Middle East slow to adopt fintech, experts say

Financial services sector in the Gulf Cooperation Council countries was not saturated like that in North America, the UK and Europe

  
Abstract photo of FINTECH connection. Image used for illustrative purpose.

Abstract photo of FINTECH connection. Image used for illustrative purpose.

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Monday, Apr 17, 2017

DUBAI

The Middle East and North Africa (Mena) is significantly behind other regions in investment in financial technology (fintech), experts said on Monday.

Mustafa Adil, Thomson Reuters’ Head of Islamic Finance — Mena, said total worldwide funding of fintech projects was $25.8 billion in 2015, with an average investment of $44 million per company, compared to typical tech start-up funding of $6-7 million.

The whole Mena region was only able to generate $45 million in funding, he told Thomson Reuters’ 150th Mena anniversary conference at Dubai International Finance Centre (DIFC).

That represented untapped potential and a tremendous opportunity, he added.

But Dr Jarmo Kotilaine, Chief Economist of the Bahrain Economic Development Board, believed the reason for the slow uptake was that neither suppliers nor customers saw a great need for it in the region.

“My view is that most innovation, most productivity gains in companies, in countries, happen not because people think productivity, is a great thing to have. They really happen in the absence of alternatives. People are pushed, by regulatory pressures, trade unions, competition, taxation, the list goes on.”

But the financial services sector in the Gulf Cooperation Council (GCC) countries was not saturated like that in North America, the UK and Europe, nor ripe for expansion like that in developing countries, both of which saw greater investment in fintech.

“In the middle, in my opinion, is the Mena region. I think in financial services the Mena region suffers the same challenge as in the broader economic development, which is that development is extensive.”

Nevertheless, governments and private companies were looking at the potential of fintech. Dr Hitcham Al Salama, Chief Economic Advisor at Qatar Financial Centre (QFC), said, “It would be foolish of anyone not to ride the wave of technology, especially when it comes to financial technology.

“QFC, like all the players in the region, is looking closely at the impact, especially when it comes to Islamic funding. Although we rare not as advanced as other centres in the region ... We believe we should be playing a complementary role.

“We have recently started looking closely at fintech strategies, we have looked at the Islamic fintech strategies, and we are hoping that in the next few months we’ll have a clear view on where exactly we’re going to be heading.”

By Andrew Staples Chief Business Reporter

Gulf News 2017. All rights reserved.