Fintech in the Gulf states: the new online mall?

Of the Gulf states, the United Arab Emirates (UAE), Bahrain, and Saudi Arabia have taken a central role in advancing the fintech revolution. This has seen regional governments encourage massive private sector investment in the region. And while these growth strategies are not without potential obstacles, the future of the fintech sector in the Gulf States still looks bright.

To accelerate growth in this sector, the six member states of the Gulf Cooperation Council, which includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, have developed high-level strategies for fintech ecosystems, in addition to to create a progressive regulatory framework. environment in areas such as cryptocurrencies, open banking, robo-advisory services, and regtech.

With this general background in mind, let’s take a closer look at the rise of the Gulf states as a hub for fintech development.

Who leads the charge?

Unsurprisingly, the UAE and Bahrain have been leading the fintech charge in the MENA region thus far, which is in line with their broader strategy of becoming a regional hub for doing business in the Middle East.

Dubai is performing particularly strongly and is currently one of the leading cities in the MENA region for fintech. According to the Findexable Global Fintech Index, it is among the top 50 cities for fintech worldwide. The Abu Dhabi Global Market has also been important, as well as the Dubai International Financial Center.

Similar programs have been launched in Saudi Arabia, through the Saudi Fintech Program within the Financial Services Development Program, and Bahrain, with its Bay fintech innovation hub.

These programs have been endorsed by both local governments and local regulators, including offering support and guidance in areas such as open banking, cryptocurrencies, and robotic advisory services.

However, with so much support present in so many different centers in the region, this has raised concerns that not all schemes may be viable. And with each center or hub trying to incentivize companies to do business there, there is a risk that they are simply competing for the same slice of the pie. This is a particularly pressing risk, given the growth of other fintech hubs such as London, Dublin, Luxembourg, Berlin, Amsterdam, and Paris.

Local specialties: developing a niche for the Gulf region

Although the Gulf states face stiff competition from other financial centers around the world, this does not mean that they cannot develop their own competitive advantages in a saturated market. What the financial centers in the Gulf states must do, then, is develop their own specialties that are uniquely served in the region and naturally attract investment.

This could be by creating a unique environment in which to do business that is not present anywhere else, such as creating a safe regulatory environment in which to develop new financial products and services. Or it could be developing expertise in a particular area, such as Islamic finance.

Islamic finance has understandably proven to be a particularly strong area of ​​development for the Gulf states. And as we can see with the Islamic forex account at AvaTrade, there are many new and exciting services being offered in the region.

The future of fintech in MENA: what lies ahead?

All that said, the future of fintech in the MENA region looks incredibly strong. The sector has experienced extraordinary growth in the region in the last two years.

At the core of this has been a real desire shared by the ruling powers in countries like the United Arab Emirates, Saudi Arabia, and Bahrain, not only to radically transform their economies, but also to change the business environment as a whole. And it is this combination of economic and cultural changes that will help drive growth in the region.

When combined with the broader move away from oil production and the rapid growth of tourism throughout the region, the future looks very bright for the Gulf states.

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