The Arab Monetary Fund, which aims to establish policies of Arab monetary cooperation and promote the development of Arab financial markets, has launched “Finxar,” which is a regional Fintech index for tracking the development of the financial technology industry in Arab nations.
The United Arab Emirates (UAE) is at the top of the list of Arab countries in the general index, “with an average of 75 percent,” according to a release.
As explained in the announcement, the index aims to reflect the “interest” and “efforts” of the Arab authorities during the past year towards “improving opportunities for the growth and employment of financial technologies and the improvement of the digital financial services environment.”
As mentioned in the update:
“The index shows the need for more effort [required] to facilitate access to financing for financial technology service providers, entrepreneurs, and emerging companies and to follow up on the development of incentive legislation.”
On the Arab Day for Financial Inclusion (April 27, 2021), the Arab Monetary Fund had officially introduced the Index of Modern Financial Technologies in the Arab Countries (FinxAr). The index aims to highlight the key developments in the financial technology sector and digital financial services in the Arab nations between 2018 and 2020.
The launch of the index is part of the Arab Monetary Fund’s effort and goal to extend support to Arab nations in promoting the Fintech sector and related digital transformation initiatives in a manner that “serves to enhance inclusiveness, financial stability, and opportunities to achieve sustainable development.”
As noted in the announcement, the annual index identifies the efforts of Arab nations in “enabling and promoting” Fintech adoption. It also “contributes to setting a vision for the modern financial technology industry in the Arab countries and how to support the Fintech ecosystem, in order to help formulate national policies to strengthen the industry in Arab countries in the future, where they harness potential opportunities and mitigate related challenges,” the announcement noted.
The update also mentioned:
“The General Index for Fintech in the Arab region (FinxAr) consists of six main indices that represent the main pillars of the Fintech ecosystem, including policies and legislation, the demand side, access to finance, financial markets infrastructure, talent development to support innovations, and finally collaboration and partnerships.”
The index findings aim to reflect the “interest” and “efforts” of the Arab authorities in the past years towards “improving opportunities for deploying financial technologies and digital financial services in addition to the implementation of national strategies and programs for digital transformation during the year 2020 is evident compared to 2018 and 2019.”
As noted in a release:
“There is no doubt that the improvement is related to the acceleration by Arab countries in supporting remote financial activities and transactions amid [the] COVID-19 pandemic during the year 2020. It is also related to the interest of many Arab countries to develop national strategies for Fintech and digital transformation that outlines a roadmap to build solid pillars to adopt Fintech and digital financial services, and hence digital financial inclusion.”
The index also points out some key challenges that will need more work, particularly “in terms of facilitating access to financing for Fintech service providers, entrepreneurs and startups, in addition to following up the development of financial market infrastructure.”
As noted in the update:
“The general index scored 43%, and the indices for talents, and collaboration & partnerships came in the forefront with 50% and 49% respectively, then the demand side and policies & regulations indices by 44% each, while the results highlighted the need to pay attention to the pillars of financial market infrastructure and finance, as they scored 39% and 18%, respectively.”
The results confirm that the UAE ranked first among the Arab nations in the “general index with a percent of 75%, thanks to the multiple efforts to enhance the diverse fintech activities, and the various initiatives employing the latest financial technologies and providing the requirements that would improve their adoption.”
The update also mentioned:
“The Kingdom of Saudi Arabia came in second place with a rate of 65%, … for the development of the demand side and the availability of financing, due to the various initiatives sponsored by the authorities in assisting technology centers in supporting digital financial products and solutions in the Kingdom, and to enhance financial education. In addition to the various awareness programs, enabling the access to finance for small and medium enterprises. It also ranked third at the level of the leading indices of policies & regulations, financial market infrastructure, and talents.”
The Kingdom of Bahrain “went to a rate of 64%, which reflects the Kingdom’s progress in terms of legislations and financial market infrastructure, through its acquisition of the first rank in the indices of policies & regulations, and the financial market infrastructure, thanks to adopting comprehensive policies to build a supportive regulatory framework for the Fintech industry at the national level, and creating a comprehensive legislative infrastructure for the various Fintech activities.”
As noted in the release, the fourth rank in the general index went to the Republic of Tunisia with “a rate of 55% as a result of its progress in the main indices related to policies & regulations, and financial market infrastructure, reflecting the efforts of the multiple authorities in these aspects.”
The announcement revealed that the Arab Republic of Egypt “ranks fifth in the general index with a rate of 52%, due to Egypt’s acquisition of the first place in the talents pillar, as a reflection of the various initiatives at the national and universities level. “
The Director General, Chairperson of the Board of Directors of the Arab Monetary Fund, Dr. Abdulrahman A. Al Hamidy “expressed his pleasure at launching the index, which is based on the results of a questionnaire sent to all central banks and Arab monetary institutions, for what it represents in an effective tool in identifying areas that need more attention, efforts, and appropriate policies required to benefit from the experiences of other Arab countries in this regard,” the announcement noted.