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Denys Boiko: GCC poised to lead the way in fintech

The incentives are abundant for GCC countries to focus on and grow their fintech sectors

Countries that form the Gulf Cooperation Council (GCC) are well placed to lead the world’s fintech evolutions in the coming years, with the UAE in particular poised to drive growth within the sector. While global fintech investments reduced by some 48 per cent in 2023, the UAE was able to attract a remarkable 92 per cent jump in funding during that same period. Regulatory changes are a key part of the picture, with governments in the UAE and elsewhere across the region taking steps to proactively encourage and support fintech investments and innovation.

Shifting dynamics and diversification

Countries in the GCC region all have youthful populations, 55 per cent of people living in MENA are under the age of 30. Population levels in GCC countries are also expected to increase dramatically in the coming decades, with Dubai alone aiming to take its population from 3.8 million in 2020 to almost six million by 2040.

Younger generations are generally more likely to engage with digital banking technologies, whether for personal banking, borrowing, payments, or business-use purposes. Smartphone penetration across the GCC is also higher than global norms at 96 per cent but there remain millions of unbanked individuals in the region. With regional governments eager to diversify their economies away from energy sectors, the opportunities for fintech startups and investors are self-evident and set to expand rapidly.

Regulatory overhauls

Fintech and banking sector activity is viewed generally by GCC governments as likely to be an essential contributor to broader economic and societal advancements. The UAE announced a regulatory overhaul in late 2020, with the impact of the reforms having proven quite spectacular. Having bucked global trends and posted a 92 per cent upturn in fintech investments during 2023, there is every expectation that the UAE’s burgeoning fintech sector will continue to grow strongly.

Crucially, redrawn regulatory structures have seen ‘sandboxes’ officially sanctioned in the UAE to allow for robust testing of emerging financial technologies and the creation of a more open banking model. There has also been the creation of a ‘digital Dirham’, an official cryptocurrency backed by the national bank. Also, major public investments have been made into digital lenders such as Wio Bank, which became the UAE’s first platform bank.

Challenges

There have been challenges to fintech developments arising from the connection between banking activities and religious considerations. Nonetheless, there are also huge opportunities for fintech players in the region to deliver solutions that meet the needs of and appeal to Muslim consumers.

Perhaps the key challenge to fintech’s advancement as a sector across the GCC is the supply of relevant skills and expertise. Such considerations will likely be a consistent focus for decision-makers across the region as they pursue their ambitious goals to drive ever-greater accessibility to the latest in digital banking, credit and financial solutions.

GCC's Fintech Future — Denys Boiko's Perspective

Denys Boiko, an experienced European entrepreneur, founder of Erglis investment company and banking professional, is in no doubt about the prospects for the fintech sector in the region.

“The potential in the fintech sector in the GCC region right now is virtually limitless,” he says. “These countries are focused on and committed to supporting fintech investments and innovation like never before. Their young populations are ready for what fintech solutions can bring and the need for these nations to diversify their economies means the momentum behind these markets currently is enormous.”

The incentives are abundant for GCC countries to focus on and grow their fintech sectors. UnaFinancial analysis suggests that fintech and digital banking will make an increasingly major contribution to the overall well-being of people living in the region. Fintech-related advancements are expected to help boost per capita contributions to GDP by 2030, most notably in the UAE but also in Saudi Arabia and Bahrain.

Boiko is optimistic: “There are few places globally better placed as hubs of digital, fintech innovation right now than the GCC. There’s no doubt that developments, particularly around AI and machine learning, will continue apace and the benefits for people living in these countries will be tangible. For investors and innovators, the opportunities across the GCC around fintech are there to be seen and to be seized upon.”

—Ahmed Al-Farsi is a professional writer based in Dubai, specializing in finance, banking, fintech, and related subjects. The views expressed are solely his own and do not reflect the newspaper's policy.