Jordan, with its progressive startups and small population, could be a good regional test market for fintech products looking to head to the GCC.
Or as Oasis500 assistant investment manager Faisal Bitar puts it, it's a good market for cheap mistakes.
“The main purchase power is in the GCC,” he said.
Jordanian accelerator and investor Oasis500 is eyeing the fintech sector and recently held a series of workshops to identify entrepreneurs and boost startups.
Bitar’s GCC comment was also one of prerequisites for fintech product ideas brought up at the workshops. Oasis500 wanted only ones that would be scalable beyond Jordan’s borders.
“Banks need to innovate,” he said “Since credit cards and ATMs there has been no real innovation.”
A recent series of workshops were held in collaboration with Madfooatcom and investors Wamda Capital, hosting a mixture of bank employees and finance types, all looking to learn more about creating and building fintech products.
Jenny Ahlzen of regional tech investors Acceleratortech was pleased to see a diverse range of sectors being tackled in the workshop, such as algorithmic trading, core banking solutions, peer-to-peer lending platforms, wealth management solutions, insurance and financial education.
Fintech is not a sector to be sniffed at. In 2016 a report from Accenture said that first quarter global fintech investment grew 67 percent year-over-year to $5.3 billion, with 62 percent of investments went to ventures in Europe and Asia.
Jordan is proving, at least to those involved in last week’s workshop, to be a good test market for fintech products. With companies such as Hyperpay and Ideal Ratings, both Acceleratortech investments, Ahlzen said they were starting to see real traction.
“Rather than resisting the fintech movement, the Jordanian financial system is proving willing to engage and explore ways to cooperate with startups, some examples being local banks investing in Madfooatcom, Bank Al Etihad supporting Liwwa, Arab Bank sponsoring the Oasis500 fintech workshop and Ahli Bank having set up an IT innovation center in the KHBP etcetera,” she said.
Getting people banking
The average consumer is the online generation, they’re not going into banks. There are also the unbanked and the underbanked. All are areas Bitar wanted to address.
And it’s true, for Jordan at least. According to USAID only 25 percent of Jordanians have a bank account. But even Payfort’s Mohammad Al Rifai says Jordan is one of the more progressive in the region. “Telcos are looking to support startups and so is the Central Bank,” he said.
Ahlzen said that although Jordan was at an advantage with stability and security, the challenges were still fighting the brain drain and retaining talent.
“Other challenges facing fintech startups (other than the obvious ones being regulatory, financial illiteracy and lack of trust) would be timing the market,” she told Wamda. “From our experience, many companies have had excellent ideas but the market just wasn’t ready for the product at the time (slow market adoption) so companies need to be mindful of the possibility that it might take longer to scale than initially planned and thus needs to have a sound longer term strategy in place.”
Oasis500 will see the final pitches this coming weekend and beyond that, they will not stop. Bitar said they have plans to lead and manage a fintech forum with the Central Bank to come up with a regulatory landscape, working with startups.