Middle East fintechs will have to change their ways in chasing growth

Marwan Hachem

As a fintech founder, I have been watching the global economy and its likely impact on the Middle East, Africa and South Asia (MEASA) markets. While the region is a growing economy, the global economic outlook poses a significant challenge, especially for the tech industry.
For fintechs, it is critical to be an enabler of the broader ecosystem. Growing economies feel the effects at a slower rate, which leads to more frequent fluctuation, and the regional markets being more fluid. As a result, the business impact is much greater in the long term if companies are not prepared to weather a storm through adaptability and diversification.
This will for sure come to fruition for many startups this year. The fintech startups with singular product lines will suffer because their offering becomes too niche or has been already saturated by another player in a market like this.
Pressure to consolidate
This will result in a growing number of M&As in our sector. We will see more JVs between neobanks and lenders and as a result, the sector will streamline creating betting opportunities for both their businesses and their consumers. We must also consider that the crucial addressable audiences are both Generation Zs and the younger cohort of millennials, all of whom will turn away from an app or digital service that is not seamlessly integrating all their personalized needs into one platform. Therefore, multiple product-lines are essential to maintain growth this coming year. The MEASA fintech sector saw rapid growth for several reasons. The advancement of digital economies accelerated exponentially triggered by the pandemic. This also had a positive effect on mobile and internet penetration, enabling greater access to financial services for many.
With that came an increase in demand for financial services that can be accessed at a touch of a button, in the same way, one would order Deliveroo or book an Uber. Investments in the sector saw a significant rise as well, particularly in the first-half of 2022, reaching $819 million – more than the total in the whole of 2021 and 14 times more than in 2016, We saw fintech players rapidly scale their business and operations throughout the past year. As we reached the end of 2022 and the global market started to look uncertain, there was a lull in both investment and confidence in the sector on a macro scale.
To stay afloat, fintechs born into growing economies such as the Middle East need to be able to adapt in real-time and face challenges with a dynamic approach. The key to maintaining growth is to become an enabler of the ecosystem.
This is a model we at YAP set out to achieve and have followed since Day One. Collaboration is undeniably the way to expand and sustain success and we will likely see more partnerships this year. We are now on a mission to position ourselves as the future of digital banking for these specific markets, where on-demand and accessible financial services were almost non-existent before. We focus on providing solutions that meet the specific needs of the local market.
This can be achieved by understanding the local market conditions and tailoring products and services to meet unique demands.