Recently, FinTech in the Middle East and North Africa has experienced notable changes due to advancements in technology and shifts in consumer habits. Making it more important than ever for banks in the region to grasp and meet the evolving preferences of their customers. Additionally, the UAE’s financial sector is embracing Blockchain technology, and digital identity solutions are expected to play a significant role in the future of the country’s FinTech landscape. Yannick Decaumont, Managing Director of Mediterranean and Middle East at CREALOGIX, tells us more.
Freedom of choice in payments and wallets
Historically, countries across the Middle East have predominantly relied on cash payments. However, digital transactions are steadily gaining ground. The rise of FinTech companies, supported by favourable regulatory frameworks across the region, is accelerating the shift towards cashless payments. One catalyst for this transition is the rapid growth of the e-commerce industry in the Middle East, projected by Deloitte to reach a market size of US$50 billion by 2025.
Government initiatives such as Saudi Arabia’s Vision 2030, aiming for 70% digital payments by 2025, and the UAE’s efforts to integrate regional payment systems, are further driving this move towards a cashless economy.
Government initiatives in Saudi Arabia are driving the expansion of financial technology, fostering innovation and investment. FinTech firms are revolutionising payment systems, lending, and investment platforms with strong financial backing and governmental encouragement. Moreover, regulatory authorities have implemented a comprehensive framework for the FinTech industry, prioritising consumer protection, cybersecurity and fair competition. This framework aims to enhance customer service quality while promoting equitable market conditions.
Increased expectations of digitalisation and convenience
According to a recent survey by IT business solution provider Comarch, traditional banks in the Middle East acknowledge the necessity of digital transformation to enhance customer experience, streamline operations, and maintain competitiveness against emerging digital players.
The report also highlights technological advancements as a key trend, with AI anticipated to play a substantial role. PwC forecasts that AI could contribute up to US$38 billion to the financial, professional, and administrative services sector in the Middle East and Africa (MEA) by 2030.
Artificial Intelligence (AI) is revolutionising cybersecurity and regulatory technology (RegTech) within the FinTech sector, significantly enhancing efficiency and effectiveness. As AI continues to advance, its integration into cybersecurity and RegTech promises to set new standards for security and compliance in the FinTech industry.
Increased popularity of ESG investments and sustainability
As global attention turns towards sustainable finance, the UAE banking sector has made a bold pledge to mobilise more than AED1 trillion in sustainable financing by 2030. This ambitious goal demonstrates a strong commitment to redirecting financial practices towards a future that is more environmentally and socially responsible.
Following the sustainability pledges of COP28, the report anticipates a significant move towards green Blockchains and eco-friendly features within banking applications. It also foresees FinTech firms and banks integrating Environmental, Social, and Governance (ESG) principles into their products and operations. This aligns well with the increasing worldwide emphasis on sustainable finance.
Access to new markets
Access to new markets has also emerged as a prominent evolving customer preference in the FinTech sector. Customers increasingly seek opportunities to invest and transact in global markets beyond their local borders such as cryptocurrencies and fractional shares. This preference is driven by factors such as diversification of investments and ease of transactions.
By leveraging technology such as AI-driven lending platforms, Blockchain for secure transactions, and mobile banking apps, FinTech’s are empowering SMEs to navigate complexities more efficiently, ultimately fuelling growth and resilience in this crucial sector of the economy. As these FinTech solutions continue to evolve, they promise to reshape the landscape of SME financing, fostering a more dynamic and inclusive business environment.
Expectations of competitive fees and free services
The expectation of competitive fees and free services is a crucial evolving customer preference that banks must consider. FinTech companies often disrupt traditional banking models by offering innovative services with lower fees or even free services in certain areas. This competition forces traditional banks to reassess their fee structures to remain competitive.
Moreover, there has also been a noticeable shift towards enterprise-focused solutions, marking a pivot from solely catering to end customers. This trend reflects a growing recognition of the unique needs and complexities faced by businesses in managing finances, operations, and compliance. FinTech companies are increasingly developing sophisticated tools tailored for enterprises, including financial management platforms, treasury and cash management solutions, and advanced analytics for decision-making. By addressing these enterprise needs, FinTech providers aim to streamline processes, optimise efficiency and support strategic growth initiatives. This shift underscores how consumer demands, in this case, the demands of businesses, are shaping the evolution of FinTech, pushing innovation towards solutions that enhance organisational capabilities and competitiveness in a rapidly evolving market landscape.