Evolving consumer expectations and the increasing focus on financial inclusion have opened the possibilities of fintech to deliver seamless, secure digital payment and financial experiences that customers prefer.
Fintech has steadily modernized the way financial services are structured and delivered. The global fintech market’s value reached $133.84 billion in 2022 and could reach $556.58 billion by the year 2030. McKinsey’s research forecasts that fintech revenues will grow almost three times quicker than traditional banking incomes between 2024 and 2028. Therefore, fintech ensures the financial services industry remains relevant to the consumer by keeping up with the latest technologies.
As a result of an innovation-driven financial market, more international names are increasingly setting up operations in the GCC. They are also offering their valuable services catered to a young, tech-savvy population.
The Middle East and North Africa region has been notably strengthening its fintech sector, with GCC hubs gaining global recognition. Several fintech hubs have emerged within the GCC:
- The FinTech Hive at the Dubai International Financial Center
- Hub71 at Abu Dhabi Global Market
- Bahrain FinTech Bay
- Qatar FinTech Hub
- FinTech Saudi
There is also considerable progress in Kuwait such as the establishment of a regulatory sandbox framework. This framework is designed to support fintech growth and regulations concerning digital payments in the country.
Fiercely competitive sector
Given the number of players in the fintech space, the need to differentiate with customer-centric value propositions is critical. Considering resilient market conditions and the reduced funding in 2023, fintechs and fintech ecosystems need to remain competitive and build competence respectively. The only outlier from the region has been the UAE. Total fintech investment surged by 92 percent to $1.3 billion across 54 deals. Thus, the UAE climbed globally to sixth position in the top 10 list of most-funded fintech markets by Innovate Finance’s ‘Fintech Investment Landscape’ report.
Fintechs are especially significant to financial services institutions that provide services targeting small and medium businesses. Hence, they have recognized that this segment of the industry has been underserved historically. By moving away from traditional banks, SMBs can grow with funding that larger financial institutions may have refused. But this weighs on fintechs to be more innovative, agile and collaborative in an economic climate where funding is scarce and the need to demonstrate profits is crucial.
Open banking
One of the areas where fintech can create value is in open banking, to carry out specific third-party functions in a secure environment. The open banking market could yield revenues of $123.7 billion by 2031, growing at a CAGR of 22.3 percent from 2022 to 2031. Open banking technology allows fintech companies to access financial data through software protocols known as APIs (application programming interfaces). These companies can then use this data with consent to offer customized and enhanced financial products or services.
Besides consumers and businesses, fintechs are offering financial services to traditionally underserved populations. Access to the digital economy is believed to be crucial for equitable and inclusive growth and fintechs play a critical role in expanding digital commerce and driving financial inclusion.
Through initiatives like the Visa Everywhere Initiative (VEI), Visa fosters collaboration and innovation within the fintech ecosystem. The platform provides opportunities for fintech startups to showcase their solutions on a global stage and compete for funding and mentorship.
The GCC region
The GCC region is already leading the way in contactless payments. 96 percent of Visa transactions in the region use contactless cards and devices. This highlights the growing acceptance and adoption of digital payment methods in the region.
VEI catalyzes collaboration and innovation in the fintech space, enabling startups to make a meaningful impact in the industry. Prashant Shrivastava, the co-founder of Daleel, said regarding his experience in 2023: “We are honored and ecstatic to be crowned the winner of the Visa Everywhere Initiative 2023 Bahrain. This achievement is a testament to the significance of the problem we are solving and validates our commitment to driving positive change in the financial sector. The support and collaboration from partners in the industry are pivotal for our marketplace’s success, and this win with Visa undoubtedly propels us forward in our pursuit of improving financial well-being in the MENAP region.”
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Funding statups
Since its launch in 2015, VEI has helped startups representing more than 100 countries collectively raise more than $16 billion in funding. Moreover, VEI has a network that includes nearly 12,000 startups from across the globe. In addition to monetary prizes, VEI winners gain access and exposure to Visa’s extensive networks of partners in the banking, merchant and government sectors. Prizes include a Social Impact Award that rewards initiatives that boost financial inclusion, promote sustainability and safeguard the environment.
This year’s competition will run June 2 through June 13, 2024, with the CEMEA (Central and Eastern Europe, Middle East and Africa) regional contests in July 2024. The grand finale will happen from October 28 until October 30 in San Francisco. This year the competition includes Kuwait and Qatar. In addition Saudi Arabia, Bahrain and Oman will participate, with Saudi Arabia and Qatar holding GCC final events.
As the fintech landscape evolves, Visa remains dedicated to driving development and fostering innovation in digital payments, contributing to the growth and development of the financial ecosystem within the GCC and the wider region.
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