FinTechs help MENA SMEs drive growth

FinTechs offer an alternative to cumbersome and risky corporate spending processes.

And whether freelancers or large companies, workers no longer have to go through the hassle of spending their own money, saving receipts and reconciling bills at a later date to get reimbursed. Employers, on the other hand, are freed from having to share card details with several employees, which exposes the company account to fraud.

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In the Middle East and North Africa (MENA), small and medium-sized enterprises (SMEs) are adopting this digital solution at a pace that matches the rapid digitization of payments in the region, said Saad Ansari, co-founder and CEO of the MENA-focused FinTech firm XPence.

Largely underserved by banks that tend to target larger companies, Ansari said SMBs are particularly attracted to XPence’s multi-functional management platform, which offers a level of oversight and control over their finances that many could not be achieved otherwise.

“We don’t just focus on their debts or on receivables. We bring both elements into play because ultimately we want to know the net cash position of the company at all times,” Ansari told PYMNTS in an interview.

While acknowledging increasing competition in the global space, he said many of the platforms designed for other markets do not translate well in the MENAP context, thus giving Xpence a competitive edge in the region.

“FinTech doesn’t travel very well across borders,” he noted, pointing to the unique challenges of the fragmented MENA market.

And unlike Europe where FinTechs can launch a new product or service across the Union with a single license, the absence of a corresponding password adds further complexity when doing business across MENA, he added.

That said, Ansari pointed to regulators in countries such as Saudi Arabia, Bahrain, the United Arab Emirates and Egypt making significant moves in recent years to make it easier for FinTechs to operate across the region as a sign of a promising future.

MENA’s maturing ecosystem

Besides regulatory fragmentation, Ansari made another comparison with Europe to highlight the fact that MENA does not have Banking-as-a-Service companies like Railsr or the now insolvent Wirecard that enable FinTechs to launch and scale quickly.

“You can go to Wirecard and launch a neobank proposition in six months,” he said, adding that Europe’s BaaS companies are also allowing other firms to piggyback on their licenses, further accelerating FinTech innovation. “We’re not there yet,” he added, referring to the MENA region.

Still, Ansari remains optimistic about the future, saying he expects the emergence of some “real base players” in the market by the end of 2023 or early 2024.

With these challenges in mind, the FinTech firm is looking to expand beyond its home base of Bahrain and the United Arab Emirates (UAE) going forward, targeting Egypt and Saudi Arabia next.

What makes Egypt an ideal market, Ansari explained, is that it boasts the largest MENA country by population and benefits from a strong entrepreneurial culture conducive to business growth.

When it comes to Saudi Arabia, which is considered the economic powerhouse of the region, the reasoning behind that choice is obvious, he said. “I don’t think you can do business in our region or call yourself a MENA company unless you have a presence in the Kingdom. That’s where the economy is. That’s where things happen.”

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