Fintech hubs see significant funds channelled to startups: PwC
DUBAI, December 27, 2022
Fintech hubs have emerged across the Mena region and are channelling significant funds to dynamic, small companies with startups receiving more than $2.5 billion in funding in 2021 alone, a PwC Meet heard.
Trends in the first half of 2022 indicate this year will surpass that, given the $1.73 billion that has been raised to date. A growing number of these companies are having successful initial public offerings (IPOs).
In particular, GCC countries have moved decisively into fintech. Some of the GCC fintech hubs are now so large that they are on the global fintech map. The critical challenge for fintech in the Mena region, the GCC in particular, is to remain competitive in a fast-developing sector. By focusing on the long-term imperatives of greater fintech scale, deeper capital markets, and talent development, GCC countries can become vibrant players in global fintech.
Financial culture
Meanwhile, the culture of financial organisations in the Middle East must shift as they design the workforce of the future, build innovative cultures from the top-down and embrace risk in experimentation, the Meet heard.
During the keynote session at the inaugural Financial Services Horizons - Annual GCC Leadership Meet , Mehryar Ghazali, Financial Services Leader at PwC Middle East, and Brett King, Australian futurist, best-selling author and co-founder of Moven explored new approaches on how the structure and committing to cloud services would be underpinned by advancement in cloud regulation which is essential for higher levels of product sophistication (and how cloud will be more secure and sustainable as new technology evolves), platform readiness with the rise of open banking, digital wallet integration and the re-imagination of the metaverse and digital twins as well the future economies of 2050.
The three-day meet hosted by PwC’s Financial Services practice leaders offered a unique platform for banking and financial services professionals to discuss new developments in global banking and debate on growth areas for banks in this region.
Transformation
The conversations focused on the transformation taking place in financial services, importance of customer integration, evolution of payments and digital wallets and challenges with growing digitalisation.
Additional key insights shared at the meet that are driving the region’s banking industry are:
Regulations
The one area that is likely to continue to be a growth constraint for financial services in the region is the regulatory structure around cloud services. Current regulations require cloud service providers to be based in the country where it plans to offer its services.
Authorities in the region are aware of this issue and are moving ahead on this front. Once this constraint on cloud services is resolved,it has the potential to tremendously expand the scope of financial services in the region.
Rise of experiential banking
Banks in the Middle East have a substantial advantage to gain market share in the digital space. In order to move away from a transactional banking mindset to one focused on customer experience, banks will need to focus on operational efficiency, understand customer data and must fully utilise analytics and artificial intelligence (AI) to anticipate and service client needs better than competition, as they focus on building AI into the core of digital services.
Digital financial inclusion
The launch and growth of digital financial services in the Middle East has led to an unprecedented increase in the number of people having access to financial services. For the unbanked populations, access to credit can be extremely difficult. However, with mobile wallets and digital payment cards, there is vast potential to promote financial inclusion in the region – all at the touch of a button.
The fintech boom
Ghazali said: “The Middle East region has advanced exponentially in the financial technological ecosystem mirrored with our focus on investing in strategic partnerships, emerging technologies and our people to help solve our client’s biggest problems. We firmly believe that the future of the industry is heading towards a brighter path, one filled with innovation and inclusion.”
Additionally, during the meet, King delved into the global fintech landscape, discussing the successes and failures in fintech, and the response of retail and corporate customers to changing capabilities, and how the pandemic has accelerated expectations around digital services. Additionally, he shared insights on some of the metrics behind the best fintechs in the world, and how the market is aligning behind these broad changes around digital customer acquisition, market cap, lifetime value and core operational efficiency, and how that is starting to see traditional banks’ share prices wane in comparison.
Dr Sandeep Srivastava, Financial Services Consulting Lead at PwC Middle East, said: “The Middle East region is emerging as a serious player from a regulatory reform and fintech ecosystem perspective. In recent years, we have seen how the region has transformed into an agile economy thus helping in the transformation of the banking ecosystem. It's going to be really fascinating to see how the region will develop its digital banking capabilities in the years to come.”-- TradeArabia News Service
