FinMaze on KSA’s FinTech landscape and their stance at LEAP 2023

FinaMaze is MENA’s hybrid human/robot digital asset manager in MENA. It is dedicated to addressing persistent issues facing the investment sector in the area and beyond. FinaMaze connects machine learning with human behavioral science to provide individualized investment solutions by combining sophisticated AI with data scientists, quantitative finance and software engineers. The central concept behind FinaMaze is “AI at the service of people”, with a strict code of ethics, transparency and a dedication to realistic investment situations and results. They also hold an extended investment management license and are regulated by ADGM’s Financial Services Regulatory Authority (FSRA).

Here, Mehdi El Amine Fichtali, Founder and CEO of FinaMaze shares his insights on the ever-evolving Saudi market…

• Please walk us through the services you offer.

FinaMaze sets a new standard in personal investing, providing unmatched personalization and performance for both our B2C and white-label B2B2C clients. Our unique hybrid human/AI framework creates, manages and executes trades for customized investment portfolios spanning global and regional equities, fixed income and futures, commodities and long/short hedge fund strategies. Our solution also gives investors unprecedented access to private equity and VCs, with a minimum investment of $10,000. FinaMaze’s dynamic rebalancing model takes into account over 4,000 possible risk profiles, allowing us to deliver superior risk-adjusted returns while respecting each investor’s tailored risk controls. With our cost-effective and diversified portfolios, customers can be confident that they are getting the most out of their investments.

• How would you describe the FinTech landscape shaping in KSA?

The FinTech landscape in KSA is rapidly evolving, driven by a convergence of four key factors:

1. The government and regulators prioritize promoting a digital economy, and creating an environment that contributes to the growth of FinTech startups.
2. The availability of funding from family offices and venture capitalists provides an important supply of capital to the sector.
3. The market potential in KSA attracts founders from the country, the region and beyond.
4. Consumers’ growing use of digital financial services creates a receptive market for FinTech innovations.

These converging factors are shaping a dynamic and rapidly developing FinTech landscape in KSA, with significant potential for further growth and innovation.

• What was it like to participate for FinaMaze in LEAP 2023? Can you walk us through your experience?

We had the opportunity to engage with the regional stakeholders we already know and with players outside the region with whom we shared experiences and explored opportunities for global partnerships and cross-pollination.

A notable event was our participation with other fintech leaders in a roundtable conference hosted by Fintech Saudi and the CMA, which focused on the critical role of fintech in driving KSA’s economic transformation. During the roundtable, we discussed the necessary ecosystem developments to unlock the full potential of fintechs in the Kingdom and position the region as a FinTech hub. In addition, the conversation highlighted the importance of regulatory frameworks and policies that encourage the growth of a thriving FinTech ecosystem by promoting R&D and innovation.

• What are the core challenges facing the FinTech industry?

The FinTech industry is currently facing challenges both globally and regionally. A global challenge is a shift in the investor mindset from an “increase your market share at any cost” to a more cost-conscious approach. Venture capitalists are paying close attention to B2C customer acquisition and retention costs, which can lead to reduced funding for some fintechs and may require painful restructuring.

At the regional level, regulators know they need to devote more resources to keep up with the rapid pace of innovation and gradually ease some restrictions to prevent a complex and fragmented regulatory environment. The absence of a robust strong pan-regional license pass creates additional hurdles and costs for the regional fintechs, hindering their competitiveness with the European fintechs that can achieve scalability faster thanks to their more integrated regulatory landscape. Furthermore, there is intense competition for local talent as not only FinTech, but also banks and government compete for the same pool of highly skilled workers.

• Where do you see the FinTech industry going forward?

During the 2020-2021 era, venture capitalists prioritized B2C startups that grow at any cost, but in 2022-2023 the narrative abruptly turned to controlling expenses and survival. Looking ahead, I expect more interest in robust, multi-year revenue and profitable startups, which you’ll find more in the B2B space.

For fintechs in the GCC region, I predict a shift towards the players who focus on adding value to established banks and financial institutions through flexible and easy-to-implement technology and new faster and better automated processes that help them in their digital transformation.

For me, 2023 will be the year of intellectual property, favoring B2B FinTech with unique proprietary technology and processes over B2C companies that rely on social media and mass marketing.

• Are there any strategic alliances for 2023?

Consolidation within the FinTech industry has begun globally, with larger fintechs acquiring smaller ones to strengthen their offerings and achieve technology and marketing synergies.

I expect to see some M&A activity in the MENA region, but more from established financial institutions buying minority stakes in select B2B fintechs rather than majority stakes. These financial institutions will target fintechs with which they already engage at a business level and have unique intellectual property or technology. Their B2B contracts will ensure continued growth and create value for start-up shareholders.

As a result, pure venture capitalists will face competition from these financial institutions’ strategic venture capital arms in terms of capital deployment and deal creation.

From Logistics News ME March 2023 issue