FinTech-Powered Digital Financial Services Drive Small Business Growth

FinTechs are offering an alternative to cumbersome and risky corporate spending processes.

And whether it’s freelancers or large enterprises, workers no longer have to go through the hassle of spending their own money, saving receipts and reconciling their bills at a later date to get reimbursed. Employers, on the other hand, are freed from having to share card details with multiple employees, exposing the company account to fraud.

Related: Emburse Debuts Card to End Employee Out-of-Pocket Spending

In the Middle East and North Africa (MENA), small- to medium-sized businesses (SMBs) are embracing this digital solution at a pace that matches the rapid digitization of payments in the region, said Saad Ansari, co-founder and CEO at MENA-focused FinTech firm XPence.

Largely underserved by banks which tend to target larger companies, Ansari said that SMBs are particularly drawn to XPence’s multi-feature spend management platform, which offers a level of oversight and control over their finances that many could not obtain otherwise.

“We’re not just focusing on their payables or focusing on receivables. We’re bringing both elements into play because ultimately, we want to know the net cash position of the company at any given time,” Ansari told PYMNTS in an interview.

While he acknowledged growing competition in the global space, he said that many of the platforms designed for other markets don’t translate well in the MENAP context, thereby giving Xpence a competitive advantage in the region.

“FinTech does not travel across borders very well,” he noted, pointing to the unique challenges of the fragmented MENA market.

And unlike Europe where FinTechs can launch a new product or service across the entire Union with a single license, the absence of an equivalent passporting scheme adds further complexity when doing business across MENA, he added.

That said, Ansari pointed to regulators in countries like Saudi Arabia, Bahrain, the UAE and Egypt who have made significant moves in the last few years to make it easier for FinTechs to operate across the region as a sign of a promising future ahead.

MENA’s Maturing Ecosystem

Besides regulatory fragmentation, Ansari made another comparison with Europe to highlight the fact that MENA doesn’t have Banking-as-a-Service companies like Railsr or the now-insolvent Wirecard that enable FinTechs to launch and scale rapidly.

“You could go to Wirecard and launch a neobank proposition in six months,” he said, adding that Europe’s BaaS companies also allow other firms to piggyback on their licenses, further accelerating FinTech innovation. “We are not there yet,” however, he added in reference to the MENA region.

Nevertheless, Ansari remains optimistic about the future and said he anticipates the emergence of some “real base players” in the market by the end of 2023 or early 2024.

With these challenges in mind, the FinTech firm is looking to expand beyond its home base of Bahrain and the United Arab Emirates (UAE) moving forward, targeting Egypt and Saudi Arabia next.

What makes Egypt an ideal market, Ansari explained, is that it boasts the largest MENA country by population and benefits from a strong entrepreneurial culture that is favorable to business growth.

When it comes to Saudi Arabia, which is considered the economic powerhouse of the region, the rationale behind that choice is an obvious one, he said. “I don’t think you can do business in our region or call yourself a MENA company unless you’ve got some presence in the Kingdom. That is where the economy is. That’s where things are happening.”

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