Middle East and North Africa (MENA) Fintech Market Flourishing at Robust 24.8% CAGR between 2022 and 2028

Published | 13 October 2022

Middle East and North Africa (MENA) fintech market is flourishing owing to technology advancements, rapidly increasing smart phone usage, and supportive initiatives by governments across the region.

BlueWeave Consulting, a leading strategic consulting and market research firm, in its recent study, expects Middle East and North Africa (MENA) Fintech Market size to grow at a robust CAGR of 24.8% during the forecast period between 2022 and 2028.  The massive youth population, combined with the vast number of unbanked or under-banked individuals who depend on cash and the recent emergence of a firmer regulatory environment, are growth drivers for the Middle East and North Africa Fintech Market. Furthermore, the region has seen a rise in entrepreneurship and tech-savvy population that is more likely to adopt new technologies and digital products, distinguishing the MENA from established Western markets such as the United Kingdom and the European Union. However, the lack of well-developed infrastructure and limited access to financing make it difficult for fintech companies to operate, grow, and scale their businesses. In addition, the costs of complying with regulations can be high, making it difficult for fintech companies to achieve profitability.

Middle East and North Africa (MENA) Fintech Market – Overview

Fintech services are a critical component of the financial industry in Middle East and North Africa. The fintech sector is a hotbed of new businesses in Middle East and North Africa. According to estimates, the Middle East will have over 465 fintech startups by 2022. With 30 fintech startups as of 2015, the United Arab Emirates was at the forefront of the region's fintech startups. Egypt came in second with 17 fintech firms, followed by Jordan and Lebanon with 15 apiece.

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Middle East and North Africa (MENA) Fintech Market – Services

Money transfer and digital payments were the most popular fintech services among customers around the world. Savings and investment options, as well as insurance services, came next. Currently, 3.8 billion individuals use digital payment systems, with that figure expected to increase to over five billion by 2025. The digital payment was the most direct service utilized by banking customers in the Middle East and North Africa region. Fintech adoption is especially strong among younger banking customers in the MENA region, and it has consistently expanded over the last few years, assisted by growing smartphone usage.

Middle East and North Africa (MENA) Fintech Market – Regional Insights

North Africa and Sub-Saharan Africa's fintech ecosystems appear to be less welcoming than those in the GCC, although for different reasons. When it comes to mobile banking and payments, certain Sub-Saharan African countries appear to be ahead of the curve (for example, Kenya). The demand for such services appears to be higher in Sub-Saharan Africa than in North Africa, where internet-based financial transactions are less common. North African countries, on the other hand, appear to profit from superior infrastructure and a greater supply of human capital. When it comes to policy and the availability of financial resources to further the fintech agenda, both areas are in comparable situations. Regulators in Middle East and North Africa as reactive rather than proactive, with a few exceptions. Finally, on both sides of the African Sahara, the capital is sparse. Multilaterals could play a role in giving financial support to fintech firms or authorities as part of their quest for greater financial inclusion.

Impact of COVID-19 on Middle East and North Africa (MENA) Fintech Market

The COVID-19 pandemic and the associated health measures have drastically altered customer behavior. Coronavirus has had a positive impact on the global financial technology industry, owing to increased digital transactions and the adoption of Fintech services in various parts of the world. Demand for contactless payment systems soared in 2020 as individuals sought to avoid physical contact. With many regional locks in play in May 2020, 53% of Middle Eastern respondents increased their online shopping to using their smartphones. E-commerce platforms KSA Bin Dawood and Danube have benefited from the increase, with their average sales increasing by 200%, while Carrefour in the UAE witnessed a 59% increase in the number of new online customers since the epidemic began.

Local closures have compelled more urban consumers, who were previously resistant to change, to shop online. After realizing the convenience of Fintech and digital transactions, most Middle Eastern people are expected to maintain their new shopping habits following the COVID-19 pandemic. Neo banks have begun to arise in the GCC, with banks launching on their own as well as independent entities working alongside regular banks. Liv Bank (owned by Emirates NBD in Dubai) and ila Bank (owned by Bank ABC in Bahrain) are two instances. Similar breakthroughs have occurred in North Africa with neo banks, which are primarily independent of traditional banks.

Competitive Landscape

Companies all over the world have made significant investments in this market segment. Many companies in the Middle East and North Africa Fintech sector are fighting for minor market share. Fintech companies include Tamara, Liv., Pepper, PayTabs, Tabby, and Sarwa. The use of a Fintech platform and the upgrade to new technology increases competition within the organization. As the COVID-19 and urbanization affect the general public, innovation and technology improvement are accelerating, leading to the introduction of new payment convenience and contactless payment gateways.

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The in-depth analysis of the report provides information about growth potential, upcoming trends, and statistics of Middle East and North Africa Fintech Market. It also highlights the factors driving forecasts of total market size. The report promises to provide recent technology trends in Middle East and North Africa (MENA) Fintech Market and industry insights to help decision-makers make sound strategic decisions. Furthermore, the report also analyzes the growth drivers, challenges, and competitive dynamics of the market.

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