The word “fintech” is just a mixture of the words “financial” and “technology”. It describes the utilization of technology to deliver financial services and products to consumers. This might be within the areas of banking, insurance, investing – anything that relates to finance. Although it’s a comparatively new word, fintech is nothing new. Technology has always changed the financial industry. Fintech is changing the planet of finance for consumers during a myriad of the way. For instance, you’ll now open a checking account over the web, without physically visiting a bank.
The fintech market within the MENA (the Middle East and North Africa) region will account for 8% of the center East’s financial services revenue by 2022. This growth is propelled by rising fintech startups, the growth of the Islamic banking system, increasing internet and mobile usage. The amount of fintech startups within the Middle East is predicted to top 250 in 2020. As there are around 300 million people under the age of 24 within the Middle East.
In the Middle East, Bahrain, and therefore the United Arab Emirates (UAE) has emerged as fintech leaders. Three main reasons for the emerging FinTech hubs within the UAE and Bahrain. The primary one being the supply of an ecosystem that’s friendly to new financial alternatives, second the existence of a government that’s in the middle of all efforts resulting in innovative projects, and third, the unwavering interest of attracting international talent which acts as a catalyst for domestic innovation. The UAE and Bahrain are leaders within the region when it involves creating ecosystems that support FinTech advancements. Bahrain Fintech Bay, the region’s largest fintech incubator, was formed in association with quite 30 corporate partners, including banks, insurers, payment processors, telecoms, and technology companies.
The Kingdom of Saudi Arabia (KSA) is one of the most important Islamic banking markets and has made several efforts to digitize its finance industry. The country was recently revealed together of the highest digital banking markets in MENA, with over 75% of the banking customers using online banking or mobile apps. Arab Net’s survey of regional banking customers revealed that 76% of all Saudi banking customers use digital platforms and 60% use online and mobile apps, the very best within the region.
Riyad Bank has pumped around $26.7 million (SAR 100 million) into its newly-launched fintech startup investment program. The Saudi Monetary Authority (SAMA) has also granted 14 fintech firms permits to hitch the bank’s Sandbox experimental regulatory environment, bringing the entire number of firms participating to 21. The SAMA also launched Fintech Saudi, an initiative that instigated the event of the fintech industry across the kingdom.
Fintech transactions within the kingdom amounted to over $20bn by the top of 2019. The worth of fintech transactions in Saudi Arabia increased at a rate of over 18 percent annually between 2017 and 2019, reaching over $20bn by the top of 2019. Research by Fintech Saudi reveals that the amount of operating fintech startups has tripled during a year from 20 in 2019 to 60 this year within the kingdom.
Payments account for two-thirds of the market and almost 98 percent of the userbase. It’s followed by personal finance which comprises over 30 percent of the fintech transaction values.
The number of payments made through the SADAD electronic payment system has increased by a CAGR of 11 percent between 2016-19 to succeed in 270 million transactions in 2019. The worth of those transactions has grown by a CAGR of 24 percent within the corresponding period to succeed in SAR 445bn. The amount of smartphone payment transactions in Saudi Arabia increased by 352 percent to 19.7 million in April 2020, compared to 4.4 million in April 2019.
The fintech market in Saudi Arabia is predicted to succeed in transaction values of over $33bn by 2023. Payments are likely to still lead the market share followed by personal finance. Significant progress has been made in payments within the past year with the launch of Apple Pay, the establishment of Saudi Payments.
The development of a fintech ecosystem may be a major factor of Saudi Arabia’s Vision 2030 economic diversification strategy and is seen as essential for broadening the country’s investment base and a transition toward a cashless digital economy. Fintech initiatives within the Kingdom, however, have so far trailed similar schemes launched in Bahrain and therefore the UAE.
