Fintech in the Middle East: A guide to the local ecosystem

In recent decades, the Middle East has played an ever larger role in global economics and finance. While it’s not yet a major player in the world of fintech, it might not be long before it becomes one. The region’s fintech sector is growing fast, and it’s attracting global attention. 

But what makes the local fintech economy different to those in other regions? What’s the region’s history as a fintech hub? And why should you consider moving your business, or partnering with a fintech, in the Middle East?

I’m the CCO at Tenity, and based on my hands-on experience in the Middle East, I share some key data and trends on the region’s fintech ecosystem. 

In this guide, I cover:

• Key numbers about fintech in the Middle East
• What’s the history of fintech in the Middle East?
• What makes the Middle East a great place for fintech?
• What’s the future of fintech in the Middle East?
• What are some well-known fintechs in the Middle East?
• What’s Tenity’s role in this ecosystem?

‍Interested in working or partnering with fintech brands in the Middle East? Get in touch to find out more about how we can help.

Key numbers about fintech in the Middle East

As an introduction to the local fintech scene, here are some statistics about the financial services and fintech industries across the Middle East. 

According to a 2023 McKinsey report on fintech in MENAP (Middle East, North Africa, and Pakistan), the region has seen a period of substantial growth since 2017:

• Investor backing increasing by approximately 36% annually from 2017 to 2022.
• Investor funding for fintech startups more than quadrupled from under $200 million in 2020 to approximately $885 million in 2022.
• Over the same period, the share of rounds exceeding $10 million increased from 4% to over 15%.
• In 2022, United Arab Emirates attracted 37% of funding, andsome text
  • Saudi Arabia received 25% 
  • Egypt received 20%
  • Bahrain received 12%
  • Pakistan received 5%.

In 2023, funding in fintech in Europe, the MENA, and Africa fell to its lowest annual level in seven years, according to KPMG. However, there are predictions that 2024 will see growth once more. 

In fact, the Middle East shows particular potential for growth. According to the IMF, only 17% of consumers in the Middle East use digital banking, compared with 60% in the US. That’s even though 99% of people in the UAE have digital access, compared to 71% in Egypt. 

What’s the history of fintech in the Middle East?

Stretching from north Africa to Iran and Iraq, much of the Middle East can’t be said to have a particularly active fintech sector. That activity is generally confined to the Gulf, including countries such as Saudi Arabia, Qatar, the United Arab Emirates, and parts of north Africa. 

While these countries have long had their financial services industries, they’ve not historically been known for their fintech growth and innovation. Instead, as the IMF has claimed, the particular structure of Middle Eastern economics has tended to “favour incumbents” at the expense of innovation.

Yet this has changed in recent years, as the Gulf states in particular have become increasingly wealthy with a growing middle class. This has provided a new pool of consumers who have money to spend, manage, and invest—increasing demand for consumer-focused fintech products. Combined with high levels of digital penetration, these consumers mean there’s lots of opportunity for fintech solutions.

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Lately, governments in the region have identified this opportunity and have been pushing for a place within the global fintech landscape. For instance, as part of their strategies of diversifying away from oil and gas, the Gulf Cooperation Council (GCC) countries—including Saudi Arabia, Bahrain, Qatar, Oman, UAE, and Kuwait—have moved decisively into fintech. 

And so, fintech hubs have opened across the region, which have been mapped by PwC: 

Let’s take the example of Saudi Arabia to illustrate the kinds of government support that have defined the industry. Fintech Saudi was established in 2018 and, within 20 months, it had set up a regulatory sandbox framework, new payment laws, licensing policies, and a commercial register featuring fintech activity. In July 2018, the first two fintech firms were licensed too. 

Since then, more measures have been introduced. For instance, in 2020, Flat6Labs launched the first Saudi financial technology accelerator. Plus, the government has launched an instant digital payments system and developed a new strategy for open banking. All of these measures have come under the fintech strategy that’s part of the Saudi Arabian government’s Vision 2030 plan. 

But Saudi Arabia is not the only country with plans for fintech. In 2019, Bahrain adopted open banking, becoming the first state in the Middle East to do so—and UAE has plans of its own to do so. Egypt, Qatar, and Mauritius are among other countries with economic strategies with a strong focus on developing fintech.

What makes the Middle East a great place for fintech?

As it continues to grow, the Middle East is an exciting fintech environment to be part of. Here are three key reasons why it’s worth partnering with a local fintech, or moving your own fintech into the region. 

1. The Middle East has large sovereign funds that are actively investing

One of the most important strengths of the Middle Eastern fintech scene—particularly in the Gulf states—is its powerful state support. 

These states are actively diversifying their economies from petrochemicals to other industries, including tech and finance. Fintech in particular is a major recipient of the investment.

The largest investors in these countries are sovereign funds, i.e. large state-owned investment funds that are actively looking for opportunities to invest. According to one study, the region’s 10 largest sovereign wealth funds manage nearly $4 trillion between them—a sum larger than the UK economy. 

That doesn’t even include private individuals who are looking to invest. The Middle East is the world’s fourth largest wealth hub, and the number of ultra high net worth individuals is expected to increase by 24.7% by 2026. 

So, what does this mean for fintechs? Ultimately, as an important centre of both state and private wealth, it’s a great place to search for investment. 

2. It offers access to a large, diverse, and growing market

Not only does the Middle East provide a lucrative opportunity for investment—it’s a large and diverse market for fintechs too. 

Historically, the area has been fragmented into small states, where over 60 different languages are spoken. This diversity has been a challenge for fintechs with global ambitions, as these companies need to ensure compliance in each individual territory. 

However, economic unions in the area such as the GCC have helped to reduce these obstacles. The Gulf now has a customs union and there has been talk of a monetary union with a single currency. While this has yet to materialise, a reduction in economic borders is the direction of travel. 

Still, the range of different currencies in the region provides opportunities for fintechs in FX and payment orchestration. Meanwhile, the region’s linguistic diversity provides a robust testing ground for fintechs involved in AI, as they have the chance to experiment with different languages and alphabets.

For consumer-focused fintechs, the Middle East also offers opportunities thanks to its sheer size. Often, fintech is simply a numbers game—and countries like Turkey and Egypt (both with over 80 million people) offer a large market for these companies to expand. 

3. The Middle East is a bridge between the east and west, allowing founders to have the best of both worlds

Europe has thriving fintech hubs in the likes of London, Estonia, and Switzerland. Meanwhile, Asia’s centres of finance, such as Singapore, are stronger than ever. With its ambitions to be a global hub, the Middle East looks both ways and takes part in the best of both worlds. 

For instance, the Middle East could be a strategic hub for Islamic finance initiatives—i.e. finance methods and tools built around Islamic teachings. If fintechs were to develop Islamic finance apps from a central location in the Middle East, these could spread east and west to the 1.9 billion Muslims across the planet. 

In other ways, the Middle East is already adopting trends from both sides of the world. For example, the MENA region has a number of super-apps, such as Careem, Talabat, and Noon Food. This is a phenomenon that’s much better known in Asia than in Europe, with the likes of the Chinese app, WeChat. 

It’s not just tech trends that meet and influence each other in the Middle East. According to PwC, there are around 30 million expats in the GCC—i.e. over half of the bloc’s entire population. 

For one thing, this has contributed to a strong market for remittances. But it’s also created a vibrant environment of international investors, businesspeople, and founders in which everyone is learning from each other. 

As a fintech, that means you’ll be taking part in a diverse and supportive startup community, where you can access talent and opportunities from across the globe.

What’s the future of fintech in the Middle East?

With the region’s robust state backing and significant financial strength, we expect the Middle East to continue to develop as a fintech hub. 

In fact, recent large valuations suggest that many investors have confidence in the local fintech scene. The buy-now-pay-later startup Tamara has reached a $1 billion in its latest equity funding round after raising $340 million. Meanwhile, the super-app Tabby has also been valued at $1.5 billion in a pre-IPO fundraise, according to PWC. 

There are big ambitions among states too. For instance, Saudi Arabia plans to become one of the world’s major fintech hubs. By 2030, it wants to:

• Establish at least 525 fintech companies (compared to 200 in 2023)
• Open 18,000 new fintech job roles (compared to 5,400 in 2023)
• Reach over SAR $13 billion in GDP (compared to $1 billion in 2023)
• Achieve SAR $12 billion in venture capital contributions (compared to $1.4 billion in 2023)

Overall, this combination of state ambition and investor enthusiasm makes us optimistic about the future of fintech in the Middle East. 

What are some well-known fintechs in the Middle East?

Some well-known Middle Eastern fintechs include: 

• Tabby. Previously headquartered in Dubai, Tabby is now based in Riyadh. It’s a buy-now-pay-later app serving 11 million customers and 40,000 retailers in Saudi Arabia, Kuwait, and the UAE. Tabby was valued at $1.5 billion in September 2023.
  
  
• Tamara. Another Saudi buy-now-pay-later platform, Tamara became a unicorn in 2023 after raising $340 million in equity funding.
  
  
• Foodics. Foodics is a cloud-based restaurant management and payment tech company. It has eight offices across Saudi Arabia, the Netherlands, and the rest of the Middle East, and it operates in 35 countries. It has raised $198 million in funding.
  
  
• Fawry. An Egyptian e-payment platform, serving over 50 million customers. The company’s net incomes nearly tripled in 2023 compared to 2022 and its market cap is now over $830 million. 

What is Tenity’s role in this ecosystem? 

Tenity started in 2015 as an open innovation programme at SIX, the Swiss Stock Exchange. Today we run custom innovation programmes for corporates, as well as our own accelerators, helping startups and corporates work together at the intersection of financial services. In 2024, Tenity acquired Hackquarters, a startup accelerator company based in Istanbul and London. 

There are 3 main tasks we perform in the Middle East. 

1. We act as matchmakers between startups and financial corporates

At Tenity, we connect financial corporates with startups that can solve their innovation challenges. Thanks to these connections, startups can benefit from corporate expertise, while incumbents get the opportunity to invest in and partner with exciting startups.

In practice, this takes three forms:

• We run our own startup accelerators. While we’re yet to launch one of our custom Tenity accelerators in the Middle East, we regularly have Middle Eastern startups and investors that are active in our European and Singapore hubs.
  
  
• We work with financial institutions to run their own accelerators. For instance, between September 2023 and May 2024, we ran the Hackzone accelerator in Istanbul for Allianz Turkey, working with startups and scaleups looking to grow globally.
  
  
• We invest—and help other investors invest—in startups. Investors are welcome at our startup accelerators, or you can invest via our own venture fund. Either way, we help to stimulate the local fintech economy. 

Whatever we do, we’re entirely focused on fintech. This way, we give all our partners—corporates, startups, and investors—the opportunity to work in a highly specialist environment.

2. We bring global finance expertise to the Middle East

Tenity helps corporates solve their challenges in innovation, no matter what stage of the innovation cycle they’re at. Across our hubs in Turkey, the Nordics, Switzerland, and Singapore, we’re a central player in all things innovation within the fintech and financial sector. 

We work with financial institutions in all of these regions, including Franklin Templeton, UBS, Julius Baer, Allianz, and more. We also have experience working with a wide range of technologies too, such as Web3, B2C superapps, and AI. This varied experience means we can support all kinds of startups and financial institutions, no matter the challenges they face. 

For instance, if you work for a corporation that has ambitions to grow globally, or to target markets in the east or west, we can help. Typically, finance is a regional game, where scaling means overcoming regulatory differences in different countries. We have the expertise to help you do exactly that. 

This expertise is particularly useful in a context such as the Middle East with few unicorns. Local founders in the region are typically keen to learn from Asian and European experts. With our wide network, at Tenity we can ensure you can access the knowledge you need to grow.

3. We help corporates invest in fintech startups

Since 2015, we’ve been exclusively focused on the finance industry. We’ve worked with startups, corporates, investors, and other experts, to track the most important themes and solve the most pressing challenges. 

We can help your financial institution find the best opportunities to invest, either within the Middle East or elsewhere around the globe. We enable you to invest directly, or you can join our venture fund to be part of the fintech ecosystem. 

If you’re not ready to invest just yet, we can still help. For instance, we can help you collaborate with startups on specific problems. Alternatively, we can help you create your own innovation strategy from scratch. With our in-depth knowledge of the fintech space, we can help you stay on top of up and coming themes and identify new opportunities. 

Fintech in the Middle East: A growing opportunity

The Middle East is an exciting place for a fintech company if you’re looking for opportunities for investment, strong government support, and a global hub of talent. 

At Tenity, we’re proud to be a player in the region’s fintech economy. Reach out to us to find out more about what we do.