While the Middle East may be one of the world’s most heterogeneous regions that spans three continents and 21 countries, according to FinExtra, it’s population of nearly 600 million has been surprisingly reliant on oil and similar material resources throughout the ages,

However, although the region’s economy doesn’t reflect its cultural or political diversity, there’s no doubt that the landscape is changing across the Middle East and North Africa (or the MENA countries).

To this end, fintech is emerging as an immeasurably powerful force in the region, with relevant startups in the region having raised more than $100 million in funding through 2020.

But why is fintech so crucial to the future of MENA, and what are the advantages of this from an economic perspective?

Why is Fintech so Important to the MENA Economy?

We’ve already touched on the recent fintech investment levels in the MENA region, with this number forecast to double by the end of the year.

Overall, disclosed investment in fintech had previously jumped by 100% to more than $35 million by October 2017, while before this, the exact number of startups in this space increased from 46 in 2013 to 105 in 2015.

This highlights the growing importance of fintech to the MENA economy, with individual nations continuing to move away from their reliance on oil and instead seek out more sustainable ways of driving growth over the longer-term.

What’s more, there’s a particularly pressing need for fintech services in the MENA region, particularly with banking penetration not keeping pace with the ubiquity of smartphones and Internet connectivity.

More specifically, an estimated 86% of the total MENA population is currently unbanked, while three-in-four GCC bank customers are ready to switch their service in search of a better and more accessible digital experience.

This, along with the relentless rise of tech hubs in the MENA region, is making fintech a significant focus of both entrepreneurs and investors alike (particularly in market leading countries such as the UAE).

What are the Advantages of Fintech?

Aside from diversifying an historically commodities-based economy and delivering banking services to a larger number of customers, fintech also has other advantages from the perspective of the MENA region.

Fintech refers to a growing field in which financial services are disrupted and delivered through increasingly technological means, so it makes sense that the field should help firms uncover new ways of optimising efficiency and productivity.

Most importantly, the provision of modern and more accessible services helps individual firms to improve their customer retention rates, potentially boosting profits in the process.

Another crucial benefit of fintech and its various applications is enhanced security, which helps to secure consumer data and boost accessibility without compromising on the safety of MENA customers and their most sensitive information.

Biometric datasets, tokenization and enhanced data encryption are just some of the latest security solutions employed in MENA countries, highlighting the precise ways in which fintech innovations are aiding companies across an array of industries.

This also leads into fintech’s ability to deliver upgraded payment systems, which optimise the speed and security of payments and drive improved business efficiency over time.

 

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