Emerging fintech trends in MENA

September 2, 2021

The MENA region is filled with a culturally diverse people and vast oil-rich lands. However, the region is also rich in something else, fintech. The fintech industry has seen tremendous growth over the years and is expected to reach a $3.5bn valuation by 2025

This massive growth isn’t a fluke as several factors have spurred it on. For starters, there’s the fact that 70% of the population are largely unbanked or underbanked and rely heavily on cash. Another factor is the region’s enormous youth population. According to the Population Research Bureau, youths make up 30% of MENA’s working population. This means more tech adoption.

Other factors include increased smartphone usage, stronger regulatory frameworks, and the pandemic surge in app usage in place of similar physical offerings.

In this article, we shall look at the top trends taking the MENA fintech sector by storm, and how they’ve revolutionized the financial industry.

Contactless/e-wallets

Due to certain socio-economic factors, cash remains king in MENA—more or less. However, people are steadily moving towards the benefits of a cashless economy.

The COVID19 outbreak accelerated the adoption of cashless and contactless payments, both in-person and digital.  Contactless payments are considered to be much safer, since cash is suspected to be a potential carrier for the virus.

Asides from safety, contactless payment tech also brought convenience to MENA retailers. Micro sellers can increase their revenue by racking up more sales than they would if they had to count out change. 

SoftPOS is the definition of convenience for small and micro sellers in emerging markets. It uses NFC tech to convert your generic Android into a POS device, with no extra hardware or special installation required. Integrating it with your payment systems is simple, affordable, and user-friendly. Just what the doctor ordered.

Cross border payments

The payments landscape in MENA is evolving. What with the majority of the population under the age of 30, online transactions are a growing trend, and more people are turning to e-commerce for their purchases. This means fintechs promising cheaper and speedier cross-border digital payments are falling over themselves to meet these rising demands. 

The improved smartphone penetration is a bonus too. Up to 65% of the region’s population are unique mobile subscribers, thus enabling the region’s underbanked to find inclusion in e-banking.

Traditional banks aren’t the gatekeepers of the MENA payments industry anymore – non-bank players like telecommunications providers, retailers, and startups have developed faster, easier-to-use methods. They include mobile number fund transfers, social payments, NFC and blockchain tech, amongst others.

Challenger banks

MENA countries are rapidly going digital. Like we said earlier, the region’s youthful population and high smartphone use are driving factors. Consequently, people are moving away from legacy banks to newer digital banks that offer modern financial services. These banks called Challenger banks, are already popular in the west. Some of them include Starling Bank, Monzo, Revolut and Metro Bank. 

But the financial climate is different in the MENA region, and as such, these banks aren’t as popular there. However, there are other neobanks setting the e-banking scene.

There’s CBD Now, the digital-only arm of the Commercial Bank of Dubai, and the first digital bank in the UAE in 2017 and Meem by Gulf International Bank, the first Shariah compliant digital bank in the world.

Other challenger banks include Mashreq neo, Xpence, and Jingle Pay.

BNPL (buy now pay later)

The COVID19 pandemic caused a global shutdown, many businesses had to close temporarily, causing people to lose their jobs and livelihoods. However, the pandemic also saw an increase in e-commerce activities.  In 2020 alone, global e-commerce sales reached $3.35trillion, as against $2 9trillion in 2019 and it’s still rising.

People were doubling down on retail therapy. But the financial uncertainty still hovered behind these purchases. Then BNPL happened. Companies like Afterpay and Klarna offered shoppers the benefit of breaking down their purchase costs into instalments spread over a period of time.

MENA countries are not foreigners to BNPL. In fact, more than 10 BNPL startups have launched in the region since the past 3 years. Popular providers like Tabby, currently valued at $300million, are tackling the issues of overdependence on cash and fluctuating conversion rates in the MENA and GCC region. Others, like , have gone a step further and turned their websites into shopping platforms with discounts too.

All this indicate the massive fintech innovation brewing in the Middle East and North Africa. And since the pandemic, it’s only getting better. Small business owners and retailers in this region will benefit from the automation and digitisation offered by these startups. Who says you can’t too? SoftPOS offers you the flexibility of safe, contactless payment with no strings attached. You can take your business with you anywhere, this increasing your revenue. Or you can be a Paymob partner and share the SoftPOS dream instead. Either way, it’s a win.