Unlocking Financial Inclusion in the MENA Region: A Call to Action
In an era where digital transformation is reshaping economies worldwide, the Middle East and North Africa (MENA) region finds itself grappling with a significant challenge: financial inclusion. Mohamed Abdel Razek, Group Head of Technology, Transformation & Information at Mashreq, sheds light on the pressing need for increased financial access in this exclusive op-ed. With only 48% of adults in the MENA region holding a financial account, according to the World Bank’s Global Findex Database, the region lags 23% behind the global average for developing economies. This stark reality underscores the urgent need for collaborative efforts to bridge the financial gap.
The Importance of Financial Inclusion
Financial inclusion is not merely a buzzword; it is a fundamental driver of sustainable development. By empowering individuals and businesses to engage with the formal economy, financial inclusion fosters economic growth and reduces social inequalities. Governments across the MENA region are recognizing this potential and are actively collaborating with key players in the financial ecosystem, including banks, non-banking financial institutions, and payment service providers (PSPs), to transform the financial landscape. Central to these efforts is the rise of financial technology (fintech), which is proving to be a vital enabler of financial access.
Serving the Underserved
The groups most frequently excluded from the formal financial system include rural communities, smallholder farmers, informal workers, small and medium-sized enterprises (SMEs), women, youth, the elderly, and people with disabilities. The barriers to financial inclusion are multifaceted, often rooted in issues of remoteness, time, and cost associated with traditional financial services. However, digital financial services offer a promising alternative. They are cost-effective, delivered in real-time, and accessible at the tap of a button, making them ideal for underserved populations.
Fintech is redefining banking experiences by providing simple, streamlined, and customer-centric solutions. This shift not only reduces dependence on cash but also enhances financial well-being. By leveraging innovative technologies, fintech platforms can create tailored solutions that address the unique challenges faced by different communities.
A Case Study: e& Neo in Egypt
A prime example of fintech’s potential is the e& Neo platform, launched in partnership between Mashreq and e& in Egypt. This market-first solution aligns with the country’s Financial Inclusion Strategy (2022-2025) by enabling customers to access a variety of banking services directly from their mobile phones. By combining Mashreq’s technological expertise with e&’s extensive reach, e& Neo is poised to meet the financial needs of Egypt’s large population, particularly those who have been historically underserved.
With mobile internet penetration in the region currently at 51% and steadily rising, the MENA region is well-positioned to harness the power of fintech solutions to drive financial inclusion. The potential for growth is immense, but it requires a concerted effort from all stakeholders involved.
Building Strong Foundations
To fully realize the benefits of fintech, it is essential to develop a robust and secure digital infrastructure that is interoperable across the region. Expanding access to information and communication technology (ICT) for underserved segments is equally critical. Additionally, establishing strong regulatory frameworks is necessary to balance oversight with the need for innovation.
Financial education is another cornerstone of successful financial inclusion. Raising awareness about fintech and its advantages, while addressing concerns related to security, privacy, and data protection, is vital. This educational effort should target not only the younger, tech-savvy population but also older individuals who may be less familiar with digital tools.
A Collective Effort for True Inclusion
Harnessing the power of fintech to extend the benefits of the digital economy to all requires a collective effort from all ecosystem stakeholders. Governments, financial institutions, technology providers, and civil society must work together to create an inclusive financial environment. Only through collaboration can we achieve true financial inclusion, ensuring that no one is left behind.
In conclusion, the journey towards financial inclusion in the MENA region is not just a necessity; it is an opportunity to empower millions and drive sustainable economic growth. As we embrace the potential of fintech, let us commit to building a more inclusive financial future for all.
Image Credit: Mashreq