mourabet emphasised the importance of exploring smaller, innovative fintech companies, which often present groundbreaking ideas and solutions.
Our discussion with Finastra executives at the Dubai Fintech Summit underscored the dynamic and evolving nature of the fintech sector in the Middle East and Africa. With strong historical foundations, evolving regulatory environments, strategic Government initiatives and innovative approaches to financial inclusion, the region presents significant opportunities for growth and development in the fintech landscape.
