UAE’s fintech sector is getting its ‘eureka’ moment: Adeeb Ahamed of LuLu Financial

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The consumer facing fintech apps may be getting all the limelight. But there is the enabling technology that is getting delivered and will help fintech expand its reach. Image Credit: Supplied

Technology has made possibilities infinite. The speed of consumer-to-market and vice versa has greatly advanced, benefitting businesses in sync with evolving social behaviors.

Reaping its rewards the most is the fintech sector, which has surfaced as a destination of sorts not just for banks, finance houses and traditional FIs, but also for social media giants and tech companies, each looking to tap into new-gen consumers through one of many unsolved pain points.

Identifying and solving consumer pain points is nothing new, but in the case of a sector as regulated as financial services, there are several pitstops and pitfalls towards creating a standardized user experience. This is as much a problem as an opportunity, and for every new consumer-facing fintech company basking in the limelight, there are hundreds of B2B tech companies sprouting in the background.

The ones silently advancing the areas of user experience actually power the fintech engine. These B2B players, unknown to the larger public, provide the nuts-and-bolts for the industry. They may not be fully regulated, but remain aware of the industry norms, in a way that allows the popular consumer-facing platforms to rollout their services without worrying too much about the backend processes.

Potential of micro-tasks

How significant are they in the context of the rapidly maturing fintech revolution? For that, let us step back and evaluate where these companies fit into the larger scheme of things. Consider a payments app, where the user journey can be broadly divided into four major tasks: 1) self-onboarding and user login; 2) capturing the beneficiary and transaction details; 3) executing the transaction; and 4) post-transaction enquiry and support.

In its most basic form, the first task may seem like two simple actions, but breaking it down reveals multiple micro-tasks, mostly around the areas of e-KYC, app security, user validation, etc. Each of these micro-tasks are tech-intensive and a multi-billion dollar vertical, of which e-KYC is the newest unicorn involving multiple technologies bundled into a unified ‘Software-as-a-Service’ model.

A single app may act as the user interface, but businesses providing the critical backdoor processes have come to rightly hold their own within an otherwise highly competitive ecosystem. Visibly then, there are several tens of micro-jobs waiting to be solved, each of which has emerged as a potential business vertical.

No monopoly in the making

The good news is that the industry’s scope prevents the B2B segment from becoming a monopoly of sorts. There is no one-size-fits-all or winner-takes-it-all scenario.

Building efficiency and constant innovation around these micro-tasks is a necessity at this stage, and this offers a welcome scenario for start-ups and tech companies looking to get a foothold into the sector.

Public-private intervention

From the perspective of the MENA region, the growth of these enabler-companies holds great potential – and greater purpose. As the pandemic has revealed, the region requires innovation at the highest level, if only to service the urgent need for accessible digital solutions that can bridge the gap in matters of financial inclusion.

The region’s stakeholders know what works best for the finserv ecosystem here, and public-private cooperation in building the sector’s nuts and bolts can be an incentive to get the larger consumer-facing companies to invest in the region.

Early indicators look positive in this regard, with studies suggesting that the number of fintech companies in the MENA region will leapfrog by 2022. It would of course be more encouraging if a good proportion of these have the capability and backing to build tools that can advance the sector’s grassroots.

Built-in advantages

In this regard, the UAE already stands tall with a major advantage. Singapore, UK and Hong Kong have been making a series of reforms to attract the best fintech talent to their shores. And similarly, the UAE’s world-class infrastructure, easy access to funds and superior living conditions put it in a position of strength to groom the ever-growing open banking ecosystem and become the innovation hub the MENA region so requires.

The DIFC FinTech Hive and ADGM are already home to several companies working in areas of contactless payments, digital identification, corporate solutions, and data management. All of which are sub-sectors solving one of the many pain-points for consumer-facing fintechs.

The fintech sector of 2021 is ripe for the taking, much like the formative years of the modern financial sector two centuries ago. The time is right for the UAE to exert greater influence and build on its strengths to set itself up as a regional hub of the ecosystem’s tech backbone.

This will ultimately attract the right tech talent and catapult the country to a position where it can play a bigger role in the region’s vision for greater financial inclusion.

Adeeb Ahamed

The writer is Managing Director of LuLu Financial holdings and Vice-Chairman of FERG (Foreign Exchange Remittance Group).