Fintech Takes Over MENA: Top Trends Revolutionising the Financial Industry

The MENA region is filled with culturally diverse people and vast oil-rich lands. However, the region is also rich in something else, fintech. The fintech industry has seen tremendous growth and is expected to reach a $3.5bn valuation by 2025.

This massive growth isn't a fluke, as several factors have spurred it. For starters, there's the fact that 70% of the population is mainly unbanked or underbanked and relies heavily on cash. Another factor is the region’s enormous youth population. According to the Population Research Bureau, youths comprise 30% of MENA’s working population. This means more tech adoption. Other factors include increased smartphone usage, more robust regulatory frameworks, and the pandemic surge in app usage in place of similar physical offerings.

This article will examine the top trends taking the MENA fintech sector by storm and how they've revolutionised the financial industry.

Cross border payments

The payments landscape in MENA is evolving. With most of the population under 30, online transactions are a growing trend, and more people are turning to e-commerce for their purchases. This means fintechs promising cheaper and speedier cross-border digital payments are falling over themselves to meet these rising demands.

The improved smartphone penetration is a bonus too. Up to 65% of the region's population are unique mobile subscribers, thus enabling the region’s underbanked to find inclusion in e-banking. Traditional banks aren’t the gatekeepers of the. MENA payments industry anymore, non-bank players like telecommunications providers, retailers, and startups have developed faster, easier-to-use methods. They include mobile number fund transfers, social payments, NFC and blockchain tech.

Contactless/e-wallets

Due to certain socio-economic factors, cash remains king in MENA—more or less. However, people are steadily moving towards the benefits of a cashless economy.

The COVID-19 outbreak accelerated the adoption of cashless and contactless payments, both in-person and digital. Contactless payments are considered much safer since cash is suspected to be a potential carrier for the deadly virus.

Asides from safety, contactless payment tech also brought convenience to MENA retailers. Micro sellers can increase their revenue by racking up more sales them they would if they had to count out change.

SoftPOS defines convenience for small and micro sellers in emerging markets. It uses NFC tech to convert your generic Android into a POS device, with no extra hardware or particular installation required. Integrating it with your payment systems is simple, affordable, and user-friendly. Just what the doctor ordered.

Challenger banks

MENA countries are rapidly going digital; as we said earlier, the region’s youthful population and high smartphone use are driving factors. Consequently, people are moving from legacy banks to newer digital ones offering modern financial services. These banks, called Challenger banks, are already popular in the West. Some of them include Starling Bank, Monzo, Revolut and Metro Bank.

But the financial climate is different in the MENA region, so these banks aren’t as prevalent there. However, other neo-banks are setting the e-banking scene.

There’s CBD Now, the digital-only arm of the Commercial Bank of Dubai and the first digital bank in the UAE in 2017. Meem by Gulf International Bank is the first Shariah-compliant digital bank in the world. Rewire the first neobank tailored for the cross-border needs of migrants worldwide. Rewire offers new customers an international bank account number (IBAN) and a free Mastercard debit card.

Other challenger banks include Mashreq Neo, Xpence, and Jingle Pay.

BNPL (buy now, pay later)

The COVID-19 pandemic caused a global shutdown, and many businesses had to close temporarily, causing people to lose their jobs and livelihoods. However, the pandemic also saw an increase in e-commerce activities. In 2020 alone, global e-commerce sales reached $ 3.35 trillion, as against $2 9 trillion in 2019, and it's still rising.

People were doubling down on retail therapy. But the financial uncertainty still hovered behind these purchases. Then BNPL happened. Companies like Afterpay and Klarna offered shoppers the benefit of breaking down their purchase costs into instalments spread over time.MENA countries are not foreigners to BNPL. Over 10 BNPL startups have launched in the region in the past three years. Popular providers like Tabby, currently valued at $ 300 million, are tackling the issues of over-dependence on cash and fluctuating conversion rates in the MENA and GCC regions. Others have gone further and turned their websites into shopping platforms with discounts.

All this indicates the massive fintech innovation brewing in the Middle East and North Africa. And since the pandemic, it's only getting better. Small business owners and retailers in this region will benefit from the automation and digitisation these startups offer.