With ongoing economic issues, how has the fintech sector developed in Lebanon up until 2024?
A combination of ongoing economic and political turmoil, compounded by the massive Port of Beirut explosion in August 2020, eventually resulted in the World Bank downgrading Lebanon from an upper-middle-income economy and a regional financial services hub to a lower-middle-income country.
Lebanon’s decline has been stark, with gross domestic product (GDP) per capita plummeting by at least 35 per cent from 2019 to 2021 alone. However, there are some signs of an economic resurgence driven by fintech.
Capital and financial hub
Beirut
Economic, financial services and fintech overview
Lebanon’s banking sector, once renowned for its regional prominence, now operates under informal capital controls, severely limiting lending and deposit attraction. The country’s payment system is fragmented, distinguishing between pre-October 2019 US Dollar deposits and newer ‘fresh dollar’ inflows. Long queues for limited cash withdrawals are a common sight, exacerbated by hyperinflation of the Lebanese Pound, leading to a widespread dollarisation of the economy.
Historically, Lebanon has relied heavily on remittances, which have consistently contributed a substantial portion – 28 per cent – of its GDP.
However, despite its current crisis, Lebanon was once a thriving hub for startup funding in the MENA region, ranking among the top three recipients. The Lebanese populace has also displayed a willingness to embrace new technologies, with over half adopting digital banking by 2017 and the country ranking second in the region for exclusive mobile banking usage in 2016.
Fintech adoption in Lebanon has largely been organic, with less legislative or government-backed support compared to other regional counterparts. Mistrust of traditional financial institutions has driven the popularity of e-wallets and cryptocurrencies, a trend supported by the government’s authorisation of at least 13 licences for e-wallet providers as of November.
Notable fintech companies originating from Lebanon include Capital Banking, offering comprehensive software solutions for banking, wealth management, and compliance; PinPay, providing a smartphone app for mobile payments; and Neotic, developing AI-enabled platforms for automatic trading strategies and recommendations.
Despite its current challenges, Lebanon’s fintech sector continues to demonstrate resilience and innovation amidst adversity.
Key organisations in Lebanon
- Banque du Liban – Lebanon’s central bank
- Capital Market Authority – Lebanon’s capital market authority
- Insurance Control Commission – An independent institution, in charge of maintaining an efficient and stable Insurance market in the country
- Investment Development Authority of Lebanon – Lebanon’s investment promotional agency
- Union of Arab Banks – Organisation responsible for fostering cooperation between Arab banks, developing Arab financial business, and enhancing the financing role of Arab banks in the Arab World
Key fintech events
Key statistics
This is an excerpt from The Fintech Times: Middle East and Africa (MEA) 2024 Report: read online
AI level 0 of 5: researched, written and edited by Richie Santosdiaz without generative AI; only everyday tools such as spelling and grammar checkers were used. What the levels mean
