A fintech launchpad

Niveen Wahish , Friday 4 Oct 2019

Senior Executive Director of capital markets at the Financial Services Regulatory Authority of ADGM Wai Lum Kwok described efforts to support promising financial technology companies in the region to Niveen Wahish

A fintech launchpad

A few weeks ago, Cairo was one of the stops on the fintech talent-discovery road show organised by FinTech Abu Dhabi (FinTechAD), a leading financial technology event which is scheduled to be held on 21-23 October.

Organised by the Abu Dhabi Global Market (ADGM), a financial free zone located in Abu Dhabi, and Unbound, a platform connecting innovators with corporates, brands and government, FinTechAD is an opportunity for promising fintech start-ups to meet with investors and pitch their stories.

Xpay, an Egyptian company, was the pick from Cairo. The company offers a solution that allows members of a community to book and pay for all activities within their community from their phones. Xpay was one of only seven companies that applied, Wai Lum Kwok, senior executive director of capital markets at the Financial Services Regulatory Authority of ADGM, told Al-Ahram Weekly. 

He said they needed to create more awareness of the event in order to attract more applicants as well as interest in the many other programmes the UAE has to offer. 

“Egypt is a market that has the potential to blossom, which is why we deliberately made Egypt a stop on the road show to reach out and create awareness,” Kwok said, adding that he was confident that future editions of FinTechAD would have more applicants.

Companies that qualify, he said, must have a value proposition and their product must be relevant to the region and meet a regional need. They must also have a business model that can be scaled and generate growth in the region.

Performance was another criterion deciding the choice of applicants — whether they are already rolled out, whether they have solutions deployed elsewhere, and how mature their product is. These factors were important in determining whether the company concerned could be up and running quickly or would need a long time to take off, Kwok explained.

The competence of the team involved was another factor in the choice. The founders needed to have passion and knowledge about the industry and technology they were working in, he added.

However, he said there was always a place for surprising new products that may lack some of these criteria yet have real potential. In this case they will still try to invite them to the FinTechAD event to showcase their products and make their story heard to investors.

According to Kwok, fintechs have been developing since the 2008 financial crisis when many more regulations were put in place, leaving a huge gap in some of the services that consumers look for. Fintech had helped plug that gap, he said, and trends in the region had caught up with the rest of the world by 2015.

What had helped the spread of fintech was the spread of technology, he added, explaining that consumer expectations were getting higher. Food, for example, was often only a click away, and customers wanted the same thing to be true for financial services, especially members of the younger generation.

But fintechs do not have it easy since they are not the typical shop around the corner. Among the problems they face are access to markets, access to funding, and different regulatory conditions. The ADGM can help out by supporting innovation programmes, co-working spaces, and technology funds. FinTechAD is an opportunity to pitch for funding.

As for regulations, the ADGM RegLab is a specially tailored regulatory framework that provides a controlled environment for fintech participants to develop and test innovative solutions. It allows innovations to be tested in the field without being subjected to the full regulatory requirements that would otherwise apply to traditional financial services firms.

This sandbox helps them to soft land into the financial sector, explained Kwok, adding that other countries had begun to follow suit, including Egypt where the Central Bank of Egypt (CBE) has set up its own sandbox to encourage innovation.

The CBE’s regulatory sandbox “will work as a live testing ground for fintechs that are developing new business models and that are currently hindered by stringent authorisation requirements and regulatory uncertainty,” the CBE website says.

“We need to start understanding and embracing development, not just waiting and watching,” Kwok said, stressing that regulators around the world are increasingly taking a more positive approach to the sector. Expertise in both the financial services sector and technology is very important for fintechs, he stressed. “In fintech, it is important to have someone who understands how the industry works,” he added.

He said that solutions that offer innovations in payments are the most advanced globally because these are fundamental to any financial transaction. However, there was a need for innovation in other services such as lending and technology solutions that address compliance with regulations.

He explained that when banks sign on a new customer, for example, they have to go through certain procedures to insure against money laundering and other matters. “Those steps can be very manual, but we have seen some solutions offered by fintechs,” he said.

Kwok is confident customers will embrace the new solutions, although the young generations, having more exposure to technology, could be more prone to adopt the new technology and the older generations could take longer.

The Egyptian company as well as other companies picked from other stops on the tour have the chance to form some of only 50 companies that will pitch to an international audience of financial institutions, regulators, corporates and media in Abu Dhabi. Kwok said they had received 350 applications to the event from around the world.

The lucky 50 companies also have the chance to join other fintech companies in applying to enter the ADGM FinTech AD Innovation Challenge in which selected firms will be tasked with solving real-world challenges faced by financial institutions, corporates, and consumers in the UAE, the Middle East, and Middle East and South Asia regions.

The overall winners of the FinTechAD Innovation Challenge will be invited to relocate their businesses to Abu Dhabi for two years and win subsidised housing, office space, and health insurance for their workers in the city.

With its own civil and commercial by-laws, the ADGM is designed to act as a catalyst for the growth of a dynamic financial services sector in the UAE.


*A version of this article appears in print in the 3 October, 2019 edition of Al-Ahram Weekly.

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