A regional fintech index has been launched to track the development of the fintech sector in Arab countries.
The United Arab Emirates (UAE) comes out in pole position on the Arab Monetary Fund (AMF)’s ‘FinxAr’ index, with the Kingdom of Saudi Arabia in second position and Bahrain ranked third.
The index, whose full name is the ‘Index of Modern Financial Technologies in the Arab Countries’, aims to ‘shed light on developments in financial technology and digital financial services’ in Arab countries from 2018 to 2020, the AMF said as it unveiled the inaugural list.
The ranking’s compilation is part of Arab authorities’ efforts to encourage the fintech sector and digital financial transformation ‘in a way that serves to enhance inclusiveness, financial stability and opportunities to achieve sustainable development’, the AMF said.
But the index also highlights where nations typically to step up their efforts to help the fintech sector, particularly access to finance.
How the ranking was compiled
The AMF describes the index, which it plans to produce annually, as the first of its type in terms of its remit and countries being assessed.
The index consists of six main indices that represent what the AMF sees as the main pillars of a nation’s fintech ecosystem: policies and legislation; demand for fintech products and services; access to finance; financial markets infrastructure; talent; and ‘collaboration and partnerships’.
With an overall score of 75 per cent, the UAE ranked first in the overall table thanks to ‘multiple efforts’ to help the fintech sector, including work to promote financial awareness and education, as well as international partnerships.
Second-placed Saudi Arabia was marked at 65 per cent, benefiting from initiatives such as schemes to enable access to finance for small- and medium-sized enterprises. Bahrain scored 64 per cent, reflecting its progress in developing legislation and financial market infrastructure.
Tunisia ranked fourth (55 per cent) and Egypt was fifth (52 per cent), with the latter scoring particularly well on talent, ‘a reflection of various initiatives at the national and universities level’, according to the AMF.
Covid-19 puts focus on fintech
Fintech promotion and adoption has been increasing worldwide as a part of the trend towards digitisation as a result of Covid-19.
The AMF acknowledges this trend in commentary accompanying its index, noting that ‘there is no doubt that the improvement [in fintech development] is related to the acceleration by Arab countries in supporting remote financial activities and transactions amid the Covid-19 pandemic during the year 2020.’
But despite this global trend, and the adoption of fintech strategies by many governments, the AMF says that the FinxAr index highlights challenges that require greater focus.
Overall, the indices for talent and ‘collaboration and partnerships’ scored an average of 50 per cent and 49 per cent respectively; demand and policies both scored 44 per cent; while financial market infrastructure and access to finance scored 39 per cent and 18 per cent, respectively.
The FinxAr list (available in Arabic as a 16-page download) was launched to coincide with the ‘Arab Day for Financial Inclusion’ on 27 April and was presented by His Excellency Dr Abdulrahman Al Hamidy, AMF director-general and chairman of the board of directors. It is based on the results of a questionnaire sent to central banks and Arab monetary institutions.
The AMF, headquartered in Abu Dhabi in the UAE and which has 22 members, published ‘A Vision of Open Banking in the Arab World’ six months ago, a 22-page report outlining the different approaches taken to open banking across the diverse region.