INVEST

COLLABORATE
COMPETE
A $20 BILLION OPPORTUNITY FOR
MIDDLE EAST AND AFRICA FINTECHS
ACCENTURE FOREWORD
Fintech is a multibillion dollar industry
that is transforming economies around
the world, with investments adding
up to almost $100 billion since 2010.
As one of the main drivers of disruption,
Fintech is reshaping the financial services
industry by harnessing emerging
technologies and creating new business
models. This shift has meant that, for the
past few years, financial institutions have
had to compete with start-ups that are
able to offer new solutions and services
to attract customers, without being
confined to the bureaucracy typically
associated with traditional banking.
In this changing landscape, financial
institutions are starting to embrace Fintech
but more investments are needed on their
part to help narrow the gap. In order to seize
the benefits while avoiding the downfalls
of disruption, the financial industry, like
most other industries, must prepare a
comprehensive strategy that will allow them to
continue to pursue new growth opportunities
without abandoning their core business.
Regulators are also feeling the pressure to
keep up with the fast pace of innovation.
Fortunately, the UAE’s visionary leadership
has understood the importance of
developing RegTech in the region and has set
out to become a Financial and Fintech hub
that is on par with international counterparts.
The appreciation of the rapidly growing impact
that FinTech will have on lenders, borrowers
and consumers, has led regulators to create
sandboxes as a way for fintech companies to
collaborate with their ecosystems optimally.
However, there is still a lot of work to be
done to align with best practice. Today, the
region’s Fintech sector is thriving. With 90%
of consumers using a mobile or smartphone
and no shortage of young and dynamic talent,
the UAE has become a breeding ground for
Fintech innovation.
2
The industry has also been pushed forward
thanks to initiatives such as The Fintech Hive at
DIFC, the first and largest financial technology
accelerator in the Middle East, Africa and
South Asia region, launched by the DIFC in
partnership with Accenture. The programme
provides a unique platform that nurtures
talent and allows innovative thinkers to reach
new heights. By encouraging the sharing of
resources and knowledge, this alliance is
boosting talent development and innovation.
Developing a robust Fintech ecosystem
can have immense benefits for the region
because it encourages entrepreneurial
activity and innovation. Most importantly,
it can bring about major economic growth
by creating jobs in many sectors including
software, mobile banking, data analytics, and
payments. The Hive is also instrumental in
bridging the gap between modern financial
demands and Islamic values by encouraging
the development of Shariah-compliant fintech
products that meet the region’s needs. While
this is still a nascent industry, the sheer size of
the Islamic market will likely lead to increased
demand in the coming years.
In the future, Financial Institutions will need
to gain a deeper understanding of what their
customers need. This will require them to review
their offerings and embrace fintech to create
a more digital and personalized customer
experience. The result will be one of greater
transparency and financial inclusion. For
fintechs, the key to success will lie in creating
solid partnerships with reputable financial
institutions that will give them the credibility to
not only become trusted advisors in the eyes
of consumers but to also gain access to much
needed funding. One thing is certain, with the
digital future residing in uncharted territory, all
organizations will need to be agile, nimble and
forward-thinking to prosper.
Sushil Saluja
Accenture Senior Managing Director for
Financial Services in Europe, Africa,
Middle East and Latin America
DIFC FOREWORD
With the rise of automation, artificial
intelligence, blockchain and other
forms of technology, financial institutions
globally are increasingly investing in
new solutions to help enhance the both
the customer experience and how they
do business.
This prominence of FinTech is increasing
across the globe. The global FinTech sector
has attracted more than US$50 billion
in investment since 2010, and this is just
the beginning.
Although still relatively nascent, the FinTech
ecosystem in the Middle East, Africa and
South Asia (MEASA) region is growing
rapidly. With a nominal GDP of US $7.7
trillion, a substantial young demographic,
and high smartphone penetration, the region
holds immense, untapped opportunities
for entrepreneurs looking to disrupt the
traditional financial services sector. However,
the region still lags in comparison to the
global FinTech scene. With less than one
per cent of global investments flowing into
the region, both private companies and
government entities must work together,
now more than ever, to support ambitious
innovators in setting up their business and
bringing a new dimension to the financial
landscape in the region.
The Dubai International Financial Centre (DIFC)
was established in 2004 with the objective
of driving growth and development of this
dynamic sector. Supported by the Centre’s
sophisticated platform, world-recognised
legal framework and a robust independent
regulator, initiatives such as FinTech Hive
at DIFC look to connect cutting-edge
technology firms from around the world with
key regional financial institutions. In addition,
the Centre offers dedicated commercial
licences for start-up firms, an interactive and
collaborative workspace and access to the
region’s largest financial community to help
develop the FinTech ecosystem in the region.
Implementing a dedicated US$100 million
fund for FinTech will further fuel investment
activity, while creating greater opportunities
for tech start-ups.
We are also pleased to be extending our
partnership with Accenture beyond FinTech
Hive, the first-of-its-kind accelerator in
the region, by commissioning this FinTech
report. Our ongoing alliance with Accenture
is testament to the effective results we
have been able to achieve together within
the FinTech space. We look forward to
establishing further mutual collaboration
to help innovative solutions pave the
future of the financial services industry
in the UAE and wider MEASA region.
Arif Amiri
Chief Executive Officer,
DIFC Authority
3
CONTENTS
FOREWORD 2
EXECUTIVE SUMMARY 5
THE FINTECH OPPORTUNITY 6
PHENOMENAL FINTECH GROWTH 12
FINTECH ACTIVITY BY INDUSTRY 14
INDUSTRY FOCUS AREAS 16
INVESTOR ACTIVITY 19
EMERGING BUSINESS MODELS 26
AN ENABLING ENVIRONMENT 28
NEXT STEPS—EMBRACING FINTECH 29

4
EXECUTIVE SUMMARY
In the Middle East and Africa (MEA), financial technology
(fintech) activity is growing. MEA’s fintechs grew from
91 companies in 2010 to 839 companies in 2017, presenting
a huge opportunity for stakeholders across the economic
spectrum, from financial services incumbents to
governments, businesses, customers and citizens.

The impact of new competition can be
seen in the changing market structure
and the shifting of a sizable amount of
revenue to new players. By the end of 2017,
fintechs had captured three percent of the
financial services revenue in the region.
Our research shows that fintechs will grow
their revenue contribution to eight percent
by 2022, amounting to $20 billion.
As the impact and influence of fintechs
grow, stakeholders are keen to find ways
to realize the benefits fintechs offer. These
include driving greater financial inclusion,
improving efficiencies and customer
experience, developing new products and
services, boosting economic growth, and
creating a differentiating capability that
can provide fuel for future growth.

South Africa, Nigeria, Kenya, the
United Arab Emirates (UAE) and Turkey
make up the top fintechs countries
and have the most advanced fintech
sectors in the region. But the top five
investment destinations in the region
do not necessarily follow that order.
At $67 million, the UAE has received
the most funding since 2010, making it
the top investment destination. This is
followed by Turkey, South Africa, Kenya
and Bahrain. In total, these countries
received $195 million from 2010 to 2017,
representing 85 percent of the total funds
invested in fintech in the region. However,
compared to global totals, fintech
investment in MEA is very low. Of the
more than $90 billion that was invested
in fintechs globally since 2010, only one
percent went to companies in MEA.
Much is being done in the region,
especially in the Middle East, to create
a hospitable business and regulatory
environment that stimulates fintech
innovation. However, more investment
is needed to support fintech growth
and fully realize the benefits they offer.
This paper assesses fintech activity
in the MEA region and turns a spotlight
on areas of great potential in the region,
such as Islamic fintech. Throughout,
we illustrate options for collaborations
and capacity building with examples
of recent fintech activities.

5
THE FINTECH OPPORTUNITY
Five forces are driving the boom in fintech activity in MEA

FINTECHS ARE TECHNOLOGICALLY DRIVEN

—THEY THRIVE ON INNOVATION
Fintechs are tech-centric and born digital. Free from legacy systems
and structures, they are nimble, able to respond rapidly to customer
needs and remain relevant. The innovative financial services
and offerings they are introducing are built on technologies and
approaches that not only improve the customer experience but
increase efficiency and reach, delivering better services
at lower costs to a wider customer base.

CUSTOMERS WANT MORE

In an increasingly digital environment, customers are always connected,
more knowledgeable, and want instant gratification. They want more
from their financial services providers—more personalization, security,
connectivity, simplicity, convenience, and choice.

• 33% of MEA customers plan to increase their online interaction

in the next 12 months
• 49% find companies that provide a mix both physical and digital
channels more relevant and attractive
• 61% of customers in Turkey, 50% in the UAE, 31% in South Africa
indicated that they were increasingly interacting directly with
companies on social media sites or other digital channels.

ECOMMERCE GROWTH CONTINUES

The Middle East countries rank higher in financial inclusion than the
other countries in the region. While the region is still largely cash-driven,
fintech solutions will drive ecommerce and associated online payment
mechanisms such as mobile payments. Companies like Souq.com, the
largest e-commerce platform in the Arab world, are showing the way.

• 101% mobile penetration in 2017

• 59% smartphone penetration in 2017
• 79% smartphone penetration in 2022
• 33% of customers plan to increase online shopping and accessing
online services in the next 12 months

6
UNBANKED NUMBERS ARE HIGH IN AFRICA
The region’s low penetration rates for financial services, especially
in Africa, coupled with high penetration of mobile phones, makes
it a breeding ground for fintech innovation.

In Africa, around 60 percent of the population was unbanked; yet

mobile penetration was at 79 percent, and smart phone penetration
was at 28 percent in 2017. Smartphone penetration is expected to
increase to 53 percent in 2022.

Here, the key challenge has been the large geographical area that
needs to be covered—building the necessary infrastructure using
legacy systems (e.g. branch infrastructure) is costly. In addition, it
is difficult, time consuming and expensive for people to travel long
distances to access financial services. Moreover, the complexity of
traditional financial products is not attractive to this segment.

YOUNGER GENERATIONS PREFER DIGITAL

The younger generations, the Millennials and the Generation Z, have
grown up in a completely digital world. They prefer—and expect—to be
able to conduct their financial affairs online.

• 53% of customers aged between 18-34 are interacting with

companies on social media sites or other online channels about their
products or customer service
• 43% of this age group will go out of their way to do business with
companies that offer them an opportunity to use digital assistants
(like Amazon Alexa, Google Assistant or Apple Siri)

Sources: Accenture Research analysis based on Accenture Survey, World Bank, GSMAi

7
THE NEW COMPETITION
IS REAL
The spillover effect of the global financial
crisis is still being felt in the region. The
regulatory landscape is more stringent
and central banks are welcoming new
competition. New digital technologies
are making that competition a reality,
driving the emergence of new entrants
and the continual disruption of the
financial services market.
As a result, traditional financial services
players, the incumbents, are facing
increasing pressure from fintechs,
which include digital challenger banks
as well as other market players such as
payment gateways like Egypt’s Fawry,
Saudi Arabia’s payment company Geidea,
Kenya’s telco-driven mobile money
solution M-Pesa, money market services
from retailers such as South Africa’s
Shoprite, and payment solutions from
technology giants such as Google Pay.
THE MARKET IS GROWING,
SO IS FINTECH’S SHARE
The financial services market in MEA
is growing, and so is fintech’s share.
The impact of new competition can
already be seen in the changing market
structure and the shifting of a sizable
amount of revenue to new players.
The financial services market in
MEA1 grew from $177 billion in 2010
to $230 billion in 2017, representing
3.8 percent growth (Figure 1). The
contribution by fintechs was $6 billion,
bringing the total financial services
revenue to $236 billion in 2017.
FIGURE 1: FINANCIAL SERVICES
REVENUE IN MIDDLE EAST AND AFRICA
$ Billions
284
20 8%
236
6
+0.4% 3% 117

106
177
One third of the fintechs in 3.8%
77
the region entered the market
in the last two years alone. 124
147
100

2010 2017 2022e

Fintech market entry is accelerating.
Our research shows that 33 percent Fintechs Middle East Africa
Incumbents Incumbents
of fintechs entered the market in the last
Source: Accenture Research analysis based on 10eqs
two years alone. That is a large number and S&P Capital IQ
for what has been a stable industry
mostly characterized by consolidation.
And it may be larger as market data is
not readily available for all countries
in the region. This 33 percent may
underestimate the level of change
in the financial services market.

1
Selected countries – see appendix A

8
By the end of 2017, 839 fintechs were
active participants in the market, and
they had captured three percent of the
financial service revenue in the region.
At the current trajectory, our research
shows a market potential for fintechs
of $20 billion to 2022, growing their
revenue contribution to eight percent.
Fintechs’ share of financial
services revenue in MEA
will grow from three percent
to eight percent by 2022.
FINTECH REVENUE
CAPTURE IS GROWING
Revenue capture of three percent is
small and does not seem alarming for
incumbent financial institutions, but it
is worth noting that revenue capture
by fintechs has grown threefold in the
last five years. The majority of fintech
players now entering the market are
small, but they are beginning to generate
significant revenues in areas such as
payments, money transfers and lending.
While three percent revenue
capture seems small, it has
grown threefold in the last
five years.
The amount of revenue grabbed by
fintechs varies by market and is largely
dependent on the regulatory regime,
evolution of the financial services
market, the participation of non-financial
institutions (e.g. telcos, retailers) and
government involvement. While revenue
capture remained relatively stable
from 2010 to 2013, it has since seen
a significant increase due to several
factors—primarily the establishing of
sandboxes, innovation hubs and other
initiatives especially in the Middle East.
In countries like the UAE and South
Africa, fintech revenue capture has
been relatively low due to the regulatory
framework and the strong performance
of incumbent financial institutions.
Regions like East Africa have seen
success stories like Kenya’s M-Pesa and,
while there has been significant revenue
capture, the market has taken off from
a low base and offerings have largely
been targeted at the unbanked market.
9
TIME TO PROFIT
Our global researchii found that
fast-growing global payments players,
such as Adyen, iZettle and Klarna, are
taking revenue share, but they are not
taking a commensurate slice of profits.
It is easy to get into payments but
turning a profit is not so simple and, for
now, many new players are operating
payments businesses as loss leaders.
Our research estimates it can take
a typical fintech start-up eight to
twelve years to achieve profitability.
In MEA, the scenario is slightly different.
It takes around three to five years for
fintechs to break even and start turning
a profit. The number varies from region
to region, with fintechs in East and West
Africa taking three years, those in the
Middle East taking four years and five
years in Southern Africa. Our research
shows that it is much quicker to turn
a profit when addressing a community
need—e.g., financial inclusion in Kenya
and cashless society in Nigeria—than
the customer experience agenda of
the advanced markets of the UAE
and South Africa.
It takes around three to five
years for fintechs to turn
a profit in the MEA region.
Besides these market dynamics, our
research indicates several factors that
restrain fintech growth across the region.
10
CHALLENGES THAT LIMIT
GROWTH POTENTIAL
While fintech activity in MEA is
booming, fintechs’ growth is coupled
with challenges to overcome, ranging
from the need to drive awareness and
educate customers, to more practical
considerations such as finding the right
skills. Harder challenges include building
trust and acquiring funding.
Factors that restrain fintech growth
include, among others:
• Limited access to funds
• The dominance of cash usage
in the region
• Acquiring customers especially
at the early stages of the business
• A lack of understanding of
digital offerings, especially
among the unbanked
• A lack of trust in fintech’s ability
to handle customers’ financial affairs
• Limited skills to develop and
manage the business and offerings
• Stringent and varying regulations,
including those that limit
cross-border activity
Fundraising in the region is also a major
challenge due to a combination of
different levels of economic development
and prosperity, geopolitical factors,
regulations and challenging conditions
to do business. Our research shows that
of more than $90 billion that was invested
in fintechs globally since 2010, just one
percent went to companies in the Middle
East and Africa.
 Of more than $90 billion
that was invested in fintechs
globally since 2010, just one
percent went to companies
in MEA.

To address these challenges, fintechs

are adopting a number of strategies,
including collaborating and partnering
with larger market players in the telco,
retail and financial services sectors.
Governments, businesses and other
stakeholders are implementing initiatives
ranging from setting up incubators to
changing policy, to create an ecosystem
in which fintechs can grow and thrive.
The UAE and Bahrain governments are
investing in entrepreneurship, fintech
accelerators and sandboxes to fuel the
rise of fintechs. Earlier in 2018, the Saudi
Arabian Monetary Authority (SAMA)
launched an initiative aimed at supporting
a fintech ecosystem to promote the
Kingdom as a fintech hub.

11
PHENOMENAL FINTECH
GROWTH
In the seven years to 2017, the MEA region has seen
phenomenal fintech growth. Leveraging technology,
fintechs bring new, more efficient and effective digital
solutions that address challenges faced by incumbent
financial service providers.

Fintechs have grown impressively at a Growing at a CAGR of 46 percent,

compound average growth rate (CAGR) of Africa’s fintechs have grown at a
37 percent to 839 companies (Figure 2).2 faster pace than those in the Middle
We expect fintech activity in the region to East, which have grown at a CAGR of
continue this growth trajectory, reaching 30 percent in the last seven years.
1,845 companies by 2022. The bulk of
these fintechs (55 percent) can be found
in Africa, the rest are in the Middle East.

FIGURE 2: NUMBER OF FINTECHS IN THE MIDDLE EAST AND AFRICA

1,845

1,573
772
1,334
667
1,126
943 575
839 495
763
425
559 380
345
1,073
389 265 906
91 290 759
135 220 630
59 202 459 518
85 170 418
32 115 294
50 87 120 169
2010 2011 2012 2013 2014 2015 2016 2017 2018e 2019e 2020e 2021e 2022e

Middle East Africa

Source: Accenture Research analysis based in 10eqs

2
The number of fintechs was determined through 10eqs primary research supplemented by secondary research.
Countries in scope: Middle East—Bahrain, Iraq, Jordan, Kuwait, Lebanon, Oman, Saudi Arabia, Syria, Turkey, United Arab
Emirates; Africa—Burkina Faso, Egypt, Ethiopia, Ghana, Kenya, Libya, Morocco, Nigeria, Rwanda, Senegal, Somalia,
South Africa, Tanzania, Tunisia, Uganda, Zambia

12
The top five countries in terms of Given the diversity of financial markets in
fintech activity are South Africa, the region, the types of fintechs that can
Nigeria, Kenya, the UAE and Turkey, be successful vary greatly. Our research
and they have the most advanced indicates that the make-up of each
fintech sectors in the region. Of these country’s financial market and the type
countries, South Africa has exhibited of fintech offering impacts its success.
the fastest growth in terms of number
of fintechs, followed by the UAE. In the more developed and advanced
markets of the UAE, Saudi Arabia and
The top 10 countries make up 84 percent South Africa, customer experience is the
of fintech activity in the region (Figure 3). focus and fintechs focus on disrupting
existing industries. Two examples are
the UAE’s yallacompare.com, which
FIGURE 3: FINTECH ACTIVITY
BY COUNTRY allows users to find and compare
2017 financial services and products, and
Saudi Arabia’s PayTabs, which provides
FINTECH MARKET SHARE BY COUNTRY payment processing solutions for
merchants or individuals.
Other
Uganda
South Africa
Lebanon 3% Where financial inclusion is top of the
3%
Jordan 4% agenda, as in Egypt and Kenya, fintechs
22%
Egypt
4% typically build infrastructure and systems
4% that fulfill a need and plug existing gaps
Ghana 4% in financial services and offerings. Kenya’s
839 Pezesha is, for example, helping to bring
Turkey 5%
low-income borrowers into the financial
United 17% system by enabling them to generate
8%
Arab credit scores and receive instant loans.
Emirates 13%
Nigeria
In countries like Nigeria, fintechs are
Kenya addressing both needs. Flutterwave
provides payment technologies and
TOP 10 COUNTRIES BY NUMBER OF FINTECHS
infrastructure to banks, enterprises and
entrepreneurs. It operates in more than
South Africa 184 36 countries and has partnered with
Nigeria 146 10 banks in Africa.
Kenya 111
UAE 67
Turkey 44
Ghana 36
Egypt 34
Jordan 30
Lebanon 30
Uganda 24

Middle East Africa

Source: Accenture analysis based on 10eqs and CB Insights

13
FINTECH ACTIVITY
BY INDUSTRY
Fintechs have traditionally targeted specific sections of the
value chain, such as payments, money transfers, and lending
(especially SME lending), as low capital requirements and less
stringent regulation made it easier to enter these markets.

Now, with the arrival of new tech-driven FIGURE 4: FINTECH ACTIVITY BY INDUSTRY
concepts and opportunities, fintechs are 2017
now branching into provision of more Capital Markets
complex financial products, such as Other
3%
cryptocurrency. In addition, a growing
10%
number of digital fintech challengers,
such as Bahrains’ Waqfe, South Africa’s
TymeDigital and Nigeria’s Wema’s ALAT,
20% Insurance
are looking to provide end-to-end
financial services.
67% Banking

Fintechs are looking beyond

banking solutions—they are
now branching into provision
Source: Accenture analysis based on CB Insights
of more complex products.

While much progress has been made

in the banking arena, access to other
services such as insurance, pensions and
capital markets is lower. Banking makes
up just over two thirds (67 percent) of
fintech activity in the region, followed by
insurance (20 percent). Capital markets
only contribute three percent (Figure 4).

14
Given the size of the banking fintech sector, it is not surprising that
the largest segments are represented by banking solutions (Figure 5).

FIGURE 5: FINTECH FINANCING ACTIVITY BY PRODUCT SEGMENT

High

80
Payments

60

Lending
5 Year CAGR

40 Merchant
Acquiring

Other

20 Account Management

Retail P&C
Corporate Investments Multiline
Finance Health
Life & Annuities
Trading Asset Management
0
Reinsurance Travel &
Assistance
Investment
Low

Research
-20
-10 0 10 20 30 40 50 60 70 80
Low Number of Deals High

Banking Capital Markets Insurance Other

NOTE
1. Bubble size represents amount of investments 2010 – 2017
2. Other includes IT solutions, operations
3. Some categories are calculated on less than five years.

Source: Accenture analysis based on CB Insights data

15
INDUSTRY FOCUS AREAS
BANKING FINTECHS ARE THE MOST MATURE
IN THE REGION

Within banking, payments, merchant Dubai Financial Services Authority

acquiring, and lending are the major
product segments for fintech activity.
Since 2010, 149 banking fintech deals3
worth $153 million were financed.
Payments made up 43 percent of the
• Fintechs allow customers to apply
deals, and lending made up 26 percent,
but the largest portion of this investment
(53 percent or $80 million) went to
merchant acquiring. With $61 million in
funding, payments received the second
highest amount of the total investment.
The largest portion of
banking fintech investment
—$80 million—went to
• Fintechs have made payments
merchant acquiring.
Banking fintechs add significant value
to ecosystem players:
• Fintech-driven peer-to-peer (P2P)
platforms and crowdfunding have
given small and medium enterprises
(SMEs) access to funding. UAE’s
Beehive is the first P2P lending platform
in the Middle East and North Africa
(MENA) region to be regulated by the
(DFSA). It connects businesses looking
for finance with a crowd of investors
and facilitates the finance agreement
between the parties.
online for credit and get approval
faster. Fintechs assess credit
worthiness much quicker and automate
underwriting processes. Take Cape
Town-based RainFin—the first lending
marketplace in South Africa, it enables
borrowers to access affordable
debt capital and investors to access
alternative credit, removing traditional
costs and barriers.
cheaper and more convenient.
Paga, for example, makes payments
and money transfers simple, fast,
cost effective, and convenient for both
consumers and businesses. The service
works on the most basic SMS-enabled
phones across all mobile networks.
Paga has close to 10 million customers
and around 18,000 agents.

3
Only venture capital funded fintechs reported by CB Insights

16
 INSURTECHS ARE FOCUSING ON
OPERATIONAL EFFICIENCY
Insurance fintechs companies (insurtechs)
now hold 20 percent of the market in the
MEA region. The biggest segment within
insurance is property and casualty (P&C),
followed by health insurance. However, it
is multiline insurance which has received
the most investment worth $21 million
(42 percent of total funds), since 2010.
Evidence suggests that insurtechs are
more focused on operational efficiency
than innovation, with several companies
concentrating on distribution. But to meet
regulatory requirements, companies
often partner with incumbents.
The biggest segment within
insurance is P&C but multiline
insurance has received the
most investment.
CAPITAL MARKETS FINTECHS’ SHARE
IS SMALL
Holding only three percent of the market,
capital markets fintechs make up the
smallest segment in the region. Most
of capital markets fintechs focus on
trading and this is where the biggest
investments have taken place. Thus said,
these segments have experienced very
little growth since 2010. Solutions in
capital markets include robo-advisors
and online wealth management tools
that reduce fees for customers and
cut out traditional financial advisors.
• Insurtechs are offering digital
platforms that connect customers
with service providers. Launched
in 2015, UAE-based Democrance
offers a digital platform that connects
low- and middle-income customer
via their mobile phones. Democrance
does not sell insurance policies directly
but offers the platform that connects
customers to insurance providers in
partnership with telecom companies.
• Insurtechs are using technology
to reach underserved customers.
UAE platform player Aqeed, for example,
allows customers to buy and compare
car insurance in a matter of minutes.
Insurance is handled by Gulf Resources
Insurance Management Services
Company and is regulated by the
UAE Insurance Authority.
UAE’s Sarwa is a robo-adviser that
offers solutions at a fraction of the
cost charged by traditional financial
advisory firms in the country. Sarwa’s
wealth management business relies
on computer-generated algorithms
and low-cost exchange-traded funds.
Developed within the Dubai International
Finance Centre (DIFC) Fintech Hive and
launched in February 2018, the company
has grown its assets under advisory
to $100,000 with more than 1,000
registered users.
17
 INCREASING REGULATION DRIVING
REGTECH GROWTH
Regulation fintechs (regtechs) span the
three sectors—banking, insurance and
capital markets. The rise of regtechs
has been driven by the pressing need to
strike a balance between accommodating
innovation, which ultimately benefits
the consumer, and maintaining financial
stability and discipline.
Regtechs help financial institutions
to analyze and comply with various
regulations. Norbloc builds regulatory
applications on blockchain platforms.
ISLAMIC FINTECHS HAVE ROOM TO GROW
When it comes to the MEA region, Islamic
fintech with its very specific requirements,
is of particular interest. While interest
in the fintech landscape has expanded
at pace in recent years, Sharia-compliant
fintech has been slow to take off as
potential investors remained cautious in
the past. However, with more investment,
Islamic fintech has the potential to grow
and become more impactful.
Sharia-compliant fintech
has been slow to take off
but has great potential.
18
The company’s platform allows
savings through digitization of the
know-your-customer (KYC) process
and removal of duplication between
financial institutions. Norbloc is
headquartered in Sweden and has
a Middle East branch in the UAE’s DIFC.
South Africa’s ThisIsMe specializes
in online identity verification and is
used by more than 15,000 individual
users and 85 merchants.
Most fintechs venturing into this segment
are doing so to provide solutions and
services to their community.
The Dubai Islamic Economy Development
Center (DIEDC) is a strategic partner of
the FinTech Hive to help raise awareness
and support Islamic fintech. Bahrain’s
Finocracy works with Islamic banks
and financial institutions to build and
operationalize fintech solutions. It aims to
roll out 15 high-impact fintech platforms
by 2022 with the objective of opening
access to 10 million underbanked
consumers for its clients.
INVESTOR ACTIVITY
In 2017, the value of global fintech investment grew
by 14 percent to $26.6 billion4, driven by deal-flow
in Asia-Pacific (APAC).

The year-on-year growth affirmed the fintech sector’s position as a hot

ticket item in financial services (Figure 6). However, while this growth
continues to outpace venture investment as a whole, which in contrast
grew by only 15 percent in 2017, there were signs that the fintech
industry had reached a new level of maturity, with some regions
cooling-off and a continued increase in larger deals.

FIGURE 6: GLOBAL FINTECH FINANCING ACTIVITY

$ Million

Investments Number of
$ Million Fintechs

60,000 3,000
2,715

50,000 2,500

40,000 2,000
1,812

30,000 1,500
1,195 26,578
23,334
21,175
20,000 949 1,000
812
638 13,337
478
10,000 339 500
4,833
1,889 2,561 3,231
0 0
2010 2011 2012 2013 2014 2015 2016 2017

Numberdeal
Global of fintechs
volume RoW Europe APAC North America

Source: Accenture analysis based on CB Insights data

4
Variations in historical numbers are due to revisions of previous data in every release which include adding and/or
removing deals from CB Insights database based on relevance.

19
THE STATE OF FUNDING IN MEA
Fundraising to support fintechs in the These deals have raised a total of
region remains a major challenge due to $112 million in venture capital funding
differing levels of economic development since 2010 (Figure 7a and b). We expect
and prosperity, geopolitical factors, the number of fintechs to grow to just
regulations and business conditions. around 1,200 companies in the region,
raising $3.2 billion in venture capital
Our research shows that of the more than funding by 2022.
$90 billion that was invested in fintechs
globally since 2010, just one percent went
to companies in MEA. The region has,
nonetheless, seen phenomenal growth
in the number of deals—growing by
more than tenfold to 111 companies.5

In 2017, the Middle East had 30 fintechs that raised $78 million,
and we expect this to grow to 465 companies, raising over
$2 billion in venture capital funding.

FIGURE 7A: INVESTMENT INTO MIDDLE EAST FINTECHS

Investments Number of
$ Million Fintechs

2,500
$2,282 600

2,000 465 500

400
1,500
$1,126
276 300
1,000
$565
200
163
$287
500 $149 96
$78 100
$33 55
$0 $6 $4 $1 $3 $15 30
3 5 13
0 1 1 2
0 0
2010 2011 2012 2013 2014 2015 2016 2017 2018e 2019e 2020e 2021e 2022e

Value of Deals Number of fintechs

Source: Accenture analysis based on CB Insights data

5
Only venture capital funded fintechs reported by CB Insights

20
 In 2017, Africa had 81 fintechs that raised $34 million, and we
expect this to grow to 637 companies, raising over $800 million in
venture capital funding.

FIGURE 7B: INVESTMENT INTO AFRICA FINTECHS

Investments Number of
$ Million Fintechs
1,000 $879 700
637
600
800
500
$445
600 408
400

$229
300
400 $120 259
$63 206
200
152
200 $34
$20 81 100
$0 $1 $7 $8 $14 $5 42
1 1 4 8 9 12
0 0

2010 2011 2012 2013 2014 2015 2016 2017 2018e 2019e 2020e 2021e 2022e

Value of Deals Number of fintechs

Source: Accenture analysis based on CB Insights data

While the MEA region represented eight
percent of global deals in 2017, the value
of these deals amounted to only one
percent of global deals.
This funding is not only coming from
within the region, but from global sources,
including venture capital companies,
development finance institutions, large
corporates, and even individual investors.

The MEA region represented eight percent of global deals

in 2017, but the value of these deals amounted to only one percent
of the total invested.

21
WHERE IS THE INVESTORS INFLUENCERS
INVESTMENT GOING? The fintech sector holds long-term appeal
The top five investment destinations in for investors because of the fundamental
the region are the UAE, Turkey, South importance of the services that fintechs
Africa, Kenya and Bahrain. These countries provide. As the region is competing
received $195 million from 2010 to 2017, with the rest of the world to become a
representing 85 percent of the total funds global regional hub for fintech activity,
invested in fintech in the region (Figure 8). countries in MEA are creating business
friendly environments that will lure
FIGURE 8: TOP 10 FINTECH investors and attract global funding.
INVESTMENT DESTINATIONS
2010 - 2017, $ Million
Countries in MEA are
UAE 67 developing fintech
Turkey 43 ecosystems, vying to become
South Africa 38 a leading fintech center.
Kenya 26
Bahrain 20
Nigeria 17 Countries like the UAE and Bahrain,
Jordan 7 and Egypt are developing fintech
Zambia 4 ecosystems, complete with regulatory
Lebanon 3
frameworks and financial incentives,
each vying to become a leading center.
Tanzania 1
These initiatives, together with support
Middle East Africa
from government, is drawing investors,
enabling countries like the UAE and
Source: Accenture analysis based on CB Insights data
Turkey to attract the highest amounts
of venture funding in the region.

Fintechs that have recently received

funding include Liwwa, Zoomaal and
Iyzico – see table on the next page.

At $67 million, the UAE has received the most funding since 2010,
making it the top investment destination in the Middle East and
Africa region.

22
 SELECTED INVESTOR ACTIVITY IN FINTECHS

Liwwa Earlier this year, Jordan-based Liwwa closed a $2.3 million funding
round led by Silicon Badia to build up its ability to assess an applicant
using technology rather than traditional credit ratings.

Zoomaal Lebanon’s Zoomaal received funding from MEVP (Lebanon), Sawari

Ventures (Egypt), Cairo Angels (Egypt), Hivos (Netherlands) and Wamda
(UAE). Zoomaal has launched over 100 successful funding campaigns
totaling over $1.3 million for projects.

Iyzico Since its inception, Iyzico in Turkey has raised US$24 million in funding
from the International Finance Corporation, Vostok Emerging Finance,
Amadeus Capital Partners, Turkish-based VC 212, Pachicle Invest,
Speedinvest and Beenos Partners.

Beehive Beehive, which raised a total of US$10.5 million since its launch in 2014.

Sarwa Sarwa has raised $1.3 million in its pre-Series A round of financing,
bringing its total funding to over $1.5 million since the firm’s launch
in December 2017.

Paystack Nigerian payments company Paystack raised $8 million Series A funding

led by Stripe, Visa, Tencent and Y Combinator in August 2017.

Flutterwave Flutterwave received backing from venture capitalists Y-Combinator,

Ventures and Social Capital, and raised $10 million in its Series A round,
one of the largest Series A rounds by an African start-up.

23
FIVE KEY TRENDS TO WATCH
1. CUSTOMER DEMAND WILL CONTINUE TO DRIVE
FINTECH GROWTH
Whether it’s financial inclusion or customer experience and personalization,
the customer will remain key in driving fintech demand. With two thirds of the
region’s population unbanked and high mobile penetration (predicted to rise
to 79 percent by 2022), mobile technology and fintech will be key to increase
financial services access.

2. SECURITY WILL BECOME A FOCUS AREA

In the region, there are two important security-related opportunities. Customers
need to feel that they can trust their financial services providers with their
financial affairs and are thus safe from cyber-attacks. The second opportunity
is in simplifying access and increasing convenience. Biometrics, supported by
know-your-customer (KYC) programs, allow customers to bypass passwords and
pins, using fingerprint scanning and facial recognition for transactions, seamless
on-boarding processes, and secure payment processing.

3. NEW FINTECH CATEGORIES ARE EMERGING

In the past, fintechs have focused on providing banking solutions such as
payments and credit. However, the need to innovate and cater to a wider
range of customers and financial services segments is seeing fintechs venture
into new areas, such as bonds, exchange traded funds (ETFs), asset-backed
loans and instruments, and Sharia-compliant investment funds. Islamic
fintech is rapidly increasing in significance and scale. Over the next few years,
it is expected to exhibit remarkable growth as fintechs ramp up product
innovation using new technologies that adhere to Islamic finance principles.

4. BLOCKCHAIN IS HERE TO STAY

As blockchain technology gains traction and the pace of innovation grows,
more fintechs will adopt the technology. Key advantages of the technology
are transparency, cost efficiency, security and smart contracts that enable
automation of financial operations. In addition, blockchain helps address
major obstacles in the fintech landscape, such as identity.

5. FINTECHS ARE BECOMING INCREASINGLY GLOBAL

Fintechs have been very successful at scaling their offerings and crossing
national borders, that they now face global competition. Countries are
competing among themselves to become regional and global hubs of
fintech activity. In recent years, many accelerators and incubation programs
have emerged to nurture fintechs and develop thriving ecosystems. Abu
Dhabi and Bahrain are collaborating to develop regulatory test beds, Dubai
is positioning itself to become a global fintech hub and a global hub for
Islamic fintech. Nigeria is planning to become the continent’s leading
fintech hub. With the crossing of national borders, fintechs will become
the catalyst to create national and common cross-border standards.
24
25
EMERGING
BUSINESS MODELS
Broadly speaking, there are two types of business models
that fintechs can pursue:

The competitive model, which Collaborative fintechs seek collaboration

directly challenges the incumbent
financial institutions.
The collaborative model, which offer
solutions to enhance the position of
existing market players.
Competitive fintech companies have
enjoyed some success, targeting less
profitable segments by delivering better
experiences directly to customers. For
example, Jordan’s Liwwa provides a lending
platform for small business loans, South
Africa’s Mobicred offers an online credit
facility, and UAE’s Bayzat allows users to
find, compare and buy health insurance.
with larger, well established financial
institutions. The incumbent provides
the investment, mentorship and market
necessary to the fintech’s survival and
growth, while the fintech provides
the incumbent with the innovation,
technology, tools and processes essential
to meet new customer demands and
remain competitive. Examples include
Bahrain’s Waqfe that enables Islamic
banks to acquire digital-ready customers,
South Africa’s SnapScan that provides
a mobile payment solution that is
backed by incumbent Standard Bank,
and WiGroup, also in South Africa,
that provides an integrated, open
and interoperable, mobile transaction
point-of-sale platform and is backed
by Investec Asset Management.

26
BUSINESS MODELS
FOR INCUMBENTS
With the resources to choose, incumbent
financial institutions are pursing three
fintech models, namely collaborate,
acquire or build.
Collaborate
As described in the previous section,
collaboration with fintechs has benefits for
both parties. In 2017, our global research
showed that the level of investment
into fintechs wishing to collaborate with
the industry increased by 138 percent,
representing 44 percent of all fintech
investment. By comparison, investment
into fintechs looking to compete with
incumbents only increased by 23 percent.
This shows a clear and growing appetite,
from both sides, to collaborate.
The level of investment
into fintechs wishing
to collaborate with the
industry increased by
138 percent in 2017.
Acquire
When it comes to acquiring a fintech,
the incumbent has the option to let the
organization operate as an independent
entity or bring it into the group. Many
incumbents have seen the benefit of
letting the fintech operate independently
of the larger group as this allows it to be
more innovative, and to remain nimble
and efficient, minimizing the risk to the
organization. An example is the purchase
of banking fintech TymeDigital by African
Rainbow Capital (ARC), a South African
financial-services company. As a subsidiary
of ARC, TymeDigital is likely to operate
independently of ARC.
Build
Other incumbents have found it necessary
to build their own fintech companies.
Nigerian bank Wema announced the
launch of a fully functional digital bank
called ALAT to address the challenges
of financial inclusion in the region.
Customers can carry out their banking
transactions without being physically
present at a bank. UK Standard Chartered
recently launched its first digital-only
bank in Ivory Coast. With the new digital
bank, customers can open an account in
less than 15 minutes and manage all their
banking activities with a swipe or two.
27
AN ENABLING ENVIRONMENT
The thriving fintech ecosystem in MEA has been fueled by
the supportive stance of governments and their willingness
to develop the digital infrastructure needed to nurture
a flourishing fintech industry.
Several reforms, initiatives and new
regulations point to increased awareness
at a policymaker level. Examples include:
• Special jurisdictions fintech sandboxes
in the UAE and Bahrain.
• The new and proposed mobile money
regulations in Egypt and Kenya.
• The establishment of a fintech unit
within the central banks in South Africa.
• Nigeria’s 2012 central bank policy to curb
excess handling of cash and reduce the
volume of money in circulation.
The supportive stance of
governments in the Middle
East and Africa is fueling a
thriving fintech ecosystem.
There are clear advantages in this
approach for governments.
• By taking a more active role in nurturing
fintech infrastructure, regulators and
governments across the region are able to
learn about new technologies and how to
shape regulations. This is the case for the
Dubai Financial Services Authority (DFSA)
and the Dubai International Financial
Centre (DIFC) through their Innovation
Testing License launched in 2017.
• Governments and regulators, especially
those in MENA, are implementing
28
legislative reforms to capitalize on
fintech. The central banks of Egypt,
Bahrain, UAE and Jordan have adopted
specific initiatives to regulate digital
payment services, while Lebanon, the
DIFC and Bahrain have introduced
crowdfunding regulations.
• Governments are signing international
agreements to promote the fintech
sector. The Monetary Authority
of Singapore (MAS) and the DFSA
have, for example, signed a fintech
agreement that allows the referral of
innovative businesses between the
two authorities and joint innovation
on projects using key technologies.
Bahrain also entered into a partnership
with incubator Singapore Fintech
Consortium and asset management
firm Trucial Investment Partners
to create a fintech ecosystem and
regulatory framework for the country.
• Governments in Africa are driving
standardization to ensure the stability of
their financial systems, macroeconomic
impact and financial inclusion.
In Tanzania, for example, many people
rely on mobile wallets. The country’s
regulators decreed that each wallet
product should be able to interface with
the others. This forced mobile wallets
to become interoperable, enabling
consumers to transfer money to users
of other products regardless of which
bank’s wallet they choose to use.
NEXT STEPS—
EMBRACING FINTECH
The benefits of fintech for all stakeholders—from the fintechs
themselves, to incumbents, consumers, citizens, businesses
and government—are growing.
Fintechs are emerging as powerful
tools for change. They are addressing
challenges that incumbent financial
institutions cannot, providing services
that empower and give customers more
choices. Fintech are also accelerating
entrepreneurship and innovation by
providing start-ups and businesses with
access to digital processes that extend
their reach into new markets and support
inclusion into financial ecosystems.
To take advantage of the
opportunities and benefits
fintech offers, it is imperative
to lay the foundations
for transformation.
In the MEA region, fintechs provide
fundamental services, but they are also
adding new layers of sophistication to
commerce and customer engagement
through advanced solutions and features.
This can stimulate economic growth and
regional competitiveness and open up
a whole new area of differentiation for
countries in the region.
To take advantage of the opportunities
and benefits fintech offers, it is imperative
to lay the foundations for transformation.
For fintechs, it is important to collaborate
with incumbent financial institutions,
be part of regulatory sandboxes and
innovation hubs, and seek funding to
investment and scale.
For governments, it is important
to create an environment conducive
to fintech development and growth.
This includes advancing regulatory
reform, putting standards in place and
stimulating fintech innovation through
incentives and other means, create
an investor-friendly environment,
and providing support to fintechs.
For incumbent financial services it is
now more important than ever to be
open, to collaborate and invest in fintechs.
While investors will continue to be
influenced by government policies and
support, and the business environment,
they will need to take bigger risks and
plunge into fintech investments without
the justification of immediate returns.
29
APPENDIX A
SCOPE
Countries in scope
Middle East
Bahrain, Iraq, Jordan, Kuwait, Lebanon,
Oman, Saudi Arabia, Syria, Turkey,
United Arab Emirates
Africa
Burkina Faso, Egypt, Ethiopia, Ghana,
Kenya, Libya, Morocco, Nigeria, Rwanda,
Senegal, Somalia, South Africa,
Tanzania, Tunisia, Uganda, Zambia
Financial services market
Listed companies in banking,
insurance and capital markets
in the selected countries.
30
APPENDIX B
METHODOLOGY
10eqs methodology
10eqs team used primary research
to interview experts in the fintech
space. Interviews with experts were
supplemented with reviews of industry
reports, news articles, start-up databases,
country-level reports and company
documents and news releases.
10eqs team engaged experts in MEA,
among which included board members
of regional fintech associations, heads
of institutions and fintech entrepreneurs.
10eqs Secondary research focused on
gathering financial industry performance
information to support expert insights,
analyzing funded fintech start-ups,
and pulling data points on incumbent
responses to fintech sector activity.
10eqs team aggregated expert insights,
reconciled inconsistencies via expert
follow-up and/or secondary research and
compiled research.
Revenue capture methodology
Accenture utilized proprietary data from
CB Insights and 10eqs to estimate fintech
revenue, and data from S&P capital IQ
to calculate incumbent revenue. Fintech
market share by country was calculated
based on the total number of fintechs in
the region provided by 10eqs and shares
per country from several sources such as
CB Insights,iii Disrupt Africaiv and Wamda.v
The historical investor financing activity
in the region was based on data sourced
from CB Insights where an autoregressive
panel econometric models with varying lag
order specifications was utilized to forecast
investor financing of the value of deals, as
well as the number of fintechs in MEA.
AUTHORS
Julian Skan
Senior Managing Director
Accenture Global Banking
Strategy Lead
julian.skan@accenture.com
Amr ElSaadani
Managing Director
Accenture Financial Services,
Middle East & Turkey
amr.elsaadani@accenture.com
Elizabeth Hakutangwi
Africa Research Lead
Accenture Research
elizabeth.hakutangwi@accenture.com
Francesca Caminiti
Principal Director
Accenture Research
francesca.caminiti@accenture.com
Contributors to this report
Geoffrey Nolting, Cansen Ergun, Masa
Al Chalabi and Rofhiwa Netshivhambe
SOURCES
i
Accenture Global Consumer
Pulse Research, 2017
World Bank, The Global
Findex Database, 2017
GSMA Intelligence Database
Accenture, Star Shifting:
ii
Rapid Evolution Required, 2018
iii
CB Insights Database, 1H2018
Disrupt Africa Database,
iv
African Fintech Start-ups, 2017
v
Wamda, State of Fintech
31
ABOUT DUBAI INTERNATIONAL
FINANCIAL CENTRE
The Dubai International Financial Centre (DIFC) is one of
the world’s top financial centres, and the leading financial
hub for the Middle East, Africa and South Asia. The Centre
provides a world-class platform connecting the region’s
markets with the economies of Europe, Asia and the
Americas and facilitates growth in South-South trade
and investment. An onshore, international financial centre,
DIFC offers a stable, mature and secure base for financial
institutions to develop their wholesale businesses.
The Centre offers all the elements found in the world’s
most successful financial industry ecosystems, including
an independent regulator and judicial system with
a common-law framework, a global financial exchange,
inspiring architecture, powerful, enabling support services
and a vibrant business community. The infrastructure within
the district features ultra-modern office space, retail outlets,
cafes and restaurants, art galleries, residential apartments,
public green areas and hotels.
Located midway between the global financial centres of
New York, London in the West and Singapore, Hong Kong
in the East, DIFC (GMT +4) fills a vital time-zone gap with
a workday that bridges the market and business hours of
financial centres in both Asia and North America.
In 2015, DIFC launched its 2024 growth strategy, a blueprint
for the next decade of growth of the financial hub. This
strategy aims to stimulate trade and investment flows along
the South-South economic corridor encompassing the
Middle East, Africa, Southern Asia and Latin America.
Currently, 2,003 active registered companies operate from the
Centre, with a combined workforce of 22,768 professionals.
DIFC continues to pursue expansion into new services and
sectors within the Middle East, Africa and South Asia region,
an area comprising over 72 countries with an approximate
population of 3 billion and nominal GDP of US$7.7 trillion.
For further information, please visit our website: difc.ae,
or follow us on Twitter @DIFC.
ABOUT FINTECH HIVE AT DIFC
FinTech Hive, along with its ecosystem of more than sixty
partner entities united in their common goal towards
fostering innovation in the region, brings cutting-edge
financial services technologies to the Middle East through
its first-of-its-kind accelerator in the region. FinTech Hive
also offers cost-effective licensing solutions for Fintechs,
supportive regulation through Dubai Financial Services
Authority’s Innovative Testing License, flexible co-working
spaces, and access to a financial community of more than
22,000 professionals. FinTech Hive continues to lead the
region’s efforts in providing an enabling environment for
innovative solutions to contribute to the development of
the financial services industry, in line with Dubai Plan 2021
and DIFC’s 2024 Strategy.
For further information, please visit our website:
fintechhive.ae.
ABOUT ACCENTURE
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