MAGNiTT, in collaboration with ADGM, launches first-of-its-kind ‘2019 MENA FinTech Venture Report’ADGM FSRA 22/10/2019
The data-driven report reveals insights on FinTech trends, including venture investments, exits, sub-industries, adoption drivers and country comparisons as the robust ecosystem continues to grow
The key highlights of the report include:
- FinTech has received 181 investments over 5 years, accounting for 10% of all venture investment deals across MENA
- FinTech ranked 1st of all industries across MENA by number of venture investments in both 2018 and 2019 YTD
- Payments & Remittance startups are the top sub-industry within FinTech, accounting for 45% of all FinTech deals in 2019 YTD
- The United Arab Emirates (UAE) is the largest FinTech hub by FinTech startups (46%), as well as number of deals (47%) and total funding (69%) in 2019 YTD
- Regional demographics, accelerator programs, and government support through sandboxes and funds propel FinTech start-ups’ growth
MAGNiTT, MENA’s leading start-up data platform, in collaboration with Abu Dhabi Global Market (ADGM), the award-winning International Financial Centre and FinTech hub, have launched the first-of-its-kind “2019 MENA FinTech Venture Report” today.
The in-depth report includes a deep-dive into the financial technology (FinTech) industry across the Middle East and North Africa, with a key focus on startups and venture capital funding. Through data-driven insights, the report delves into key trends in the regional FinTech industry, including venture investments, successful exits, FinTech growth drivers, sub-industries, country comparisons, international benchmarks and success stories.
Richard Teng, CEO of Financial Services Regulatory Authority (FSRA), Abu Dhabi Global Market (ADGM), said, "Digitalisation of financial services is happening at an unprecedented pace. From payments, banking, financial advisory, capital market and insurance, deployment of financial technology (Fintech) have reimagined the financial services sector resulting in innovation, efficiency and greater financial inclusion. Having a keen insight of the region’s FinTech growth and development will enable policy-makers, regulators and investors to introduce better initiatives that support the industry. As an International Finance Centre and financial regulator, this report reveals the needs of the industry that we can better attract and secure more investments and funding to support the FinTech ecosystem.”
Philip Bahoshy, CEO and founder of MAGNiTT, MENA’s leading start-up data platform, highlights "FinTech has become a buzzword across the region. It is important to be able to substantiate the hype with data-driven insights and data transparency to support key government-level decision makers to support founders with the right initiatives to see the continued growth of the FinTech ecosystem".
- FinTech Investments: A total of $237M has been invested in 181 deals since 2015 in MENA-based FinTech startups, with 51 of those deals being made in 2019 alone. 2017 was the breakout year for FinTech venture investment across MENA, and in 2018 and 2019 YTD FinTech ranked first in the region by number of deals, overtaking other popular industries such as e-commerce and transport & logistics.
- Key Adoption Drivers: The report highlights 6 key drivers of the FinTech across MENA, including the quick internet and online payments penetration, government support through regulatory sandboxes and government funds & accelerators, consumer demographics and attitudes towards FinTech solutions, and the increase in private capital availability. Through the combination of these factors, the FinTech industry and startups receive a boost, which accelerates and smoothens adoption.
- Sub-industry verticals: Within the quickly growing FinTech industry, Payments & Remittances startups have historically received a large proportion of the total FinTech deals. In 2019 YTD, 45% of all deals were in Payments & Remittances startups, as the sub-industry continues to draw investor interest. However, Wealth Management, Capital Markets and Personal Finance also account for several deals, whereas InsurTech has received significant amounts of funding as well, mainly for insurance comparison. Other FinTech sub-industries, including blockchain, are high on government agendas, but have yet to see significant traction in investments.
- Geographies: The number of FinTech startups across MENA has grown rapidly over the past years, accelerating quicker in numbers than many other industries. Since 2012, the number of FinTech startups has seen a compound annual growth rate (CAGR) of 39%, with a total of 310 FinTech startups active presently across MENA.
- The United Arab Emirates (UAE) is the largest MENA FinTech hub, accounting for 46% of all FinTech startups, as well as 47% of all deals and 69% of total funding in 2019 YTD. Other ecosystems, such as Bahrain, Egypt and Saudi Arabia, are emerging, with multiple private and government initiatives to boost the industry.
- Capital Availability: 37 investors in 2019 YTD have invested in FinTech startups, with regional investors accounting for 86% of them. However, 41% of these investors had not previously invested in FinTech startups, showing increasing appetite. Moreover, local governments have launched $1.4B of funds that are open to FinTech investments, increasing the potential pool of capital available for startups.
This report marks a first for the region, as it delves into the FinTech industry with a key focus on startups and venture capital. Bahoshy mentions, "After an initial wave of e-commerce and transport & logistics startups in previous years, FinTech has taken the front stage since 2018. The industry has many similarities to transport & logistics: a large addressable market, the ability to disrupt historical business models and solutions that can cross borders."
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