In the MENA, the fintech industry is expected to hit a record valuation of $3.45 billion by 2026. A recent report by consultancy firm Deloitte also states that the UAE houses over 50% of the region’s fintech companies, with nearly 39% of the population using fintech for P2P money transfer. According to a report by Crowd Funder, a leading online source for the fintech industry, the number of financial technology companies in the Middle East increased from around 105 companies in 2015 to 250 firms in the year 2021.
UAE, Saudi growth in finance app installs
AppsFlyer, a global marketing measurement leader, released its 2021 edition of The State of Finance App Marketing which showed that financial technology (Fintech) apps are in high demand, experiencing a 132% leap globally in downloads in the last two years. Finance installs rose by 55% in the UAE and 73% in Saudi Arabia year on year.
Shani Rosenfelder, Head of Content & Mobile Insight, AppsFlyer said, “Marketers should strive for efficiency with their spend by following the rising Clicks Per Install trend and focusing on user acquisition to meet new demand.”
Marketers in the Middle East spent $95 million on user acquisition in 2020.
Since Q2 2020, when COVID lockdowns began, the number of Finance apps investing in marketing increased by 27% in the Middle East.
Marketing drives the majority of finance app installs in the Middle East and Turkey, with 62% coming from paid marketing campaigns.
Globally, digital banking installs were up 45%, while traditional banks gained 22% in 2021.
There was a 3.3x growth in the number of remarketing conversions between Q1 2020 and Q1 2021.
Samer Saad, Regional Manager, Middle East, AppsFlyer said, “With marketing being a primary driver of installs, and the amount spent on user acquisition increasing, we can expect UAE fintech marketers to continue running aggressive acquisition campaigns through the remainder of 2021.”
Regional innovation and fintech
Abdulrahman Hammad, Head of Private Equity and Venture Capital, Hammad & Al-Mehdar said that with numerous start-ups, increased funding, and enhanced government support, the fintech industry has all the elements it needs to thrive.
Related venture investments in the first quarter of 2021 increased 163% year on year.
The UAE recently announced the opening of the DIFC Innovation Hub, a welcome addition to the fintech infrastructure in the region and a reinforced commitment from the UAE government to nurture the growth of new and emerging industries.
“Already, approximately one in five active investors in the region’s fintech companies are from the US. Meanwhile, Middle East startups are breaking new ground. Tarabut Gateway, closed the largest ever seed investment round for a fintech company in MENA, after developing the first regulated (and largest) open banking platform in the region,” Hammad said.
What is even more compelling, he added is the breadth of companies that are operating in the space, “showcasing expertise in all aspects of fintech, including personal finance, mobile payments and transfers, P2P lending and microfinancing, crowdfunding, and accessible investing through the use of AI advisors.”
Banks & fintechs: To compete or to co-exist?
Praveen Chandiramani, CEO of WorkerAppz, wrote that since the formalization of monetary policies centuries ago, the space has seen a massive evolution from banking institutions moving purely accepting deposits & disbursing loans to increasing their focus on wealth management & value-added services for increased customer acquisition and retention.
“However, it was no secret that the banks earned the lion share of the profits from deposits but also left a large part of the society unbanked due to compliance procedures causing the public at large to have an unfriendly perception of banks,” Chandiramani said.
“The last decade has seen a surge in the number of fintech players and the pandemic has caused an acceleration in the fintech industry due to people looking at alternate payment methods and applications or tools that give back more to the users.”
He said that two such segments of the fintech world have taken the world by storm: Challenger banks and digital payments.
“A co-existent ecosystem between banks, regulators, and fintechs is what would create not just a customer-friendly environment but also, a regulated interface to maintain the integrity of the highly looked upon the industry. The current era is the time of instant gratification and audiences are a lot more aware than what they were in earlier decades.”
“As long as people migrate or travel, remittances and payments will continue to thrive and remain a necessity; of course, the mechanism and time involved in making these payments would definitely improve and get almost instantaneous but the crux of the business remains the same.”