Why Fintech Accelerators are so important in the post-COVID economic recovery?

Pre COVID, FinTech had developed enough to become integral part of most of the leading unicorn companies who were developing their own financial services products. Some called it the “era of all-fintech”. In the MENA region in particular pre-COVID FinTech had undergone rapid growth in the UAE, making the country the largest hub for Fintech start-ups in the MENA region.

Fintech companies were focusing on very niche B2C products to be able to differentiate. To help with distribution, Fintech companies relied on partnerships with big companies or banks, while the big companies or banks were able to benefit from the technology as a new service to existing and new customers.

And then COVID happened, and it widened existing cracks in the economic landscape. SMEs were already underserved pre-COVID by the banking system. This was certainly more true in the Arab world than anywhere else, with outdated financial products and limited access to funding or lending. In the MENA region, FinTechs are perceived as enablers. Most banks consider them as legitimate players of an emerging banking ecosystem, but without a clear role. Put simply, banks are in an exploratory phase of how best to cooperate with these rising FinTechs and where to deploy these solutions.

Fintech innovation became essential, as part of the economic recovery, with Fintech-focused accelerators at the core of this ecosystem. Even for those who are experienced in business, building a business from the ground up is an enormous task. Today with more youth choosing the UAE as their business hub, this helping hand is not only useful but necessary.

The financial stress on SMEs from the pandemic, showed an opportunity for Fintech innovation to address not only the B2C segment with their digital apps for remittances, savings or investments, but also the B2B segment with similar innovation around payroll, savings, investments, cash flow management, transactional tracking and corporate lending.

Broadly, accelerators help early-stage entrepreneurs benefit from connecting to mentors, industry experts, and investors, as well as filling their knowledge gaps, validating their business model, getting the tech right and securing their first customers. It is an environment that gives them a shoulder to lean on, as well as acting as their so-called reality check tool. It is a community that teaches entrepreneurs to practice resilience and tackle their shortcomings.

Many entrepreneurs don’t have access to any of the above. Additionally, Fintech entrepreneurs deal with challenges such as licensing, regulations, securing bank partners, and raising capital. According to Deloitte, in the MENA region 40% of banking customers would be concerned about the security of their personal data if using FinTech solutions. This serves as a pertinent example of just one of the areas where Fintech accelerators play an essential role - in providing this support and ensuring these key security issues are addressed, the majority of which are specific to the MENA region.

(Article publish also on SME10X: https://www.sme10x.com/technology/why-fintech-accelerators-are-so-important-in-the-post-covid-economic-recovery)