KPMG financial services experts on the Middle East’s fintech scene

Despite the Covid-19 pandemic, funds pumped into FinTech firms globally topped $100 billion for under the third time in historical past, demonstrating the sector’s rising significance inside the wider financial services panorama. 

The growth of worldwide fintech funding throughout merger & acquisition, personal fairness and enterprise capital offers was a narrative of two tales in 2020. Following a Covid-19 induced slowdown in the first half of the 12 months, fintech funding bounced again strongly in the second half, greater than doubling from $33.4 billion to $71.9 billion.

Having bagged a complete of $105 billion throughout 2,861 offers, 2020 was the third greatest 12 months on document in accordance with KPMG analysis. The US drove exercise in the M&A section, accounting for 9 of the high ten M&A offers, together with TD Ameritrade, Credit Karma ($7.1 billion), Vertafore ($5.3 billion), Iberia Bank ($2.5 billion) and Avaloq ($2.2 billion).

Global enterprise capital funding into FinTechs reached its second-highest stage ever at $42.3 billion, led by Ant Financial $14 billion elevating (the world’s largest personal financing spherical ever) and wealthtech Robinhood elevating $1.3 billion throughout two offers. Meanwhile, digital banks had been a vibrant spot, with Sweden-based digital financial institution Klarna elevating $650 million, Revolut elevating $580 million, and US-based Chime elevating $533 million. 

Middle East

The Middle East FinTech scene equally noticed a combined bag of outcomes. According to KPMG, most economies throughout the area have “labored diligently to reform their banking and financial services sector to help the evolution of a fintech ecosystem.” In the UAE for instance, the authorities and the sector launched open banking initiatives and are bettering entry to expertise.

Key areas of fintech funding in the UAE included funds, remittances, insurance coverage, on-line lending, digital banking, crowdfunding and, more and more, cryptocurrencies and crypto exchanges — significantly in the Abu Dhabi Global Market (ADGM).

Abbas Basrai, Head of Financial Services at KPMG in the Lower Gulf stated:  “A significant change that occurred in 2020 is that the UAE’s ADGM signed an MOU with the Israeli Security Authority and Bank Hapoalim to collaborate on FinTech innovation initiatives, together with supporting FinTech firms trying to set up a presence in the area. This transfer might be very helpful for the additional growth of each fintech ecosystems.” 

In 2021, biometric safety techniques, blockchain and synthetic intelligence are anticipated to learn from elevated funding in the UAE, along with open banking initiatives.

Total fintech investment activity in Saudi Arabia and UAE

In Saudi Arabia, funds and cash switch targeted FinTech’s have seen the most investor curiosity to this point. In 2020, the Kingdom continued so as to add to its applications that assist drive fintech innovation, together with improved visa applications for key information staff (Golden Visas) and the Saudi Central Bank fintech regulatory sandbox.

Ovais Shahab, Head of Financial Services at KPMG in Saudi Arabia stated: “The challenges of 2020 did current alternatives for the fintech ecosystem to develop manifold – particularly in the area of funds as hygiene consideration, e-commerce and different supply services catalysed cashless transactions.” 

Against the backdrop of rising focus on innovation and digitisation in financial services, KPMG is “witnessing growing curiosity from FinTech’s eager to broaden their presence in the area” stated Manav Prakash and Mahesh Balasubramanian,  Bahrain-based Partners in the agency’s Financial Services observe.

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