Fintech & Blockchain in MENA the race for digitization
Born amidst the crisis and designed to breed innovation, Blockchain emerged as a viable alternative to the traditional financial systems in 2008, when the world was paralyzed by the financial market crash. With the slow emergence of national digital currencies, certain people doubt Blockchain’s ability to achieve global prominence, but Blockchain’s strengths are digital currencies’ weaknesses, so it has the chance to solidify its position as an alternative, fair payment method. Free from inflation’s whims and international politics’ impact on the exchange rates, Blockchain may be the antidote to the present political and economical uncertainty, but will the post-pandemic world give Blockchain a green light? Let us explore the complexities of the Blockchain system and FinTech landscape in Saudi Arabia and the United Arab Emirates, where innovation is the economy’s latest theme. The insight used in the article is based on the conversation between Pawel Sobotkowski (FinTech & Financial Services Consultant) and Taha Sajid (Thought Leader).
Numbers do not lie: Blockchain’s potential to become the technology of the future is undeniable. According toStatista,global spending on Blockchain solutions is expected to grow from 2,7 billion U.S. dollars in 2019 to 15,9 billion U.S. dollars in 2023. Blockchain’s no longer a business option to consider, as entrepreneurs slowly move towards the era of full Blockchain adoption, investing in intelligent solutions to create value for their companies. Already seen as one of the top 5 business strategic priorities in 2019, Blockchain has captured the world’s attention as a pragmatic tool to solve real business problems and improve companies’ internal working processes.Deloitte’s report on “5 Blockchain Trends for 2020” found that 40% of respondents are planning to invest more than 5 million in Blockchain solutions within the next year, and 86% of companies in the USA and 70% globally are already building Blockchain teams for Data Validation, Data Access & Sharing, and Identity Protection. Fintech’s industry numbers are just as impressive: according to KPMG’s“Pulse of Fintech H2 2019” Report, global Fintech investment in 2019 exceeded 135 billion US dollars across 2693 deals, and the numbers are expected to significantly grow in the upcoming years due to the global digitalization.Findexable’s “The Global Fintech Index 2020” report suggests that by 2022, 60% of global GDP will be digitized, which creates enormous possibilities for FinTech. Interestingly, the same report states that half of the top 100 leading FinTech cities are in the emerging markets, which paints a bright picture for the rising market players, such as Middle Eastern countries. The current crisis is a great chance for investors with enormous cash reserves to take advantage of devalued assets and expand portfolios, especially in the regions, where economic models shift. How does FinTech and Blockchain adoption impact Saudi Arabia’s and the UAE’s business ecosystems?
Middle East’s position in the FinTech world has been steadily improving over the years, and the United Arab Emirates was ranked 34th in the Fintech Country Rating with Dubai ranked as one of the Fintech’s leading cities. The country’s FinTech industry is booming, as according to the previously mentionedFindexable’s report on Fintech ”The UAE accounted for 47% of all fintech deals in 2019 with nearly half the region’s FinTechs based there”. In comparison, Saudi Arabia’s Riyadh ranked as 7th FinTech city in the region, behind Cairo and Beirut, but given that it entered the Fintech race relatively recently, its rapidly growing importance is a good sign for the country. The National transformation plan initiatives for 2030 encourage innovation and provide investors with excellent opportunities, and regulatory benefits. With 33,7 million population, compared to UAE’s 9,6 million, and improved laws, Saudi Arabia is the business empire in making. The latest reforms made it easier to start companies, obtain permits, and trade, which encourages international trade, and partnerships between global players and local businesses.
The pandemic has highlighted the need for digital transformation and upcoming mass Blockchain adoption and shifts towards FinTech solutions are likely to benefit emerging markets. When systems change, so does the world’s architecture and countries with the best digital infrastructure may quickly rise to global prominence. Could Saudi Arabia and the United Arab Emirates become new FinTech empires?