The financial technology industry will emerge stronger from the post-coronavirus period as more people turn to digital payments as they work remotely and practice social distancing, according to the Dubai Future Foundation.
“This sector will successfully overcome the crisis … thanks to its efficiency, reliability and clear ability to influence the global economic system,” the report said. It did not provide any forecasts for growth or details on the size of the market.
FinTech companies, which focus on lowering transfer fees and reducing transfer times, are gaining substantial funding on a global scale, though. According to KPMG's Pulse of FinTech survey, FinTech companies were involved in 2,693 deals last year worth $135.7 billion (Dh498.4bn), which was 3.7 per cent below the $141bn record set a year earlier. The industry in the Middle East and North Africa region is set to attract $2.5bn by 2022, according to a study by Mena Research Partners.
More than 92 per cent of people in the UAE use smartphones, presenting a substantial opportunity for FinTech companies – particularly those in the mobile payments sector, which is set to grow in the UAE at a rate of 30 per cent year-on-year, according to McKinsey.
DFF noted that the pandemic could be an “opportunity” for companies to accelerate the digitisation of financial services, while the public sector can explore the use of digital currencies.
As many people cannot physically visit banks due to the precautionary measures taken to tackle contagion, improving their access to digital services will be “critical”.
Banks and other financial intermediaries should augment their digital platforms and reduce the costs associated with online banking, said DFF, adding, “Such costs should be streamlined or entirely removed where possible”.
Digital currencies could help with this, as the central banks of Saudi Arabia and the UAE – the Arab region's two largest economies – already have a pilot programme to develop a shared digital currency for cross-border bank transactions, launched last year.
The speed at which digital currencies can be transferred, through digital ledger technology, would allow governments to provide liquidity to vulnerable groups much faster than using traditional methods, it said.
“Traditional money requires the use of intermediaries such as banks to transmit payments, thus preventing the unbanked from accessing financial services,” said the report.
“On the other hand, FinTech provides alternative ways of making transactions that are faster and cheaper … and in some cases, more inclusive.”
Also on Sunday, payments company Mastercard signed an agreement with Hub71, the tech ecosystem being developed in Abu Dhabi Global Market Square as part of the emirate's Hub71 initiative.
The partnership will identify suitable Hub71 companies for Mastercard's global Start Path start-up engagement programme, which currently contains more than 200 companies who gain access to Mastercard's expertise, technologies and global channels.
"We will develop a unique mentorship programme for Hub71’s FinTech startups that helps them tap into both regional and global market opportunities, as well as technical and industry insights," said Ibrahim Ajami, chief executive of Hub71 and head of ventures at Mubadala Investment Company.