The financial technology (fintech) sector has been making waves across the globe, especially in emerging markets. As the world becomes increasingly digital, the potential for fintech to revolutionise the financial services industry is immense.
As a home grown GCC company, our societies are composed of a high percentage of young adults who are looking from the industry mobile first, digital only, and instant services. This created a huge demand for Fintechs supported by the government and demand which we also have foreseen.
Emerging markets have historically faced challenges in providing access to basic financial services for the masses. A significant portion of the population is underserved; Fintech innovations, however, are bridging this gap.
By leveraging technology, and distribution models, fintech platforms are extending digital services efficiently and inexpensively to vast segments of the population, transforming the financial landscape in these regions.
According to a report by Global X ETFs, emerging markets make up nearly 86% of the world’s population but produce only 40% of global economic output. Yet, with the rise of fintech, these markets have seen a surge in consumer-oriented growth, with fintech platforms addressing unmet demands and filling gaps left by traditional financial institutions.
The proliferation of smartphones and mobile connectivity in emerging markets has paved the way for mobile transactions to flourish. For instance, China has witnessed a significant rise in mobile phone usage, with smartphone ownership growing from 56% in 2011 to 96% in 2018. This growth has led to a surge in mobile payments, with China recording over $15 trillion in digital spending in 2017, a stark contrast to the $2 trillion in the US.
Government Support and Regulatory Frameworks; emerging market governments are increasingly supporting fintech initiatives through various means, including meaningful regulations, infrastructure development, and pro-consumption policies. Many are also fostering domestic fintech efforts by establishing start-up hubs and clusters. The sandbox approach, which allows new fintech products and services to be tested under relaxed regulatory conditions, is being adopted by various emerging market regulatory bodies, promoting innovation and financial inclusion.
The Future of Fintech in Emerging Markets; the rapid growth and adoption of fintech in emerging markets indicate a promising future. As technology continues to evolve and integrate deeper into daily life, the potential for fintech to further transform the financial landscape in these regions is vast. With continued support from governments, investments from big tech companies, and innovative solutions addressing the unique challenges of each market, fintech is poised to play a pivotal role in shaping the future of finance in emerging markets.