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FinTech Surge in MENA: 5 Key Enablers Driving Growth in the Industry

The Middle East’s FinTech ecosystem, though relatively young, has experienced remarkable growth since the establishment of its first start-ups in 2015. Today, the MENA region hosts over 800 FinTech startups valued collectively at $15.5 billion, with the majority based in the United Arab Emirates.

A report by MAGNiTT highlighted a staggering 183% year-over-year growth in funding for MENA FinTech startups in 2021, marking the highest annual growth rate in the past five years. Furthermore, predictions from Saudi Arabian technology venture capital indicate the emergence of 45 unicorns worth over $100 billion by 2030.

Let’s explore the five key enablers driving this exponential growth in the MENA FinTech industry.

  1. Government Initiatives

Government reforms and initiatives have played a crucial role in fostering the FinTech ecosystem in the MENA region. Middle Eastern governments are actively promoting privatization, increasing public-private partnerships, and monetizing infrastructure assets to drive financial inclusion. By implementing FinTech-friendly regulations, they support the growth of home-grown startups and attract global players. Regulatory sandboxes across the region have been established to facilitate the adoption of digital financial solutions, further accelerating FinTech growth.

For example, the UAE and Saudi Arabia have been at the forefront, launching initiatives such as National Instant Payments Platforms (IPPs) to digitalize payments and enhance financial inclusion. This supportive regulatory environment has been instrumental in creating a fertile ground for FinTech innovation.

  1. Financial Inclusion

One of the primary drivers of FinTech growth in the Middle East is the urgent need to address financial exclusion. Over 70% of the population in the region does not have access to traditional banking services. FinTech startups have emerged as a solution to bridge this gap, offering innovative financial products and services where traditional banks have struggled.

The launch of instant payment platforms by the UAE and Saudi Arabia’s central banks exemplifies the region’s commitment to enhancing financial inclusion. These platforms aim to streamline and digitalize payments, making financial services more accessible to a broader population.

  1. Demographics

The MENA region boasts a young and tech-savvy population, which has been a significant factor in the growth of the FinTech sector. With over 450 million people, more than half of whom are under 25 years old, the region represents a vast market of potential customers who are eager to adopt new technologies. This youthful demographic is driving demand for digital financial solutions, creating a robust market for FinTech startups.

High mobile penetration rates further support this growth. The Middle East has achieved 100% mobile penetration, providing a solid foundation for FinTech companies to reach a large and receptive audience. As digital natives, this young population is more likely to embrace innovative financial technologies, fuelling the expansion of the FinTech sector in the region.

  1. Investment and Funding

The influx of investment and funding into the MENA FinTech sector has been another critical enabler of growth. In 2021, the region saw a 183% increase in funding for FinTech startups, indicating strong investor confidence in the market’s potential. This surge in investment has provided startups with the necessary capital to scale their operations, develop new products, and expand their reach.

The rise in funding has also led to an increase in the number of financial firms in the region. As of February 2022, the MENA region was home to more than 3,600 financial firms, a 25% increase from the previous year.

  1. Infrastructure Development

The development of robust infrastructure has been fundamental to the success of the FinTech industry in MENA. Governments have invested heavily in building the necessary infrastructure to support digital financial services. This includes high-speed internet connectivity, secure payment gateways, and regulatory frameworks that ensure a safe and efficient financial ecosystem.

For instance, the establishment of digital-only banks and the introduction of blockchain technology for secure transactions are examples of how infrastructure development is driving FinTech growth. The conducive environment for innovation in the region, is attracting both local and international FinTech companies.

As these enablers continue to evolve and strengthen, the MENA region is poised to become a global hub for FinTech innovation, offering exciting opportunities for startups, investors, and consumers. Much like Cedar-IBSi FinTech lab, which has been home to global technology companies who need a “soft-landing” opportunity into MENA and India. Join the FinTech Lab to tap into the Middle East banking technology today.

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BankTech in India: Transitioning beyond transactions to innovative interactions

Well, there was a time when banking in India was a bit of a challenge, but then came along BankTech and revolutionized the customer experience and transformed the way banks operate. Due to the advancements in BankTech we now live in a world where you can easily access your bank for all your needs, thanks to improved products, services, and technology.

With globalization and digitalization, Indian banks leveled up big time. They have become more competitive globally, offering better services to everyone. The secret sauce of course is BankTech – a mix of advanced technologies making banking smoother and more efficient.

Now, technology-driven banks are on a roll, planning to bring even more awesome stuff for customers. The next-gen technologies are like superheroes, strengthening the banking sector and keeping it up to date in our fast-paced digital world.

“FinTech” and “BankTech,” are way more than fancy jargon… they are like magic spells, transforming the financial landscape of India. In this exciting tale, we also shine a spotlight on B2B FinTech startups – the heroes behind the scenes, driving innovation and making banking in India a truly remarkable story.

Now, what sets these heroes apart is that they represent a significant shift in how financial institutions operate. No longer confined to traditional, rigid banking technology setups, they now embrace agile, cloud-based solutions. These solutions prioritize speed, customization, and security, ushering in a new era of banking excellence.

The worldwide move toward integrating cloud services into next-gen core banking and micro-services architecture is fueled by consumer expectations for seamless experiences and groundbreaking solutions. Cloud technology empowers banks to effortlessly scale APIs, pinpoint areas for enhancement without system-wide disruptions, and consistently elevate their services.

Indian banks have adopted technology-driven solutions aimed at boosting revenue, improving customer satisfaction, streamlining costs, and mitigating enterprise risks. However, the effectiveness of these initiatives varies across banks due to differences in their technology implementation strategies. Various players in the banking sector encounter challenges related to enhancing the value of core banking operations, modernizing digital initiatives, transitioning from data accumulation to actionable insights, adapting to evolving risk management practices, transitioning from cash-based to electronic payment systems, addressing issues related to financial inclusion, empowering employees, and fostering innovation.

In this tech-forward landscape, startups focusing on micro-solutions and targeted improvements are pivotal in driving innovation within financial institutions.

Recognizing this necessity, Cedar-IBSi Capital has introduced initiatives like the FinTech Lab and supporting programs, with the aim of supporting early-stage and pre-Series-A companies in the FinTech and BankTech sectors. Drawing from the insights gained through our operations in Dubai, we are enthusiastic about expanding our presence in India to further our mission of fostering innovation in the financial domain.

If you’re interested in meeting our team, feel free to reach out to us.  Let’s come together and explore how we can collaborate to shape the future of banking technology.

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Cedar-IBSi FinTech Lab: Success in 2023, ambitious expansion in 2024!

The Cedar-IBSi FinTech Lab is a robust community of global banking and financial technology enthusiasts aspiring to be the future of FinTech. The Lab has demonstrated remarkable success in incubation through strategic partnerships, diverse events, and a supportive ecosystem in 2023. Marking a successful year of growth, we welcomed:

Over the 5 years of its existence, the Cedar-IBSi FinTech Lab has repeatedly demonstrated a clear commitment to building a robust global community. The Lab’s multi-faceted offerings cater to FinTechs at various stages of their lifecycle, providing a comprehensive set of benefits to Lab members. Its thriving community provides start-ups access to cutting-edge technologies and global networks and creates an environment conducive to innovation, collaboration, and growth. The year 2023 also saw the Lab in partnership with key international organizations and play host to a series of event bringing its community together:

4 Ecosystem Partnerships: DIFC, START AD, AFN, SINE IIT Bombay

  • Events: 4 Round Tables, 4 Advisory Sessions, and 1 FinTech Happy Hour

The Lab’s achievements in 2023 showcase its commitment to fostering a vibrant FinTech ecosystem, making it an attractive choice for those looking to be at the forefront of financial technology innovation.

Growth in membership

Adding new members, including Coforge, NetGuardians, Intellect Design Arena, Gieom, Tesselate, Veefin, IDA, Clayfin, and Neokred, reflects the growing ecosystem within the Cedar-IBSi FinTech Lab. This influx of diverse talents and perspectives contributes to a rich and dynamic collaborative environment.

Strategic technology partnerships

The lab has established partnerships with 7 prominent technology companies, namely Asana, Digital Ocean, GitHub, Hubspot for Start-ups, Notion, Nvidia, and Zoho for Start-ups. These partnerships provide access to cutting-edge technologies and facilitate knowledge exchange, fostering innovation and growth for all involved.

Ecosystem partnerships

The Cedar-IBSi FinTech Lab has forged alliances with 4 key ecosystem partners – DIFC (Dubai International Financial Centre), START ADAFN (African Fintech Network), and SINE IIT Bombay. These partnerships broaden the lab’s reach, offering unique opportunities for collaboration, mentorship, and market exposure.

Community engagement & global recognition

The Lab has engaged with its community through various events, including Round Tables, Advisory Sessions, and a FinTech Happy Hour. These events serve as platforms for knowledge sharing, networking, and collaboration, fostering a vibrant ecosystem that accelerates the growth of start-ups and nurtures innovative ideas.

The Cedar-IBSi FinTech lab is a hub for innovation, providing an environment where start-ups can thrive. The Round Tables and Advisory Sessions contributed to the exchange of ideas, insights, and expertise, furthering the collective knowledge of the lab members.

The FinTech Happy Hour is a testament to the Lab’s commitment to creating a supportive community. This networking event allowed members to connect, share experiences, and explore potential collaborations, fostering a sense of camaraderie within the ecosystem.

Through partnerships with internationally recognized entities such as DIFC and participation in events like AFN, the Cedar-IBSi FinTech Lab has built global recognition. Being part of the Lab gives start-ups a unique opportunity to access global markets and establish an international presence.

Coming in 2024: Mumbai Lab evolution

The Mumbai Lab, currently a satellite hub, is gearing up for a significant change – soon, it will have its own physical space in the city. This move is about making it easier for Moonshot Accelerator portfolio companies and lab members to work together. The new location will be a hub for sharing ideas, speeding up projects, and learning from each other. It’s a step towards more collaboration, helping everyone involved in the Moonshot Accelerator make exciting advances in technology and business.

Angleen Malik, Director at the Cedar-IBSi FinTech Lab, said: “The Cedar-IBSi FinTech Lab was established to bring relevant BankTech industry leaders together under one roof to foster collaboration. 2023 has been a year of experimenting with various new formats of sessions and deliverables and forging robust technology and ecosystem partnerships in the industry. The new technology partners credit program now enables Lab members access to $21,000 worth of credits for various products. The ecosystem partnerships allow the Lab members to access multi-dimensional and global networks and knowledge.”

Malik added: “We aim to continue delivering value to our Lab members by providing them soft-landing opportunities through market access and intelligence, knowledge access, visibility, and resource access. The FinTech Lab calendar for 2024 is power packed with 4 external industry expert hours, 4 bankers’ round table discussions, 4 advisory sessions, and 5 FinTech Happy Hours. If you’re an early or a growth stage BankTech company looking to unlock growth, reach out to the Lab team. We would love to chat and support your market expansion journey.”

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Unleashing FinTech’s Soaring Potential: 2024 and beyond

The future of FinTech in India in 2024 and beyond will be characterized by deeper financial inclusion, innovative solutions, increased digitization, and greater accessibility to financial services for all. Technology, especially smartphones, will be a driving force in connecting a more extensive customer base with a wide array of financial products and services, ultimately improving the overall financial well-being of individuals and businesses across the country.

Cedar-IBSi FinTech Lab and Cedar-IBSi Capital (SEBI AIF), with Cedar-IBSi’s in-house 500+ years of cumulative experience in advancing FinTechs and banks are poised to play a pivotal role in fostering an environment conducive to growth, collaboration, and cutting-edge financial technology solutions. At the recent Cedar-IBSi FinTech Happy Hour, there was unanimous agreement that financial technology will persist in its expansion, delving deeper into tier 2 and tier 3 cities. This expansion is foreseen to unveil more significant business opportunities driven by technological advancements and the omnipresence of smartphones. As a result, FinTech is strategically positioned to tap into a broader customer base in these cities.

G Aswin, VP – Strategy Innovation at Protean, emphasized the role of emerging technologies in reinforcing India’s FinTech ecosystem, “As we progress beyond traditional AI, we are venturing into neural networks, particularly for post-trade operations. Once considered cutting-edge, Robotic Process Automation (RPA) has become outdated due to its high initial investment, ongoing maintenance, and service requirements. In contrast, neural networks are gaining traction alongside blockchain technology. It’s crucial to create awareness about the advantages of blockchain technology in India, especially as foreign governments are embracing it enthusiastically.”

Reflecting on the strides made in 2023, where partnerships flourished, fostering collaborative innovation, we now focus on the horizon of 2024. Anticipating the trends that will shape the FinTech landscape, let’s preview what lies ahead in the ever-evolving intersection of finance and technology.

Unleashing FinTech's Soaring Potential: 2024 and beyond

Here’s a glimpse of what FinTech will look like in 2024 and beyond:

  1. Widespread Financial Inclusion: FinTech will play a pivotal role in bringing financial services to previously underserved populations in India, particularly in tier 2 and tier 3 cities. With the help of smartphones, mobile banking, and digital wallets, people in remote areas have improved access to banking, payments, and credit services.
  2. Innovative Payment Solutions: Cashless transactions will become more prevalent, and new payment methods will emerge. This may include seamless peer-to-peer payments, digital currency adoption, and contactless payments. Customers can expect faster, safer, and more convenient payment options.
  3. Personalized Financial Services: FinTech companies will leverage data analytics and AI to provide highly personalized financial solutions. Customers will receive tailored advice and products based on their financial goals, risk tolerance, and spending patterns.
  4. Wealth Management for All: Robo-advisors and automated investment platforms will continue to grow, making it easier for people to invest and manage their wealth. This will not be limited to the affluent but extend to the broader population.
  5. Insurance Innovation: Insurtech will revolutionize the insurance industry. FinTech will offer on-demand, pay-as-you-go insurance, using data from various sources to provide more accurate risk assessments. Claim processing will be expedited, making insurance more accessible and efficient.
  6. Blockchain and Digital Currencies: Cryptocurrencies and blockchain technology will continue to gain momentum. They will not only serve as alternative investments but may also find applications in cross-border remittances and settlements. Central bank digital currencies (CBDCs) may also make their debut.
  7. Regulatory Advancements: Regulatory bodies will adapt to the changing landscape. There may be more comprehensive guidelines for FinTech companies, including those involved in lending and payment processing. Regulatory sandboxes will continue to encourage innovation while ensuring consumer protection.
  8. Collaboration and Partnerships: Traditional financial institutions will increasingly partner with FinTech companies to offer a broader range of services and enhance their digital capabilities. This synergy will result in a more comprehensive and seamless customer experience.
  9. Cybersecurity and Data Privacy: With the increasing reliance on digital financial services, cybersecurity will be a top priority. FinTech companies will invest heavily in protecting customer data and transactions, and regulations around data privacy will continue to evolve.
  10. Global Expansion for Indian FinTech: FinTech firms in India will look beyond domestic markets, expanding into international markets and collaborating with global players. This globalization will provide opportunities for Indian FinTech firms and contribute to India’s status as a FinTech hub.

The future of FinTech in 2024 and beyond is poised for significant growth and transformation, driven by a confluence of technological advancements, changing consumer behavior, and regulatory developments.

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10 Reasons why your FinTech Needs the Transformative Power of Labs & Incubators

During the recent FinTech Happy Hour, hosted by Cedar-IBSi FinTech Lab and Cedar-IBSi Capital (SEBI AIF), founders, investors, and CXO executives from FinTech, BankTech, and BFSI institutions, came together to exchange ideas, network, and collaborate on Everything FinTech!

One topic that echoed in the room was the importance of labs and incubators in India and the role they can play for FinTech companies.

In the rapidly changing FinTech landscape, the demand for guidance, mentorship, and strategic connections is essential. The Cedar-IBSi FinTech Lab is one such powerful catalyst driving these ideas towards unrivalled success since 2018 when it was set up in Dubai’s Internet City. The Lab not only cultivates invaluable mentorship but also forges highly lucrative connections within the FinTech industry.

Talking about the potential of labs and incubators, Geeta Chauhan, Co-founder, and CEO, HiWi noted, “Incubation and lab programs are particularly useful for startups with no experience or who are starting from scratch. FinTech(s) can take advantage of mentorship programs, a set of contacts and funding that ensure they get the right foot in the door.”

Here’s how labs and incubators are revolutionizing FinTech in India.10 Reasons why your FinTech Needs the Transformative Power of Labs & Incubators

  1. Mentorship and Guidance: Labs and incubators provide access to experienced mentors and industry experts who can offer valuable guidance and insights. This mentorship can help FinTech startups make informed decisions and navigate the complexities of the financial industry.
  2. Validation and Credibility: Being a part of an established incubator or accelerator program can add credibility to a FinTech startup. It validates the business idea and can make it easier to gain trust from potential partners, customers, and investors.
  3. Networking Opportunities: Accelerator programs like the Lab offer an extensive network of contacts in the FinTech and financial services sectors. Startups can connect with potential customers, partners, and investors, which is essential for growth and success in the FinTech industry.
  4. Product Development Support: Many FinTech startups need technical assistance and support for product development. Incubators, such as the Cedar-IBSi FinTech Lab can offer access to development teams, resources, and infrastructure to help in building and refining products.
  5. Market Research and Validation: Incubation programs often provide access to market research data and opportunities for market validation, enabling FinTech startups to fine-tune their offerings to meet customer needs.
  6. Fundraising Opportunities: Incubators and accelerators can introduce FinTech startups to potential investors, refine their pitch and business model, making them more attractive to investors. Many incubators and accelerators provide direct funding to early-stage startups in the form of grants, equity investments, or loans.
  7. Cost Savings: Shared office space, resources, and infrastructure can significantly reduce the operational costs for startups, allowing them to focus their financial resources on product development and growth.
  8. Skill Enhancement: These programs often offer training sessions and workshops that help FinTech entrepreneurs, and their teams enhance their skills in various areas, including marketing, sales, and leadership.
  9. Risk Mitigation: By providing a supportive ecosystem, labs and incubators can help FinTech startups identify and mitigate risks early in their development, improving their chances of long-term success.
  10. Market Entry Assistance: For FinTech startups, entering the Indian market can be challenging due to the diverse customer base and regulatory environment. Incubators can provide market entry strategies and assistance.

The Cedar-IBSi FinTech Lab is a dynamic entity propelling FinTech companies towards their target market. It has a proven track record in assisting 35+ FinTechs since 2018, offering market access and collaboration; product and market intelligence via the Cedar-IBSi Platform; visibility via exclusive in-house, global events, leadership interviews, coverage via the IBSi Podcasts and in the IBSi FinTech Journal; Acceleration and access to interesting co-investment opportunities via Cedar-IBSi Capital (SEBI AIF).

For FinTechs in the Middle East & India, the Cedar-IBSi FinTech Lab is not just a place for mentorship: it’s a hub. A hub that fosters a culture of creativity, facilitating FinTech startups to think outside the box and develop groundbreaking solutions.

Labs & incubators are thus the perfect partners in your FinTech journey to realize the true power of transformation, innovation, growth, and limitless possibilities.

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