Gulf financial centers battle it out to be the region’s FinTech hub
LONDON: Gulf countries are vying to become the regional hub for fintech start-ups and entrepreneurs and are pouring money into educational campaigns; schemes to develop talent and trendy co-working spaces. The region is racing to catch up with the global tech hubs of London and Silicon Valley, as well as individual countries competing with their neighbors to be the most attractive destination for Fintech firms. In Dubai — typically seen as one of the region’s pioneers in fintech — the Dubai International Financial Center (DIFC) is set to accept applications from startup tech firms this month for the second round of ‘FintechHive,’ a 12-week talent mentorship program originally set up last year. This year the scheme is expanding its focus into Islamic finance and insurance. “We always want to make sure that we are looking to stay ahead of the trends and understand what the region needs so that we can provide an adequate framework to enable innovation to flourish,” said Amr ElSaadani, managing director and financial services lead for Accenture in the Middle East and Turkey. The US-based consultancy firm signed an agreement on May 5 with the DIFC to continue to back the DubaiHive program. Saudi Arabia has also ramped up efforts to secure a slice of the the fintech market with the launch of ‘FintechSaudi’ initiative last month. Bahrain launched its Bahrain Fintech Bay in February, a new co-working space that brings together startups, banks and other companies into one space. Both Saudi Arabia and Bahrain set up their own regulatory ‘sandboxes’ earlier this year, a concept which allows start-ups and companies to test out banking ideas and solutions in a ‘safe’ live environment without dealing with the burden of too much regulation. While barely a week goes by without a new launch, conference or seminar on the latest fintech innovations, experts warn there is still a lot of work to be done to help attract and keep firms working in the region. Rushdi Duqah, partner, consulting and operations at Deloitte, based in Riyadh, told Arab News that there was a need for Gulf countries to work more closely together, particularly on regulation. “The region is demonstrating strong commitment for fintech. It is seen as a strategic priority with each country has its own strategic positioning,” he said. “What I would like to see is how the different fintech hubs would collaborate with each other in the region, because there is more to do on that front than just being seen as competing (with each other),” he said. “Fintechs that emerge in one country would want to come and scale, operate and test in another country, and that collaboration would be something that would benefit both Fintechs and the countries in which they operate. Rather than companies having to reinvent the wheel every time they need to go to another country,” he said. Fintech firms told Arab News that regulation and access to financing were obstacles to growth. Craig Buchan, founder and CEO of Qpal, a mobile payment app company based in Dubai, said: “Early stage financing would be desirable. Challenges relate mainly to regulation, Know-Your-Customers (KYC) and access to finance. “The UAE government has great initiatives in place to transform Dubai into a global fintech hub, but until banks revise their risk propensity then early stage fintech’s may find it hard to get off the ground and make significant traction.” Qpal is a startup supported by In5, the Dubai-based tech incubator platform owned by the Tecom Group. Artemisa Jaramillio, professor of digital marketing, technology & innovation at the Princess Nourah Bint Adbulhahman University, said that those working in the fintech industry in Saudi Arabia must have a clear focus. “Urged by the NTP 2020, stakeholders have started to create a number of events, without a clear goal in mind. What are our success metrics? Are we only creating events to tick the box,” she told Arab News. “Are these real, scalable solutions or are we only following the trend of inflating our numbers,” she said. Adrian Quinton, head of financial services at KPMG in Saudi Arabia, said the fact that Saudi Arabia has lagged behind its peers could play to the Kingdom’s advantage as it strives to be a fintech hub. “Saudi Arabia is in a unique position where it can learn from global successes and achieve tangible results more efficiently and effectively,” he said.