Velmie, a white label mobile banking platform provider, has carried out research on how the MENA fintech environment has been transforming recently. The aim was to spot specific regional trends, drivers and challenges that are likely to influence the fintech industry in the Middle East and North Africa in 2021 and further.
The MENA region is fast becoming an exciting frontier for the fintech industry, with growth benefiting from a confluence of contributing factors, including favourable demographics, economic potential, digital appetite and mobile penetration.
The financial technology industry is in the beginning of its development in the MENA region. That is illustrated by the fact that the Middle East fintech startups received a mere 1% (about $0,4 billion) of all venture capital fintech investment across the globe in 2018. However, the growth off this low base is likely to be strong, with the fintech sector across the Middle East already growing at a compounded annual growth rate (CAGR) of 30%. What is more, it is projected that by 2022 some 465 fintech companies in the Middle East will raise over $2 billion in venture capital funding.
The key factor that makes this region an attractive hub for fintech startups and mobile banking expansion is a high demand for mobile banking and payment solutions due to the low financial inclusion rates across the region. About 43% of the adult population still have no access to bank accounts in the Arab world.
“MENA’s financial services industry is well-positioned to see significant growth and fintech disruption in the foreseeable future, which makes it a great market for fintech startups and investors,” said Paul Shumsky, Head of Product, Velmie.
Overall the transformation in the MENA region is likely to be propelled by the shift away from oil-based economies toward more service-oriented digital industries, the demographic shift to a younger and tech-savvy population, and the exponential technology evolution.
