How do you see the growth of the fintech sector in the Middle East region?
The growth of the fintech sector is driven by both regulation and innovation. Regulators have traditionally operated under a state or national rather than regional mandate. The move towards more homogeneous regional frameworks and the application of international standards can catalyze a wave of new fintechs not only in their home territory, but also regionally and even globally.
State-run sandbox programs are also essential for pre-startup, helping to incubate ideas and build camaraderie among fellow innovators to sustain growth. When it comes to financial services innovation, this also happens at the firm level,
where banks and physical institutions are turning to digitized models.
They even form their own fintechs, often operating under a different brand. Until now, competition has driven attitudes rather than collaboration – big banks’ ambition not to be left behind by agile startups has spurred incumbent organizations to improve their
There is a mobilization towards more efficient methods of operation, including faster and more convenient means of identity verification to speed up onboarding and conversion, prevent fraud and, of course, comply with changing regulatory requirements. /news.
When it comes to fintechs, they are learning from existing banks and using those lessons to shape the future and do things differently. While large banks have the strength of scale and large customer databases, startups benefit from the ability to build digital-first infrastructure without overburdening legacy systems. Fintechs are also benefiting from an appetite for investment in the region.
The recent example of Rain Financial’s $110 million Series B round highlights this point.
What regulatory risks should every fintech company have on their radar?
Each GCC state has different regulatory requirements, so fintechs must balance their growth plans with each jurisdiction’s operating rules. To achieve sustainable growth, they must take on the right amount of regulatory risk and balance expansion with compliance. Having the right technology in place that can be deployed seamlessly in any country is vital for fintech scale. With secure, compliant, and transparent identity verification steps, robust onboarding processes help reduce the risk of fraud and protect businesses from money laundering activity.
Data residency and data privacy laws are fundamental to all businesses. For fintechs, it is crucial to secure the right type of license for specific activities, which may include proof of business maturity, auditing and achievement of milestones/targets, before moving to licensing more comprehensive and advanced activities. Government regulations must follow them to stimulate the growth of ecosystems.
With the expansion of the cryptocurrency industry, regulation becomes a challenge. So how can customers stay ahead of rapidly changing industry regulations?
It is essential for cryptocurrency organizations to select the right partner so that there is no disruption or delay in reacting to regulatory changes. Our technology and experience help support businesses as they grow and can identify investors. The big challenge for cryptocurrency and NFTs is trust. Customers are wary of online scams – take the recent example of Logan Paul and the purchase of fake Pokémon cards. Scammers can gain the upper hand without proper digital identity verification and reporting of fraudulent activity. Similarly for cryptocurrencies, being able to identify fraudulent operators before transactions take place is key to taking crypto from trending to trusted, mainstream and many opportunities. . Compliance and auditing are a big part of that. As each jurisdiction decides on regulation, businesses can use more robust verification processes to their advantage to build trust in their communities and differentiate themselves from competitors.
Excerpt from GB Invest February 2022 edition