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According to a report by Qatar Financial Centre and Refinitiv, investors stashed $30.4B in global fintech investments in the first 9 months of 2020.
Despite 2020 being characterized by economic chaos and market crashes, investors still managed to invest $30.4B in the fintech industry according to the Qatar Fintech Report 2021. The report especially highlighted the exponential interest growth. In 2008, global fintech investments stood at $1B. In a few years, this has gone to over $30B. It is also evident that investors are seeing great potential in the Middle East and North Africa (MENA) region.
In 2019, the MENA region accounted for only 1% of investments. But several developments especially in the Middle East in recent months has been an indication of the great untapped potential in the region. Accelerated development of the fintech ecosystem has made the region a fintech hotbed. Furthermore, the 2020 pandemic called for accelerated development and digitization of the industry.
Middle East Luring Fintech Investments
The Middle East is however ahead of North Africa with 70% of fintech companies going to the UAE. Looking at the 2020 largest investments, the UAE has been aligning itself to attract these fintech investments. The largest investments included payments, VC funding, banking and digital market solutions. For traditional financial institutions, it’s evident that innovation is an eventuality. Failure to which they will be left behind or rendered obsolete.
Chief Executive Officer of Qatar Financial Centre, Yousuf Mohamed Al-Jaida, noted that the pandemic offered a unique opportunity. And a need for financial innovation. The CEO noted:
The outbreak of the Covid-19 pandemic created new opportunities for financial innovation, which has attracted an influx of tech and FinTech companies seeking to set up operations in Qatar. The country offers FinTechs worldwide substantial opportunities domestically as an unsaturated market with ICT spending expected to reach $9 billion by 2024, boosting the competitiveness of its market and strengthening its position to emerge as a FinTech hub in the region…
Managing Director, Middle East and Africa, Nadim Najjar, also spoke on the report pointing out the Gulf was especially well-positioned to adopt fintech in the MENA region because of its above-average GDP per capita, high internet and online payment penetration. The director further added that traditional financial institutions needed to recognize that customers were increasingly preferring digitized services.
In global fundings, MENA recorded a slight increase between 2019 and 2020. The year 2019 saw around 70 deals averaging $15 million. In contrast, 2020 saw an increase to 72 deals with an average of $21.5 million.
Predictably, the US records the largest fintech investment. In 2019, 51% of VC-backed investments were from the US while Asia and Europe accounted for 20%and 19% respectively.