Data analytics and AI to drive Middle East and Turkey’s FinTech growth, MasterCard says
Data analytics and artificial intelligence are the leading technologies driving the growth of the FinTech industry in the Middle East and Turkey market, a new study by global payments company MasterCard has found.
MasterCard’s white paper entitled “Future of FinTech: smart, scalable, collaborative”, released during Gitex 2022 at the Dubai World Trade Centre, said FinTech offerings are “agile and able to identify opportunities”, often in times of adverse events such as the 2008 financial crisis and the Covid-19 pandemic.
One of the main reasons behind FinTech growth in the Middle East and Turkey region, the study found, is the “collaborative approach”. It added that FinTech solutions in these markets are working to solve the pain points of consumers and merchants in a very “localized framework”.
The report revealed that FinTech startups in the Middle East and North Africa region recorded a 183 percent growth in funding last year, the highest annual growth rate in the past five years. The majority of FinTech financing deals (32 percent) and financing capital (49 percent) in Mena were focused on the UAE market.
“The FinTech landscape is accelerating at an unprecedented rate to transform economies and the exchange of value … new players are continuously emerging, their scaling strategies are maturing and investments are accelerating,” said Ngozi Megwa, senior vice president of digital partners and enabler for Eastern Europe, Middle East and Africa at MasterCard.
“Yet the core mission of FinTech companies remains the same – they strive to empower consumers, increase financial access and help bring the unbanked and underbanked into the digital economy,” Megwa said.
The global FinTech market is projected to reach $332.5 billion by 2028, up from $112.5 billion in 2021, MasterCard said, adding that there are more than 470 FinTech unicorns globally, with 40 of them added in the first quarter this year. The Mena region alone is expected to have 45 FinTech unicorns by 2030, a tenth of the global number.
FinTech regulations include several facets, such as payments, money transfers, equity crowdfunding, e-money and peer-to-peer lending.
The UAE, the Arab world’s second largest economy, has regulations for all five facets and the leaders in the region, followed by Saudi Arabia and Bahrain, which regulate four of the five facets, the study found. Egypt and Turkey have regulations in place for three of these facets.
“However, regulation remains very localised, as regulators’ main concern is to protect consumers in their own countries. Very few country regulators have partnered with their counterparts in neighboring countries to allow companies from one country to operate seamlessly in the other,” MasterCard said.
The report said it is important for local FinTech companies to get global companies on board. This enables them to solve several cross-border issues related to regulation, payments (making and receiving them) and fundraising rounds.
Updated: 12 October 2022 at 04.30
