Gulf States' fragmented approach to FinTech needs to change
Source: Middle East Insurance Review | May 2017
While GCC countries are making moves towards capitalising on FinTech’s potential, the fragmented approach of the region’s financial markets could delay the way to a sharing, experience-based economy in the financial ecosystem, according to Saxo Markets, the institutional division of the Copenhagen-headquartered Saxo Bank Group.
“The Gulf’s myriad of finance sector players must work together to capitalise on the region’s optimum market conditions and reshape and improve client experience. Globally we are in the second wave of FinTech, and people have realised that you cannot own the whole value chain. Today there is a more sophisticated understanding that traditional financial organisations need to combine their significant regulatory expertise, capital and relationships with FinTech innovators and partners,” said Ms Jennifer Hansen, Global Head of Sales, Strategy & Execution at Saxo Markets.
The rise of the digital economy has catapulted the GCC into a position of significant market opportunity that serves as an emerging market advantage for the development of a flourishing FinTech ecosystem. With the UAE and Saudi Arabia leading the way, the region has some of the world’s highest rates of mobile and internet penetration, with a large proportion of the total population aged between 15 and 25. Together with the region’s cosmopolitan business environment, government support and access to global capital and financial expertise, the region is well-placed to embrace FinTech solutions and service adoption across the marketplace.
While every ambitious GCC financial centre has started banging the FinTech drum, the GCC FinTech ecosystem remains less developed than in other international markets.
This year saw the launch of DIFC’s “FinTech Hive at DIFC” – the region’s first FinTech accelerator designed to empower entrepreneurs to innovate and meet market needs. DIFC’s initiative follows the Abu Dhabi Global Market declaring its intention to be the FinTech capital of the Gulf region and putting in place a special regulatory regime to allow it to become the Gulf’s incubator for FinTech businesses.
Other ambitious regional initiatives include the Central Bank of Bahrain’s recent announcement that it is considering introducing regulations on FinTech, and Saudi Arabia’s promise to put FinTech at the heart of the King Abdullah Financial District currently under construction in Riyadh. M