Danish fintech companies are preparing to make a move into the GCC Islamic banking market, attracted by emerging untapped opportunities as Shariah banks amp up their tech game to adapt to a fast-changing operating environment where its increasingly IT-savvy population is demanding more and more for a customized digital finance experience.
Thomas Krogh Jensen, CEO of industry association Copenhagen Fintech, confirmed that there are several companies looking to bring their solutions to the GCC region under a newly minted partnership with Bahrain-based Finocracy, an enabler of fintech platforms focusing specifically on Islamic financial institutions.
“[The Business Bridge] will ease the entry of Danish firms in the GCC, collaborating with Islamic banks and bringing innovative solutions for digital-ready customers. It also provides GCC start-ups ready access to Danish innovations,” explained Ashar Nazim, the managing director of Finocracy.
The availability of new fintech solutions, especially from relatively advanced tech markets like Denmark, could assist Islamic banks — which are generally behind their conventional counterparts when it comes to digital solutions — in capturing new customers or retaining existing ones as the region shifts toward a digital-first environment; Finocracy estimates between 8-10 million customers to make that switch over the next five years.
“That is a big prize to win. At stake is up to 25% of [the] banking revenue pool in the region,” Finocracy noted, adding that leading financiers are eyeing between three to seven partnerships with fintech challenger platforms to defend and grow their business.
Aside from opening the doors for Danish firms to enter the GCC region, the Bahraini organization will also anchor itself in the Copenhagen Fintech Hub alongside 40 other challenger institutions to facilitate technopreneurs from both markets to collaborate in designing, building and launching new solutions under the Talent Bridge program. GCC talent will also be able to test their solutions in Copenhagen.
Finocracy this month also partnered with Singapore-based Alpha Fintech to bring its payment solutions to banks in the GCC. The company is backed by Wells Fargo’s accelerator program and First Quay Capital. Alpha Fintech specializes in end-to-end payment solution, enabling banks to quickly access new fintech partners across the entire payments, risk and commerce spectrum.
“The teaming agreement between Alpha and Finocracy promises to significantly bring down the cost and complexity of integration for banks, vendors and fintech players. This will directly contribute to improving the speed to market and the profitability of banks in the region,” Ashar said, adding that this will create two to three clear leaders in each of the GCC markets, and these will be banks that are able to start early.