The world’s largest continent by both population and landmass, Asia, and the Middle East and Africa (MEA) region have common trade and investment opportunities and the potential to grow that even further. This plays true in the fintech, wider tech and financial services.
The regions share some of the world’s largest financial services hubs – from Hong Kong to Singapore to Shanghai to Tokyo to Mumbai to Kuala Lumpur and Seoul in Asia to Dubai to Johannesburg to Cairo to Tel Aviv to Nairobi to Istanbul and Lagos – to name a few. There are synergies and current collaborations in international trade and foreign direct investment (FDI) flows in both regions. Despite the coronavirus disrupting daily life and the global economy, there were still activity in the fintech, tech and wider financial services space from Asia to MEA and vice-versa.
From Asia to MEA
Hong Kong is a major financial services hub IMAGE SOURCE GETTY
In terms of the wider economy, China has heavily invested in the region. Its most visible project is the One Belt/One Road (OBOR), which aims to restore old trade routes and streamline the transport of goods from Asia to Europe. The goal is to create a significant economic boost to more than 60 countries that represent 70% of the global population, more than half of global gross domestic product (GDP) and 24% of global trade.
As part of OBOR China spent $71.1 billion between 2014 and 2017 in the Middle East. In terms of fintech and wider tech, this most likely will play a role particularly in the growing trend of digital transformation. Besides the wider investments, companies from Asia have been active this year in the MEA region.
First, Huawei has also invested and expanded in the MEA region. Recent examples include Huawei signing a collaboration agreement with The Kenya Bankers Association (KBA), seeking to deepen financial inclusion in the banking sector through further deployment of technology and building fintech capacity. Separately, Huawei also is collaborating with Mondia Pay to offer contactless digital payment options through Huawei Mobile Services in the MEA region. In addition, Huawei and TPAY MOBILE have been working closely as part of their ongoing commitment to support developers in MEA. Sunline and Huawei have jointly released the Digital Loan One Box solution, a global contactless solution for financial services, where MEA, as well as Latin America and Asia, look to be recipients of the technology.
Singapore is a major financial services and tech hub IMAGE SOURCE GETTY
Second, Singapore headquartered 360F has partnered with Zurich Insurance to launch a customer engagement app in the Middle East. In addition to the 360-NeedsProfiler app, 360F says it’s “making headway with a string of projects that will mark as transformational milestones for the market in Dubai.” Anthony McGonagle, Zurich Insurance’s head of digital transformation, said, “360F’s technological expertise, entrepreneurial spirit and divergent thinking is helping us to achieve our ambition to disrupt legacy insurance rational and behaviour.”
Third, other expansions, investment announcements and/or partnerships in MEA from Asia included the following: First, Amaten, major digital gift card marketplace solution, Japan’s largest digital gift card marketplace, expands to Dubai. Second, UnionPay International (UPI), a subsidiary of China UnionPay, partners with Vaulsys to deploy its systems across Africa and the United Arab Emirates (UAE), as well as in Pakistan. Third, Hong Kong-based Liquefy announce that it is the first company to be granted in-principle approval to operate a Private Financing Platform (‘PFP’) for the Abu Dhabi Global Market (ADGM). Once granted in full, Liquefy will be able to offer tokenised securities backed by real world assets such as private companies, venture funds and other alternative investments to investors in the UAE on its Alternative Global Marketplace.
Emirates Islamic Bank, whose parent company is Dubai-headquartered Emirates NBD, has successfully closed the issuance of a $500 million 5-year Sukuk (sharia-compliant bonds) from its $2.5 billion Certificate Issuance Programme. The investor base was geographically diverse, with 41% placed into the Middle East and North Africa, 28% allocated to Asia and the remaining in the rest of the world. Both MEA and Asia are known to have strong Islamic Finance sectors, such as with hubs like the UAE (Dubai and Abu Dhabi), Kuala Lumpur, as well as beyond the two regions such as in London.
It is worth nothing that many Asian companies – from the Japanese to Chinese to South Korean to Singaporean to Indian to Filipino – have offices and a presence in the region. Dubai, for instance, is a recipient of many Asian companies setting up offices such as in the financial services, tech and fintech space. These include the likes of major banks such as Bank of China, MUFG Bank of Japan, DBS Bank of Singapore, Maybank Islamic Berhad of Malaysia and HDFC Bank of India – all five have an office in Dubai International Financial Centre (DIFC). Hong Kong-founded HSBC, which is headquartered in London, has their Middle East, Northern Africa and Turkey (MENAT) regional office in Dubai as well.
This holds true as well for other of MEA’s hubs such as Manama, Johannesburg, Tel Aviv, Istanbul, who also have various offices and presences from Asian headquartered companies – both large multinational corporations and small and medium enterprises (SMEs).
From MEA to Asia
Dubai is a major financial services and tech hub IMAGE SOURCE GETTY
Particularly in the Gulf Cooperation Council (GCC) region (Saudi Arabia, UAE, Qatar, Bahrain, Kuwait and Oman), where the majority of most of their populations have expatriates outnumbering locals, is home to many people from across Asia. Historically many came from India, Pakistan, Bangladesh and the Philippines but several Asian nationalities across various professional spectrums are represented. The diverse demographics have actually created innovative fintech solutions such as in the remittances space and the unbanked market, which is a common challenge across much of MEA.
An example of a solution born to cater to a demand has been Dubai-based Rise, a financial services platform designed for expatriate workers, who recently launching Xare, a new product aimed at empowering more than one billion people worldwide to become their own bank. Another example is C Wallet, which targets the low-income, high-volume market such as migrant and domestic workers, as well as micro-entrepreneurs, and SMEs, giving them access to financial services such as payroll and payments.
Companies from MEA are also invested in Asia. For example, MUFG Bank and Liquidity Capital, an Israeli fintech company, announced in August a joint venture to launch a debt financing business for startup companies mainly in the Asia-Pacific (APAC) region. According to an official release from MUFG Bank, both MUFG Bank and Liquidity Capital will establish a joint venture named Mars Growth Capital, which will be based in Singapore. The fund has an initial capital commitment of $80 million that will used to provide financing to startups.
Finally, historically and at presence, the large sovereign wealth funds in the GCC such as Saudi Arabia’s Public Investment Fund (PIF) and Abu-Dhabi’s Mubadala have and are investing in innovation, which has included projects in Asia. For example, in the wider tech space this year, Jio Platforms from India announced it will receive $1.5 billion from PIF, whose investors include Facebook, Silver Lake, Vista Equity Partners, General Atlantic, KKR, TPG, L Catterton and Mubadala.
Asia and MEA are two vast territories that play key roles in the wider global economy. Their current synergies show a future where more partnerships and collaborations could occur.