FinTech Focus

Compelling business models

April 11 - 17, 2018
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Gulf Weekly Compelling business models

The current MENA FinTech market is estimated at $2billion (around BD755m) and expected to witness an annual growth of $125 million (BD47m) until 2022, according to researchers.

Increasingly compelling business models of FinTech are expected to drive the market growth further, according to MENA Research Partners (MRP). Short for financial technology, it is the new technology and innovation that aims to compete with traditional financial methods in the delivery of financial services.

The kingdom has already made immense strides to keep ahead of the game. As reported in GulfWeekly, Bahrain FinTech Bay (BFB), is the largest FinTech hub in the Middle East and Africa, and already working with established industry leaders and new entrants from Bahrain, the region and around the world to drive innovation and create opportunities for growth.

Going forward, when benchmarked against emerging markets, the region is anticipated to experience a new era of fast growth.

FinTech funding has been rapidly gaining traction in the past five years, reflecting investors’ rising interest in the sector. This has supported the proliferation of new FinTech start-ups, with only six start-ups founded in 2005, the figure is expected to reach 252 by 2020.

Anthony Hobeika, CEO at MRP, said: “In the last six years, the landscape of major funding players has been changing. While in 2010 funding of FinTech was provided exclusively by venture capital firms, it is clear today that there is a shift to new funding vehicles such as accelerators, private equity institutions, corporation, banks and angel investors among others, highlighting the increased interest in FinTech by a broader range of investors.”

In the early days, regional FinTech startups were mainly specialised in payments activities. In 2015, the industry witnessed a major change with the emergence of start-ups created for lending and capital raising and the second wave start-ups, or those which are specialised in remittances, wealth management, insurance and blockchain-based solutions.

In 2020, this industry is expected to have an equal distribution of start-ups between these three main activities, Mr Hobeika believes.

“Fintech start-ups in MENA region are witnessing a pronounced expansion with the introduction of new technologies to serve the financial industry,” he added. “Up until recently, banks considered FinTech as a competitor but are now adopting what the sector needs to improve their own services.

“Banks are currently acquiring, partnering and also sponsoring FinTech companies.”

As an example, he said, some GCC banks collaborated with specialised FinTech start-ups across the region to implement value added tax (VAT) regulations - a type of consumption tax that is placed on a product whenever value is added at a stage of production and at the point of retail sale.

Numerous seminars on VAT are continuing to take place in Bahrain this week aimed at key decision-makers preparing for the introduction of the tax in the kingdom by the end of this year.

Bahrain FinTech Bay’s founding partners represent a broad cross section of Bahraini and global financial services and technology industry leaders, such as the National Bank of Bahrain, Arab Financial Services, Payment International Enterprise, Investcorp and Microsoft.

They and others are collaborating with BFB in accelerating Bahrain’s position and international start-ups already gaining from expertise available at the FinTech co-working hub include US-based RobustWealth, Offrbox and Sigma Ratings, as well as Jordanian start-up, Labiba. 

Khalid Al Rumaihi, chief executive of the Economic Development Board of Bahrain, believes the base at the Arcapita building in Bahrain Bay will play a central role in growing a supportive ecosystem necessary for innovation to thrive.







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