Financial technology (fintech) will continue to slowly expand in the Middle East and Africa, and therefore constitute a limited threat to the region's well-established financial institutions in the foreseeable future, said S&P Global Ratings.
"We are of the view that money transfer, payment services, and compliance with regulations are the main sectors that are bound to be disrupted by fintech in the next few years," said S&P Global Ratings credit analyst, Mohamed Damak.
We also believe fintech offers other opportunities for the region's banks, such as financial penetration in less developed African countries and the use of blockchain for capital market issuance of conventional and Islamic securities. However, several prerequisites are necessary for that to happen.
"We do not expect fintech alone to have a significant bearing on our ratings on Middle Eastern and African banks in the next two years. Instead, we foresee more co-operation between fintech firms and banks, and strong regulatory protection given the significant role of banks in financing regional economies."