The financial technology sector in the Middle East and North Africa region is poised for continuous growth despite the macroeconomic challenges such as inflation, interest rate fluctuations, and bank collapses, according to Dubai-based startup data-crunching firm MAGNiTT.
At a time when geographies across the Middle East and Africa have seen funding and deal declines, a number of high-profile funding rounds have closed, according to the report.
And financial technology companies appeared in about 29 financing deals during the second quarter of this year at the level of Africa. For example, TymeBank from South Africa and M-Kopa from Kenya raised more than $100m together.
The FinTech sector continues to grow rapidly in the African region driven by increasing rates of access to technology and a large population that lacks access to financial products, according to the report.
For the MENA region, investors have shown caution in the current market environment, which has led to lower deals and larger funding rounds.
Early-stage funding rounds saw an increase in share as investors preferred funding rounds that were smaller in value and less risky, while M&A activity was on par with last year’s figures.
According to the report, the value of funds collected by financial technology companies during the second quarter of this year amounted to about $256m, with 32 transactions.
However, despite the volatility, there is a strong opportunity for fintech startups in the upcoming trends, compared to traditional banks that can tighten their lending standards or increase borrowing costs for customers at such a time as this creates an opportunity for fintech startups to provide alternative lending options at more competitive rates and more flexible terms.
The report believes that the shift towards artificial intelligence has the potential to revolutionize various aspects of the industry, including banking services, payments, and investments.
Fintech companies can leverage AI and machine learning to automate processes, reduce costs, and gain more accurate insights into customer behavior.
Despite the challenging macro landscape, the FinTech industry continues to present opportunities for growth.
