Since 2010, global investment in FinTech ventures has exceeded $60 billion. The Middle East and North Africa (MENA) has claimed stake to only 1% of this. Could Islamic / FinTech provide the panacea for innovation in the region and the 1.6 billion burgeoning global muslim and MENA populations alike? Some of the key drivers behind FinTech innovation in the region lie in the fact that 80% of the MENA population are unbanked, the high-level of international remittances, increase in smart phone penetration and young population customer expectations.
The UAE is taking a leading role in the broader FinTech movement, hosting approximately 30% of all FinTech startup companies from the MENA region. It has established a first of its kind start-up “accelerator programme” called the ‘Fintech Hive’ at DIFC. In addition, Abu Dhabi has launched the RegLab, also known a regulatory sandbox. In October 2017, the UAE Exchange, the largest money transfer company in the region, allocated $250 million for Fintech acquisitions. Other countries in the region are now adopting FinTech as part of their future growth strategies with the number of FinTech companies due to double by 2020.
The Islamic FinTech space presents an exciting horizon for the MENA region. The Islamic finance industry has also grown significantly over the past decade, at approximately 10% per year. Sharia-compliant financial assets are projected to be valued at over $3 trillion by the end of 2018, covering bank and non-bank financial institutions, capital markets, money markets and insurance (“Takaful”). It is estimated that the UAE is already home to 12 out of approximately 100 Islamic FinTech companies.
In fact, such is the penchant and excitement for the broader FinTech scene that Goldman Sachs estimates that the startups driving the industry could be worth revenues around $5 trillion. These include ventures covering peer-to-peer lending, crowdfunding, payments, wealth management, and the use of underlying blockchain technologies. Many of the players in these spaces are growing, and fast. The MENA region is in a unique position to leverage its advantage in the Islamic and broader burgeoning FinTech space.
