- The study highlighted how solutions related to payments and remittances continue to drive growth in the region’s fintech sector, with lending and open banking growing at a rapid pace
Dubai, UAE: Data analytics and artificial intelligence (AI) are the top technologies of the fourth industrial revolution driving fintech solutions, a Mastercard study on the state of fintech in the Middle East and Turkey markets found*.
The white paper titled ‘The Future of Fintech: Smart, Scalable, Collaborative’ was released during the Fintech Surge at GITEX Global 2022, one of the leading technology events in the Middle East. Mastercard is a strategic sponsor of Fintech Surge where senior global and regional leaders speak at several panel discussions, fire chats and presentations.
Announced during a panel discussion, the white paper findings were discussed by industry leaders who highlighted how young, tech-savvy and informed consumers are driving the trend for fintech products and services across the Middle East and Turkey. Metaverse, AI, 5G and data analytics are enabling hyper-personal experiences for consumers, which in turn is fueling the demand for a 24/7 digital experience.
“The Fintech landscape is accelerating at an unprecedented rate to transform economies and the exchange of value. Our study ‘The Future of Fintech: Smart, Scalable, Collaborative’ shows that new players are constantly emerging, their scaling strategies are maturing and investments are accelerating. Yet remains the core mission of fintech companies the same – they strive to empower consumers, increase financial access and help bring the unbanked and underbanked into the digital economy Mastercard provides the services and tools fintech innovators need to iterate at every step of the journey, transforming bold ideas and achieving scale at the pace of connecting more people to the digital economy,” said Ngozi Megwa, Senior Vice President Digital Partners and Enablers, EEMEA, Mastercard.
The study highlighted that fintech is disrupting the status quo in the pursuit of a better tomorrow. They are agile and able to identify opportunities – often in times of upheaval such as the 2008 financial crisis and the COVID-19 pandemic, when the need for innovation increases.
The global fintech market was valued at USD 112.5 billion in 2021 and is projected to reach USD 332.5 billion by 2028, reflecting a compound annual growth rate (CAGR) of 19.8%. The white paper also revealed that there are more than 470 fintech unicorns globally, with 40 of them added in Q1 2022. The Middle East and North Africa (MENA) region alone is expected to have 45 fintech unicorns by 2030, a tenth of the global the number of . In Turkey, 2021 was a record year for fintech deals and funding. The highest-ever fintech round in Turkey closed in 2021 and a startup announced its acquisition.
A key reason for this growth, the study found, is the collaborative approach that can lift all boats in the fintech sector in the Middle East and Turkey. The paper says that fintech solutions in these markets are working to solve pain points for consumers and merchants in a very localized framework. For the fintech sector and companies to expand, they need to start operating across borders.
The white paper explored the ecosystem around how fintech can be established, operate and grow. Some of the key findings include:
- Fintech startups in MENA recorded huge growth in funding in 2021
- Fintech startups in MENA recorded 183% growth in funding in 2021, the highest annual growth in the past five years. The majority of fintech funding deals (32%) and funding capital (49%) across MENA in 2021 were focused on the UAE.
- Regulation of the fintech sector is on the rise
- Regulation of the fintech sector in the Middle East and Turkey includes several facets, such as payments, money transfers, equity crowdfunding, e-money and P2P lending. The UAE has regulations for all five facets and leaders in the region, followed by Saudi Arabia and Bahrain, which regulate four of the five facets. Egypt and Turkey have regulations in place for three of these facets, while Qatar has soft-launched its regulatory sandbox and plans to have a full launch in the near future. The four areas of focus for Qatar are payments, regtech, Islamic finance and SMEs.
- However, regulation is still very localized, as regulators’ main concern is to protect consumers in their own countries. Very few country regulators have partnered with their counterparts in neighboring countries to allow companies from one country to operate seamlessly in the other.
- Open banking is experiencing increasing consumer acceptance and is transformative in fintech adoption
- 51% of consumers say faster transactions are the biggest benefit of using open banking. The Mastercard New Payments Index 2022 shows that consumers use open banking services for a variety of tasks, including bill payments, loans, Buy Now Pay Later (BNPL) payments, credit score optimization, remittances, savings, cryptocurrency trading, loan repayment and financial planning, among others. Over 50% of consumers across the region want to link their accounts to automate payments, because transactions are faster. And almost 50% find it more convenient to track and manage bill payments, to trade between accounts and for general financial management.
- Partnerships with global companies are important
- It is becoming very important for fintech companies to get global companies on board. This enables a fintech company to solve several cross-border issues related to, among other things, regulation, payments (making and receiving them), raising funding rounds. Companies like Mastercard help fintechs scale quickly. It is also important for a fintech to identify the most relevant stakeholders – including making the right connections in the traditional banking sector – in order to successfully navigate local, regional and global growth.
Download the entire white paper here.
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- The white paper study covered the UAE, Saudi Arabia, Egypt, Qatar and Turkey.
- The study was carried out by White Paper Media Consulting
About Mastercard (NYSE: MA), www.mastercard.com Mastercard is a global technology company in the payments industry. Our mission is to connect and drive an inclusive, digital economy that benefits everyone, everywhere by making transactions safe, easy, smart and accessible. Using secure data and networks, partnerships and passion, our innovations and solutions help individuals, financial institutions, governments and businesses realize their greatest potential. Our decency quotient, or DQ, drives our culture and everything we do inside and outside our company. With connections across more than 210 countries and territories, we are building a sustainable world that opens up invaluable opportunities for all.
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