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Fintech innovations reshape GCC’s banking landscape 

  1. The GCC countries are rapidly emerging as a leading fintech hub, revolutionizing traditional banking and financial services across the region 
  2. The region's fintech growth, fueled by a tech-savvy populace, robust regulations, and digital adoption, is heralding the future of financial services 

DUBAI, UAE — In recent years, the GCC countries have emerged as a dynamic hub for financial technology, or fintech, redefining the landscape of traditional banking and financial services in the region.

Comprising six countries — Saudi Arabia, the UAE, Bahrain, Kuwait, Oman, and Qatar — the GCC has witnessed an unprecedented surge in fintech startups, investments, and innovation. This surge can be attributed to a combination of factors, including a tech-savvy population, robust regulatory frameworks, and a drive to embrace digital transformation.

As a result, the fintech ecosystem in the GCC has become a vibrant and rapidly evolving sector, attracting global attention and positioning the region as a leading player in the future of financial services. In this article, we’ll delve into the key drivers behind this fintech revolution, explore notable trends, and examine the transformative impact of these advancements on the financial landscape of the GCC.

<blockquote class="custom">Within the Middle East, there’s a tremendous opportunity for tech companies and the fintech market in general because the population is primed for it, especially with nearly 85 million unbanked adults in the region. <footer> <img src="https://assets-global.website-files.com/63ae72fa55c20307d0e01b8c/654acbfc53c1f1bbfd4a429c_quote-example.webp"> <cite>Tugrul Tasgetiren <span class="cite-grey"> CEO red_mad_robot in the Middle East</span></cite> </footer> </blockquote>

Tugrul Tasgetiren believes multiple factors support fintech growth, particularly in the Middle East.

In an interview with TRENDS, he added that the Middle East market is ripe for fintech companies, with many of the unbanked population eager to embrace technology. Simultaneously, the region boasts impressive infrastructure, characterized by high internet and smartphone usage.

At a Glance

  • GCC countries have emerged as a dynamic hub for fintech, redefining traditional banking.
  • Factors driving fintech growth are tech-savvy population, robust regulatory frameworks, and digital transformation eagerness.
  • The fintech ecosystem in the GCC attracts global attention, positioning the region as a future financial services leader.
  • Governments in the GCC ramp up investments in technology and fintech, with supportive regulations and free zones.
  • Challenges faced by the sector include tech talent shortage and the need for «passporting of licenses.»
  • The UAE and Saudi Arabia have emerged as frontrunners in the GCC’s fintech revolution.

Additionally, Middle East residents show a keen interest in fintech, especially given the region’s youthful demographic. In Saudi Arabia, the average age hovers around 29, while in the UAE, it’s about 30-31, according to Tasgetiren.

Moreover, governments in the GCC are ramping up their investments in technology and fintech, facilitating companies to launch and operate efficiently in countries like the UAE and Saudi Arabia. Here, regulations are supportive, and the presence of free zones and free offices is significant.

This is what sets Middle East’s fintech apart

There are stark differences between fintech in the US, Europe, and the Middle East, starting with the size of investments.

In the US, fintech investments totaled around $24 billion, and in the UK, $10 billion; in the Middle East, it ranges from $1 billion to $1.5 billion, explained Tasgetiren. However, while investments have declined over the years in both the US and the UK, in the Middle East, it’s almost 60 percent higher, based on the red_mad_robot report.

Another distinction Tasgetiren noted is the scalability of the market. While the US boasts a population of over 300 million and the EU 400 million, in Saudi Arabia, it’s 35 million, and in the UAE, about 10 million, with even smaller numbers in other regional countries.

However, some factors favor the Middle Eastern markets, such as the approach of regulators. In the US and Europe, it’s more conservative, but this region is hungry for fintech and encourages investors to pour money into it.

GCC’s fintech frontrunner

Several reasons position the UAE as the fintech leader in the GCC. Tasgetiren believes the visionary government is the primary driver, as it has long sought to attract more technology investments into the country, successfully drawing foreign talent and tech companies to the region.

Simultaneously, the UAE government is fine-tuning regulations to allow swift company establishment and provide more transparent access.

With Saudi Arabia’s recent ascent, Tasgetiren believes it’s challenging to predict the future fintech leader. However, he envisions cooperation between the UAE, the kingdom, and other GCC and MENA countries rather than competition.

Regarding the region’s growth needs in its fintech sector, Tasgetiren identified a global challenge: a tech talent shortage.

A general view of the King Abdullah Financial District in Riyadh. (AFP)

Another challenge is the «passporting of licenses,» which would allow a license obtained in one country to be used in another. «If you can use your license to operate the payment system in Saudi Arabia and other countries, you can quickly grow your market,» Tasgetiren said.

International companies eager to operate in the Middle East should establish a strong presence, understand the culture, and tailor their products to the cultural and business needs of the local population, without imposing external business rules and products, Tasgetiren added.

To sum it up, the rise of fintech has been nothing short of a financial revolution in the GCC countries. The infusion of technology into the financial sector has accelerated innovation and opened new avenues for economic growth and prosperity. Streamlined services, increased accessibility, and heightened efficiency have empowered businesses and individuals alike, fostering a more inclusive and competitive financial landscape.

Furthermore, the agile regulatory frameworks in the GCC have played a pivotal role in supporting and guiding this fintech surge, ensuring that innovation is balanced with stability and security. As a result, the GCC nations stand at the forefront of global fintech, attracting significant investments and positioning themselves as leaders in financial technology.

The continued growth of fintech in the GCC promises further diversification and strengthening of their economies. This digital transformation is expected to not only facilitate easier access to financial services for all segments of society but also stimulate entrepreneurship, job creation, and foreign investment. As fintech solutions mature, we can anticipate significant strides in financial inclusion, capital market development, and overall economic resilience.

In essence, fintech’s impact on the GCC economy is profound and far-reaching. It’s a testament to the region’s forward-thinking approach to embracing technological innovation and its commitment to positioning itself as a global economic powerhouse in the digital age. As the fintech ecosystem evolves, the GCC is poised to reap the rewards of a more agile, efficient, and inclusive financial sector, propelling these nations towards a more prosperous and sustainable future.

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