The Rise of FinTech in MENA: Jordan Edition

Wed, Sep 9, 2020


The MENA region lies within the heart of the world, where economic diversification and the R&D/innovation economy will play a key role in the growth of the region’s ecosystem. FinTech in MENA is relatively nascent, yet we are seeing growth propelled by key favorable fundamentals: youngest demographics globally, highly digitalized and tech-savvy population, high internet penetration levels, and high smartphone usage. As FinTech is interconnected with various industries, many sub-sectors will become the infrastructure to grow the adoption of FinTech services. For instance, e-commerce has witnessed tremendous growth especially with the COVID-19 driven lockdowns in the region - which contributed to shifting customer behavior and accelerating digitization.


We have seen a growth of online entrepreneurs and VC investments in the ecosystem, which increased the appetite of investors. FinTech startups in the region have raised over USD 500 million, and the FinTech sector has received the highest amount of investments in MENA in 2019. Today, we have more than 310 Fintech startups in MENA with around 7% based in Jordan. The growth of FinTech startups is being led by the increase of international interest in the region. For instance, regional success stories include Careem (acquired by Uber) and Souq (acquired by Amazon). Notable FinTech deals include the acquisition of Beam Wallet and Fawry by Majid Al Futtaim.


If we look at the regulatory landscape in MENA, regulation has been an enabler, and without regulatory frameworks, FinTechs cannot exist as they will operate in gray areas where the ripe of innovation and growth is limited. Looking closely at the region, there is an increasing level of government support, as some governments are now understanding that they need to play a much faster and aggressive role in ensuring the regulatory landscape is easier to navigate by facilitating easier access to funding. If we look at Jordan, the ISSF (Innovative Startup & SMEs Fund) launched a USD 100 million fund focused on the fund of funds and direct investments. Other initiatives include regulatory sandboxes, which enable a safe environment for FinTechs to test their solutions. These fundamentals open tremendous opportunities for MENA and Jordan to become fertile grounds for FinTech innovations.

Jordan is more of a trend follower than a trendsetter, and a lot of what we see in Jordan is really mirrored to what is seen globally. Payments and remittances are the predominant industries in line with e-commerce growth. MadfooatCom has really shifted the e-payment infrastructure in Jordan, yet there are emerging new opportunities for alternative payments, which enable small businesses to start accepting credit card payments in-store or in an omnichannel aspect (example: POS Rocket).


In addition, Buy Now Pay Later (BNPL) solutions support e-commerce platforms and providers in offering customers payment installments. We are going to see more payment functionalities that are focused on social commerce since many businesses are migrating online and will require new types of solutions that can help them in accepting payments and accessing funding. As such, this is where alternative lending comes into place, where instant loans can be provided based on the company’s cash flow.
Banks have been accelerating their innovation capabilities by launching different digital banking solutions into the market. We also saw FinTechs outside Jordan supporting the digitization of banks, whether it is by launching innovative wealth management solutions or enhancing corporate banking services. This is mainly driven by the sandbox environment existing today in Jordan, which enables international companies to easily set up their operations in the country. Finally, regulatory technology (RegTech) is another growing vertical, mainly driven by a large number of people moving online, which imposes significant cybersecurity and privacy risks to consumer businesses and financial institutions. At AB Accelerator, we invested in Seclytics, a US-based startup that provides zero-day cyber threat detection and intelligence aggregation.


Regulators and FinTechs

Regulators need to play a more progressive role in enabling innovation and adapting to the changing behavior of consumers. Regulations should always protect consumer rights without hindering innovation and actively listen to the needs of FinTech providers. Collaboration is essential and regulators should work hand in hand with FinTechs to ensure their growth and success.
The sandbox environment is a great initiative as it supports FinTechs by safeguarding them and enabling the testing of solutions, thus opening new doors of innovation in the ecosystem. For example, Cliq is a new payment infrastructure that will enable new innovations to be built on top - which will serve as a great platform to support the ecosystem. However, FinTechs need more direction on emerging technologies and how to proceed in filling innovation gaps and introducing solutions within new technology verticals. FinTechs also need more clarity on ‘post-graduation’, in order to have a clear timeline and roadmap after graduating from a sandbox program. From a strategic point of view, FinTechs need to build an exit strategy from the sandbox, focusing on available market opportunities and how they can connect to new clients.


Jordan role in the MENA FinTech Map

Jordan lies within the heart of the Arab world which makes it strategically positioned as the ideal kitchen for startups who are looking to kick-start their operations in the region. Today the Jordanian Ministry of Digital Economy & Entrepreneurship is working with the Jordan Central Bank and other government entities to collaborate with FinTech startups and expand financial inclusion in the country. This includes increasing the adoption of digital payments in both the private and public sectors. For example, Jordan’s strong e-payment capabilities are serving as the infrastructure for the introduction of new financial technologies within verticals such as remittances, insurance, and alternative funding. As the market matures and customer technology adoption increases, we will see more sophisticated FinTech solutions in verticals such as wealth management or Robo-advisory.
Furthermore, Jordan is witnessing an increase in startup funding, as we are seeing the establishment of new funds and growth of investment activity - which will play a key role in accelerating FinTech innovations. In the B2B space, FinTech and InsurTech startups will support in digitizing the services of banks and insurers. Lastly, we are going to start seeing tremendous growth in embedded fintech, not only in Jordan but also in the MENA. For instance, startups offering marketplaces or consumer products will start embedding FinTech services with the objective of becoming ‘super apps’


The interplay between financial institutions and FinTechs

Banks in the region have implemented different strategies in their digitization journey. Certain banks focus on building their own digital solutions internally, while other banks prefer buying solutions or collaborating with FinTechs. At Arab Bank, we established two innovation pillars: AB iHub and AB Accelerator. These two pillars primarily focus on collaborating with the external FinTech ecosystem. Under AB iHub, we conduct rapid prototypes, FinTech ecosystem collaborations, and FinTech bootcamps that provide entrepreneurs with idea validation and mentorship support. Last year, we launched an open banking API platform that enables the FinTech ecosystem to start testing their APIs in a sandbox environment.

Under the AB Accelerator program, we primarily focus on accelerating the adoption of emerging FinTech technologies into Arab Bank’s infrastructure and network. We focus on conducting proofs-of-concept (POCs) to allow startups to validate their product-market fit within our own environment that is safeguarded under the bank’s license. AB Accelerator also conducts early-stage investments in FinTech startups that are strategically aligned to Arab Bank.

We also established AB Ventures, a corporate venture capital fund that focuses on investing in startups that achieved product-market fit and are scaling.



Arab Bank has a global banking network with a strong presence in the MENA region. We understand that FinTech startups face major difficulty in scaling due to market fragmentations and regulations. Therefore, we want to work with FinTech startups to support them in scaling and accessing new markets by leveraging our regional and international network. We also aim to support FinTechs in setting up operations in new countries. Today, we have an innovation hub in Jordan and we will soon be launching new innovation hubs in Egypt and UAE - to build an interconnected network to support FinTechs in growing and scaling in new markets. If you are experienced in financial services or FinTech and planning to join a FinTech program, you can apply to the AB Accelerator program and take part in reshaping the financial industry in MENA.