Fintech
Fintech Evolution in the Middle East and Africa: Insights from Finastra at the Dubai Fintech Summit
To the Dubai Fintech Summit, Mark Walker, editorial director of The Fintech Times, chatted with Siobhan Byron, Executive Vice President of Universal Banking at Window, AND Karim El Mourabet, Head of MEA Solutions Consulting, Universal Banking at Finastra, to discuss the dynamics of financial technology in the Middle East and Africa.
The conversation highlighted Finastra’s longstanding presence in the region, the rapid growth of the fintech sector, and the unique opportunities and challenges facing the region’s diverse markets.
Finastra’s long-standing commitment and market potential
Byron and El Mourabet outlined Finastra’s deep-rooted presence in the Middle East, which dates back more than 35 years. This long-term commitment has fostered strong relationships and positioned the company as a key player in the region.
El Mourabet highlighted that Finastra’s historical footprint has allowed it to maintain its relevance despite the growing number of fintech competitors. Byron noted the significant growth potential in the Middle East, driven by substantial market opportunities and strategic initiatives such as Vision 2030, that prioritizes innovation and aligns well with Finastra’s mission to advance open finance.
Regulatory framework and consumer behaviour
The discussion also delved into the regulatory landscape and consumer behavior in the Middle East and Africa. Byron noted that the regulatory environment in the Middle East, particularly in the United Arab Emirates, Saudi Arabia and Qatar, is more stringent than in Europe.
This stringent regulation for banks, coupled with credit scoring systems, provides a solid framework for fintechs to operate. El Mourabet added that Middle Eastern consumer behavior tends to favor spending beyond basic necessities, in contrast to the more conservative spending habits seen in Europe. This difference in consumer behavior has driven the adoption of buy now, pay later (BNPL) solutions, with luxury brands being early adopters in the region.
Challenges and opportunities in Africa
Addressing the African market, El Mourabet highlighted significant challenges, including limited access to credit and varying consumer behaviors. For example, credit scoring systems are often non-existent in many African countries, and access to funds remains a major barrier. However, digital banking initiatives have begun to fill these gaps.
El Mourabet cited the example of Zambia, where the launch of digital banking has facilitated widespread access to financial services across the country’s many territories. This digital transformation highlights the potential of financial technology to reach underserved and unbanked populations, promoting financial inclusion.
Technology Adoption and Financial Inclusion
Byron shared success stories from other regions to illustrate the transformative power of digital banking. In the Philippines, Finastra enabled Tonik Bank to launch a digital platform that reached over one million customers in 24 months. This rapid adoption is indicative of the larger trend of digital and mobile technologies accelerating financial inclusion. Byron also shared the example of BKN301 expanding into MEA, further highlighting the scalability and impact of digital banking solutions.
The Role of Mobile and Agency Banking
El Mourabet elaborated on the different banking models that are gaining traction in the region, including mobile banking and agency banking. In areas with high smartphone penetration, mobile banking is becoming increasingly popular. However, in regions where smartphone access is limited, agency banking, which involves local agents providing banking services, is proving effective. This model is particularly relevant in rural and underserved areas, offering a practical solution to the challenges of physical banking infrastructure.
Regulatory and innovation dynamics
The conversation also touched on the regulatory and innovation dynamics in the Middle East compared to Europe. Byron noted that Europe is more regulatoryly advanced than the MEA in approving cloud solutions in areas like core banking, which are mission-critical systems. However, the region has innovative government initiatives that are helping drive the open finance and fintech ecosystem. This proactive approach is evident in initiatives like Vision 2030, which aim to drive rapid growth and innovation in the sector.
Observations from the Dubai Fintech Summit
Reflecting on the summit, both Byron and El Mourabet expressed admiration for the vibrant fintech scene in the Middle East. They highlighted the impressive breadth and diversity of innovations showcased, from big players like Mastercard to emerging startups. El Mourabet stressed the importance of exploring smaller, more innovative fintech companies, which often present disruptive ideas and solutions.
Our discussion with Finastra executives at the Dubai Fintech Summit highlighted the dynamic and evolving nature of the fintech sector in the Middle East and Africa. With strong historical foundations, evolving regulatory environments, strategic government initiatives and innovative approaches to financial inclusion, the region presents significant opportunities for growth and development in the fintech landscape.