FinTech Committee Market Analysis Report


Mr. Ali Hussein Kassim, Co-Founder & CEO, Kipochi
Mr. Mohammad Ridzuan Abdul Aziz, President, FinTech Association of Malaysia
Mr. Mohammed Kateeb, Group Chairman & CEO, Path Solutions
Mr. Mustafa Kuğu, Founder, FASTER Community
Mr. Salman Butt, Co-Founder & COO,

FinTech industry locally and globally: A global review of current issues and opportunities.

Countries all over the world have seen a sharp rise in FinTech adoption, with an increasingly ecosystem-driven approach towards managing consumer financial services.

The FinTech sector is experiencing explosive growth in both Africa and Asia, but while Asian banks have managed to efficiently integrate with FinTech solutions, African banks have been slower to adapt to this change. Although the African regulators are heavily promoting FinTech, but like Nigeria and Kenya there is a misunderstanding around FinTech, due to explaining the impact of FinTech only from a banking consumer perspective and not from a start-up perspective.

Africa continues to be the global leader in mobile money services, a position boosted by the COVID-19 pandemic, which forced people to turn to digital services as a safer transaction method than using cash. Half of the world’s mobile money services are in Africa.

The Africa FinTech space, which is home to over 300 FinTech start-ups, has recorded an impressive growth. However, it faces a number of issues such as lack of funding and poor regulations. It is worth highlighting that over 40 African countries are part of their countries FinTech associations.

Usage and subscribers for mobile banking as well as internet banking have increased noticeably in recent months in Malaysia with a plan to fully adopt 5G technology by 2023.

The role of the FinTech Association of Malaysia (FAOM) is vital to help FinTech start-ups and SMEs work hand in hand to close the gap between the underserved and financial services providers, while creating value to customers and key stakeholders to embrace a collective ecosystem via a digitalized business model and a new mindset.

Upon realizing that the financial literacy is the key reason for the growth of the FinTech sector in Malaysia, FAOM has produced a digital playbook to improve financial literacy, and help increase the visibility of local FinTech start-ups and companies. This digital playbook is used to educate not only investors who are unfamiliar with the FinTech industry, but also the general public on finance and technology. It facilitates the close connection between all stakeholders, which could help better understanding their requirements, actions required from each party to meet all stakeholders’ expectations. The digital playbook also describes the 5 pillars needed to build a healthy ecosystem, and which are:

Talent: Hiring bright talents, reskilling experienced talents.
Investment: Halal Money.
Narrative: Putting in place a comprehensive digital book for those who might know little about FinTech and for those who might be in tune with its developments.
Technology: Having an efficient and right technology.
GRC: Receiving a comprehensive and structured assistance from the regulators to enable FinTech start-ups to survive.

Very few MEA FinTech start-ups can reach the top 10 in terms of leading the world in Islamic FinTech, because they are country-based, and the majority of MEA countries are small.

The major issue in the MEA region and in the developing countries such as the Far East region is how to develop a FinTech that can cross-border and work well with all these regulations.

Supportive regulatory frameworks and incentives are regarded as critical drivers of the FinTech industry’s growth. Any FinTech ecosystem cannot survive without a clearly defined regulatory framework. While the adoption and implementation of FinTech legislation may be difficult for smaller emerging economies where the FinTech industry is still nascent, regulators must be proactive by issuing specific guidelines or amending existing ones to properly supervise the FinTech developments for consumer protection and regulatory clarity.

The need for a strong entrepreneurship education to create a healthy and solid ecosystem is fundamental. The majority of the entrepreneurs don’t have business plans on how to make money, and they only depend on funding.

The MEA region sits on a large pool of opportunities for FinTech start-ups, but a healthy and strong FinTech ecosystem requires all stakeholders to work together on problems, align their vision and support each other.

The number of FinTechs emerging in Saudi Arabia's financial services landscape is changing the face of the banking industry, as the FinTech sector continues to accelerate and expand across the globe.

A number of key developments have recently taken place to support the growth of the sector in Saudi Arabia, such as changing the name of the Saudi Arabian Monetary Authority (SAMA) to Saudi Central Bank, launching a framework for open banking to go live with this initiative in 2021, issuing e-invoicing regulations to come into force in December 2021, etc.

Large Saudi banks are tapping into the start-up ecosystem to create alliances on a variety of platforms such as e-wallets, e-commerce, e-payments, etc. They are seeing the FinTech as an enabler rather than a disruptor.

Closing Remarks:
FinTech has shown its abilities to close gaps in the delivery of financial services in both emerging and developing markets. Considered as one of the fast growing and developing industries, FinTech has won the fight to drive financial inclusion and resilience around the globe, and in putting customers’ changing requirements post COVID-19 at the heart of its innovation.

The FinTech associations in different countries benefit more the FinTech companies to develop and flourish when both serve as a platform for advocacy and coordinated regulatory interactions.

Written by:
Mrs. Danielle Karam
Manager - Corporate Communications
Global Corporate Communications & Marketing Department
Path Solutions