Fintech in the Gulf States: The New Online Trading Hub?

Of the Gulf states, the United Arab Emirates (UAE), Bahrain and Saudi Arabia have taken on a pivotal role in driving the fintech revolution forward. This has led regional governments to encourage massive private sector investment in the region. And while these growth strategies are not without potential hurdles, the future of the Gulf fintech sector still looks bright.

To accelerate growth in this sector, the six member states of the Gulf Cooperation Council – including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE – have developed high-level strategies for fintech ecosystems and a progressive regulatory environment in areas such as cryptocurrencies, open banking, robo-advisory services, and regtech.

With this general background in mind, let’s take a closer look at the rise of the Gulf States as a hub for fintech development.

Who is leading the charge?

As you might expect, the UAE and Bahrain have so far led the fintech burden in the MENA region, which is in line with their broader strategy to become a regional hub for doing business in the Middle East.

Dubai is performing very strongly and is currently one of the leading cities in the MENA region for fintech. According to the Findexable Global Fintech Index, it is among the top 50 cities for fintech worldwide. Also important were the Abu Dhabi Global Market, as well as the Dubai International Financial Centre.

Similar programs have been launched in Saudi Arabia – through the fintech Saudi Program within the Financial Services Development Program – and Bahrain, with their fintech Bay innovation hub.

These programs have been supported by both local governments and local regulators, including providing support and guidance in areas such as open banking, cryptocurrencies and robo-advisory services.

However, with so much support in so many different centers in the region, it has raised concerns that not all schemes may be viable. And if every center or hub tries to encourage companies to do business there, there’s a risk that they’re all just competing for the same piece of the pie. This is a particularly dire risk, given the growth of other fintech hubs such as London, Dublin, Luxembourg, Berlin, Amsterdam and Paris.

Local Specialties: Developing a Niche for the Gulf Region

While the Gulf States face fierce competition from other financial hubs around the world, that doesn’t mean they can’t develop their own competitive advantages in a crowded market. So what the financial hubs in the Gulf States need to do is develop their own specialties that are unique in the region and that will naturally attract investment.

This can be by creating a unique environment for doing business that cannot be found anywhere else, such as creating a safe regulatory environment in which to develop new financial products and services. Or it could be by developing expertise in a particular area, such as Islamic finance.

Understandably, Islamic finance has proven to be a particularly strong area of ​​development for the Gulf States. And as we can see from the Islamic forex account at AvaTrade, there are many new and exciting services being offered in the region.

The future of fintech in MENA: what awaits us?

That said, the future of fintech in the MENA region looks incredibly bright. The sector has experienced extraordinary growth in the region over the past two years.

At the heart of this was a real desire by the government powers in countries like the UAE, Saudi Arabia and Bahrain to not only radically transform their economies, but also to change the business environment as a whole. And it is this combination of economic and cultural shifts that will help drive growth in the region.

Coupled with the wider shift in oil production and the rapid growth of tourism in the region, the future looks bright for the Gulf states.

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