GCC fintech startups to attract $2 billion in investments
Private-funding investments in GCC-based financial technology (fintech) startups is expected to reach $2 billion in the next decade according to a study by Mena Research Partners (MRP). This compares to just $150 million worth of private-funding investments in such startups over the past 10 years.
The number of fintech companies across the Middle East and North Africa (Mena) region will rise from 130 to 260, a rise of more than 50 per cent.
“Governments have stated their visions for developing smart cities for the future, and they have the financial power to implement these visions,” said Anthony Hobeika, chief executive officer at MPR who believes the region’s economy is conducive for the growth of the fintech sector. “Similarly, the highly connected consumers in the Gulf are driving the demand for smarter solutions for all their financial needs.”
Much of the growth will be driven by supportive government and regulatory initiatives which are being pushed by countries with smart city objectives. Dubai’s Fintech Hive, ADGM’s Reglab, Bahrain’s Fintech Bay and the UAE-Saudi Arabia joint project for a blockchain-based system were highlighted by the study for their role in enabling fintech startups. The UAE and Saudi Arabia in particular are expected to embrace fintech more since the two countries have the highest online connectivity per capita in the region.
The region’s fintech sector initially developed to offer payment solutions and slowly developed to offer lending and capital raising solutions to fill the vast $1.7 trillion funding gap for small to medium-sized enterprises (SME) in the region. The study believes a consolidation will emerge in the market, driving larger transactions and possibly resulting in the creation of at least one regional fintech unicorn in the next five years.
“The fintech trend is a reality and the fintech sector is poised to reshape the future of the financial market, creating fresh opportunities for existing and new businesses,” Hobeika added.