Data is a prized commodity, particularly in financial networks where continuous analysis of transactional data is driving innovation. The Levant region, where banking and finance are undergoing a significant transformation, is no different.
The adoption of open finance frameworks across the financial sector has made banking a lot more simple, seamless and straightforward for customers. Indeed, open finance has evolved from open banking, offering a holistic framework that relays the financial mapping of a customer, going beyond banking to include mortgages, savings, pensions, insurance, and more. Within such a framework, the sky is the limit for innovation.
Our research Understanding the Fintech Landscape-Levant, which was conducted in Jordan, Lebanon and Iraq, reveals that 71% of fintechs are founded to address a specific problem or market need.
In the Levant region, individual financial markets are at varying degrees of their transformation. Several factors are contributing to the rapid expansion of fintech solutions in the Levant region, which is driven by governments, banks, financial institutions, and consumers. According to our research, 83% of fintechs attribute increased digitalisation as a key driver of growth, while 78% highlight market readiness. Fintechs add relevance and personalisation to consumer journeys through technology and collaboration. Real-time payments, for example, benefit expatriates by offering secure remittance options. By accessing consumer data, banks and financial services can tailor their solutions to meet market demands better and capture new opportunities.
The role of regulators in an open finance framework is also crucial, with our research indicating that more than half of fintech respondents require regulatory and infrastructure support. There are bright sparks in the region’s regulatory landscape, with the Jordanian & Iraqi governments both making several positive moves, such as implementing effective regulatory support, legal frameworks catering to data privacy, and financial inclusion initiatives. All of these can have a profound effect on the status quo. Fintechs also have a vital role to play here – by giving underserved populations access to essential, cost-effective, secure and convenient financial services, such as accounts, digital wallets, peer-to-peer transfer capabilities and more.
The Levant region has a young population with the appetite to use more technology daily. Our survey showed that more than 90% of fintechs in the region believed digital marketing campaigns remained their top customer acquisition strategy in the form of email marketing and social media campaigns. Through the transparency of open finance, innovative products and secure services immensely help to build consumer trust in digital financial services such as payments, peer-to-peer transfers, remittances and more.
Open finance offers several advantages. For service providers, it translates to better market offerings, expansion into new markets, improved customer retention, and enhanced risk management, while consumers benefit from tailored solutions and increased transparency. The open finance network also facilitates the inclusion of emerging technologies such as artificial intelligence and new digital currencies.
Fintechs, with innovation at their core, are critical to the progress of financial markets. Our analysis highlights growth factors such as increasing digitalisation (83%), market readiness (79%), and government initiatives and support (63%). The recently held Visa Everywhere Initiative in the Levant region introduced startups in Jordan, Iraq, Lebanon, and Palestine to a global platform to showcase new solutions that show potential to take commerce and payments to the next level. What was most exciting was that our region showed they are operating at international levels when our Jordanian fintech won the Central Eastern Europe, Middle East and Africa (CEMEA) leg of the competition.
Fintechs are crucial in developing a transparent and secure financial ecosystem. Through open finance, they build consumer trust in digital financial services like payments, peer-to-peer transfers, and remittances. The transformation of the financial sector in the Levant will lead to a more efficient, transparent, and inclusive financial ecosystem. Collaboration between fintechs, regulators, and traditional financial institutions will be key to unlocking its full potential, benefiting individuals, businesses, and the wider economy.
