2018 - 2019 Edition of Citi Perspectives for the Public Sector

26 2. Fintech is the new oil in the Middle East and North Africa In the Middle East and North Africa (MENA), fintech is coming of age with regulators and governments across the region thinking deeply about the impact that it will have on the wider economy. While fintech in MENA lags Europe and the U.S., it is growing fast as digitization of banking and financial services gathers momentum: more than $100 million has been raised by start-ups in the region in the last decade and some believe fintech could become as great a force in the Middle East as oil. Certainly, fintech has become the biggest disrupter of traditional banking, prompting a race to innovate and, for some, a race to collaborate on digital financial services. This comes at a time when governments across the region are accelerating their investment in national payment systems (i.e., faster payments) and financial market infrastructure (i.e., eFawateer and Fawry) which is leaving the region poised to leverage new request-to-pay techniques and significantly increase digital payment activity. Countries are pursuing different paths While 2017 was a record year for digital investments in the region, there is a wide variation between countries. For example, the UAE has taken the lead in adopting digital financial services solutions and has among the most advanced digital technology infrastructures within the GCC. Meanwhile, the public sector has been keen to nurture this burgeoning ecosystem and develop the right digital infrastructure through spending and attracting private investments. Home to the largest fintech sector in the region, Dubai has seen a surge of interest from fintech startups because of its location, availability of private investment and innovation. Neighboring cities in the region are catching up as well. Egypt launched two accelerators to nurture startups and Abu Dhabi created the region’s first “regulatory sandbox,” allowing new products to be tested without full regulatory compliance. Bahrain and Qatar also launched their own regulatory sandbox programs and held fintech conferences, while Lebanon invested significantly in its digital economy. Public and private partnerships to build digital money solutions Given the needs of the growing refugee and internally displaced populations, strategic partnerships are arising between the public and private sectors. Often shut out of traditional modes of finance by account minimums, identification requisites or expectations of a fixed address, refugees often resort to their own informal social networks for help. The Central Bank of Jordan, aware of these structural barriers, launched the Mobile Money for Resilience (MM4R) initiative with support from the Bill and Melinda Gates Foundation. The initiative intends to digitize cash assistance by funneling it into a comprehensive mobile account equipped with money transfer, digital payment, saving and credit services. Ultimately, it aims to use electronic money for cash assistance in order to strengthen the digital financial services industry while supporting local economic development. Bahrain and Qatar also launched their own regulatory sandbox programs and held fintech conferences, while Lebanon invested significantly in its digital economy. Banking without Barriers: Digitization across Africa, Middle East and Asia