Challenger Banks in Middle East And Africa - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Abu Dhabi Global Market rolled out new digital banking licenses during the summer, hoping to attract new investors.

For now, there are only a handful of digital banks in MENA. All of them operate under an established lender’s license, such as Emirates NDB’s Liv; Mashreq Neo; CBD Now; meem by Gulf International Bank; and soon Bank ABC, Bahrain’s neobank.

There is increasing incorporation of digital means by the traditional players in the region and with a sigma to opt for bank credit in this region, unbanked population levels are always recorded high. There has been a decreasing trend in the unbanked population levels in the region. And the present pandemic conditions increased the importance of digital adoption.

The main challenge today remains onboarding and customer experience, both of which are still very manual and inefficient. Digital banks could also open up opportunities for local entrepreneurs-although barriers to entry and the sheer scale of traditional banks make it difficult to imagine a digital-only challenger bank starting from scratch in the Middle East. Challenger banks and neobanks from Indian sub-continent, Britain and the US are expanding into the region.

Key Market Trends

Market Opportunity: Large Unbanked Population in the region

Having a bank account and being able to withdraw or transfer money at any time is one of the things that people in developed countries take for granted, like clean water, electricity, or, to a lesser extent, internet access. In many regions of the world, however, access to basic financial services is anything but given with 1.7 billion people still “unbanked” in 2017 according to the World Bank.

Thanks to the rise of digital payment options and challenger bank - friendly regulatory environment in the region. The number of unbanked population in the region, as a whole, are reducing over the years.

Market Restraint: Cost of opening New business is high

The high cost of starting a new business in the U.A.E. is another challenge facing startups. However, the situation improved this year (2019 & 2020) with stimulus packages. For example, Abu Dhabi’s 50 billion-dirham over three years, which aims to reduce the cost of doing business, support SMEs, industrial companies, and infrastructure. More relaxed rules on fintech startups are likely to help ease the cost burden in the early years given that scalability remains an issue.

Competitive Landscape

The report includes an overview of challenger banks operating across the region. We wish to present detailed profiling of a few major companies which cover product offerings, regulations governing them, their headquarters, and financial performance. Currently, some of the major players dominating the market are listed below.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support