Mapping Fintech Innovations in the Arab World

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What does the fintech landscape look like in the Arab world? To better understand fintech in a region with roughly 140 million financially excluded adults and 13 million companies that lack financing, CGAP has conducted an in-depth desk review and 150 interviews to date with key stakeholders in various countries, whether start-ups or existing financial service providers, regulators, incubators, accelerators and investors. While this research is ongoing, below are some preliminary findings that suggest fintechs are setting the stage for further uptake of financial services in the future.

Where is fintech innovation happening in the Arab world?

As of October 2019, we have identified over 330 fintech solutions operating across the 22 countries of the Arab world, and we are still counting. Although we have identified fintech solutions across practically every country in the region, 75 percent are concentrated in a handful of countries. The Gulf countries have positioned themselves as leaders, with the United Arab Emirates (UAE) counting over 60 fintech solutions. Northern Africa follows, led by Morocco, Tunisia and Egypt, along with Levant, spearheaded by Jordan and Lebanon.

CGAP is conducting additional research in each of these markets to better understand market barriers and opportunities for financial inclusion. Bahrain is the fastest growing fintech hub, in part due to its active regulatory sandbox and recent regulation on open banking that allows third-party providers to access clients’ financial information or initiate payments on their behalf.

Who are the fintech innovators?

Most of the solutions are offered by independent providers. With over 20 fintech solutions hitting the market every year since 2013, many are offered by relatively new firms. Some are still in need of early-stage financing, while others are already looking for large investments. According ArabNet’s latest State of Digital Investment in MENA report, the number and average value of tech-related investments doubled between 2013 and 2018. MAGNiTT and ADGM’s latest MENA Fintech Venture Report confirms that fintech is the most active industry for startup investments, with $237 million and 181 deals from 2015 to 2019. Fintech accounted for 17 percent of deals closed during the first half of 2019 alone.

Which fintech solutions are reaching the market?

Aligning with global trends, fintech solutions in the Arab world are primarily about payments, whether with or without a store-of-value option. Payments companies represent close to 40 percent of the fintechs identified in the region, with international remittances counting for less than 1 percent. Software solutions aimed at improving financial service providers’ operational efficiency represent the second largest group, typically consisting of solutions like enterprise resource planning, client relationship management or chatbots. InvesTech, financing, and RegTech solutions form the third group of products. InsurTech solutions remain rare, although a staggering 99 percent of the population does not have access to insurance.

Who are fintechs targeting in the Arab world?

In a region where access to financial services is far from universal, it is not surprising that slightly over half of emerging solutions target the mass market, whether individuals or companies, without further distinction or industry focus. As regulatory bottlenecks remain a primary concern in several countries, a number of business-to-consumer (B2C) companies have ended up switching to business-to-business (B2B) or business-to-business-to-consumer (B2B2C) models.

How many of these new fintechs are likely to survive?

Survival rates are hard to compute, especially given how difficult it can be to open or close a business in the region. The World Bank Doing Business 2019 score for the Middle East and North Africa is of 58/100, far below the OECD average of 78/100. Very preliminary findings seem to suggest a better survival rate for fintechs than for the average startup in the region and beyond. This echoes the 63 percent survival rate highlighted in Wamda’s 2017 research on fintech.

Do these fintech solutions matter for financial inclusion?

With payment solutions in the lead and transactional accounts dominating the B2C offering, the solutions we’ve identified to date set the stage for a future uptake of formal financial services. Almost all require either a smartphone or Internet access, which might be an issue for low-income consumers in the short run. Providers should, however, be able to serve the mass market in the medium term given the high and rising penetration of smartphones. GSMA indeed expects 74 percent of all connections in the region to be initiated from smartphones by 2025.

A lot more still needs to happen for these emerging trends to materialize into substantial and tangible gains for the Arab world. Dialogue with regulators needs to improve, and the establishment of regulatory sandboxes or fintech hubs in a number of countries is an encouraging sign in this regard. The most critical task ahead is perhaps the scaling up of existing B2C operations and the establishment of partnerships for B2B-focused fintechs. Going forward, CGAP aims to identify top performers and to build bridges between the financial inclusion community and the dynamic fintech space in the region. Stay tuned for more in the coming months.

For a more in-depth look at the fintech landscape in the Arab world, see the slide deck "Fintech Landscaping in the Arab World" (CGAP, 2020).



Based on pilots with 18 fintechs across Africa and South Asia, this paper identifies emerging fintech innovations with potential to improve the lives of the poor. It also highlights common challenges faced by early-stage fintechs.

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