My article last month talked about the immense value accelerators are adding to the fintech industry globally, not only in terms of capital but also in terms of infrastructure and ecosystem creation. If you remember, I also spoke briefly about the massive Gulf (GCC) opportunity where I also mentioned IBS Intelligence’s new FinTech Lab in Dubai.

The opportunity

One thing is clear; the instability in oil prices has encouraged most GCC countries to actively diversify their economies, resulting in a
strong focus on fintechs in the geography. Investments in this space alone are estimated to grow to US$2 billion in the next few years. While all GCC countries will play a key role going forward, it is worth noting that the UAE and Saudi Arabia are predicted to play an integral developmental role, mainly due to the fact that both countries possess the highest online connectivity per capita and also have smart-city infrastructures already in place. With 178 banks in the GCC (49 in the Middle East alone) covering an asset base of US$2 trillion, the proposition is definitely an attractive one. Some more interesting facts and figures are below.

Fintech Lab

Current landscape

Today’s trends in the GCC fintech environment are centred around two key trends; the need for banks to digitise traditional products and services, and the development of innovative offerings to cater to customer expectations. While products were traditionally developed internally, banks are increasingly leaning towards working with fintechs directly to assist in adding products to their own platforms. The table opposite shows the strong presence of global fintechs in the current GCC ecosystem. Nobody wants to miss the bus on this one.

Some key current trends are highlighted below.

  • The investments in digital are not only affecting product and service offerings but are also making an organisational impact: digital and transformation offices are being set up under the new role of “Chief Digital or Innovation officer”
  • A deeper focus on areas such as wealth management, insurance, and money-transfer services moving away from the traditional focus on lending and capital-raising
  • Strong focus on working to introduce bots in customer service offerings and RPA in bank operations teams
  • Increased use of cybersecurity tools in mobile banking
  • The development of digital-only banking services for SME customer segments
  • The digitisation of Islamic banking. Abu Dhabi’s Al Hilal Bank completed the world’s first sukuk transaction using blockchain technology in 2018
  • The birth of the mobile wallet.

While some GCC countries such as the UAE already have a few wallet operators, other geographies such as Oman are now in final stages of readying e-wallet propositions

  • Bahrain’s fintech efforts to grow at rocket speed via the Bahrain Fintech Bay initiative launched by the Development Bank of Bahrain
  • The rise of robo-advisories, especially in wealth management While many exciting trends are yet to develop, some of the key GCC countries have already been experiencing some interesting some iconic and first-ever rollouts:
  • The Central Bank of Bahrain’s launch of the country’s first “sandbox” concept in 2017
  • The launch of Bahrain’s first e-wallet by BENEFIT
  • Bahrain’s first fintech consortium formation in the form of a crowdfunding platform
  • Kuwait’s recent launch of the first Islamic digital-only bank
  • Mini-branch concepts rolled out in Kuwait
  • Kuwait’s first smart wallet introduced in collaboration with MasterCard
  • The launch of digital signature verification in Oman
  • Oman’s first implementation of blockchain in remittance products and services
  • 2017 saw Qatar’s first rollout of instant card-issuing services
  • Facial recognition capabilities launched in mobile banking across the GCC
  • Saudi Arabia’s recent launch of its first digital bank
  • The opening of digital branches inside cafes and other dining joints to enhance customer experience across the GCC

 

The enabler: IBS Intelligence’s new Fintech Lab!

When you combine IBS Intelligence’s 20-year track record in the fintech research and news space along with Cedar’s (IBSI’s parent company) vast Technology Consulting experience in the banking space in the GCC over 30 years, the result is a pretty solid one. This is the CedarIBSI Fintech Lab. Positioned perfectly between fintechs and banks, the accelerator aims to help suppliers access that Middle East banking technology opportunity (which we already discussed above), and provide GCC banks and insurance companies with an opportunity to test and experience global fintech products within the region in an innovative lab environment.

Cohort member benefits include:

Market access: Provide start-up, emerging and recognised suppliers an opportunity to access banking opportunities within the region, leveraging our 20-year presence and markets connects assisting banks in developing and executing technology transformation

Virtual sandbox: The Lab will offer a virtual sandbox to banks and suppliers to allow for rapid product showcasing, but more importantly quick POCs supported by our project management capability

Investor access: We will leverage its connects with family offices, private investment offices, VC and PE funds, encouraging them to evaluate and potentially invest in fintech firms seeking capital carefully

Growth enablers: Our strategy consulting teams can assist cohort members with regional and global corporate growth strategy leveraging its 30-year expertise in this area

Lab facilities: The state-of-the art Lab facilities include private cloud, hot seats and conference room facilities, sanitised data sets of bank customer data that can be used in a POC, and a range of other standard work space conveniences

If you are a fintech company, a bank or an investor seeking to be a founding cohort member of the CedarIBSI FinTech Lab, email us at membership@cedaribsilab.com for a full presentation and membership form.

By Sahil Anand, Director, IBS Intelligence

by Sahil Anand
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