Redefining Emerging Economies: Fintech’s Impact on MENA’s Unbanked

Region is home to 85 million adults with no basic banking access
Redefining Emerging Economies: Fintech’s Impact on MENA’s Unbanked
Fintech is critical in making banking more accessible to more people

The growing number of unbanked individuals in emerging economies, particularly in the Middle East and North Africa (MENA) region, demands immediate attention. Traditional banking models have struggled to reach these underserved populations, leaving millions without access to essential financial services. However, the rise of fintech companies is offering a promising solution to this unbanked problem. The analysts from red_mad_robot have analyzed current market situations and provided recent cases to highlight prominent solutions to the rising unbanked crisis and the path forward to promote economic growth and stability in emerging economies.

The unbanked challenge

Unbanked individuals are those lacking access to basic banking services. They face significant daily challenges, including limited savings, investment opportunities, and access to essential services like healthcare and education. The traditional banking system, despite its importance, has failed to provide adequate coverage to emerging economies’ unbanked populations. In the Middle East, millions of people remain underserved by basic banking and payments. However, open banking, cryptocurrency, and stock trading are gaining ground in markets.

Beyond the tech hubs like Dubai or Abu Dhabi, the region is home to one the biggest unbanked populations in the world: 85 million of the world’s 2 billion unbanked adults. The main reasons for the spread of the unbanked population can be described as follows:

Infrastructure limitations

Traditional banks face infrastructure challenges in reaching remote and rural areas, where a significant portion of the unbanked population resides. Establishing physical branches in such areas can be costly and logistically challenging. They also have high operating costs associated with maintaining physical branches and a large workforce. These costs are often passed on to customers in the form of fees, making banking services unaffordable for many. 

Low financial literacy rate

The unbanked often lack the financial knowledge and literacy required to navigate the complex traditional banking system. For example, the United Arab Emirates (UAE), one of the biggest fintech hubs in the Middle East, has a financial literacy rate of 30.7 percent. This is so low compared to developed economies such as Denmark, the UK, Germany, and others. In these countries, rates can be as high as 70 percent.

Bureaucracy of traditional banks

Opening a bank account often requires extensive documentation. This can be a daunting task for unbanked individuals. It is particularly challenging in regions with limited access to formal identification and paperwork. In addition, migrant workers face difficulties in accessing bank accounts due to requirements such as salary certificates, minimum salary requirements, and bank statements. All of these result in high remittance costs and limited financial services.

Early stage of data sharing

The Middle East is currently in the early stages of data sharing. Countries such as the UAE, Jordan, and Oman have lower data scores than countries such as the UK and Estonia. The region is implementing open banking to facilitate data sharing and ownership. This allows customers to control their financial data and choose who to share it with. This shift may open up opportunities to serve markets that have not previously been served. Some of these fintech companies and large banks may provide better financial inclusion.

fintech unbanked

Fintech’s growing impact in the Middle East and its unbanked

Despite the lack of access to basic services, technology has enabled startups to address the challenges of unbanked and underbanked populations. Now, fintech companies are overcoming regional limitations and increasing efficiency. For example, wallet apps and other financial solutions allow unbanked workers to track wages, bonuses, and deductions. This benefits both employees and employers in terms of staff retention and service assurance.

Read: Saudi fintech companies already double all of last year’s numbers

Many fintech companies are beginning to recognize the potential of remittance because migrants send most of their savings back home to support their dependents. Gulf countries send more outbound remittances than the US, with most of them going to India, Pakistan, the Philippines, Bangladesh, and Indonesia.

But opportunities also exist in the lending sectors as well. Lack of access to financial services also leaves migrant workers without a credit history. In this scenario, financial support is dependent on their employers or BNPL services and Sharia-compliant microfinance (although these services may not always be able to help the migrant. For example, to buy an apartment or a house). However, interest-free loans provide small sellers with capital, and flexible payment systems enable them to order goods in bulk on e-commerce platforms. At the same time, household goods are made affordable through interest-free installments. More than 50 percent of consumers in the Middle East are expected to use Buy Now, Pay Later (BPNL), which allows them to pay in four interest-free installments.

Success stories: The impact of fintech on the unbanked

Ualá, a fintech company established in Argentina, decided to make banking more accessible and chose unbanked people, living outside of major cities, but with access to mobile Internet as the target audience. The company relied on a wide range of free services: no fees were charged for card issuance and maintenance, as well as for transfers. Uala sees cash as its main competitor and charges a fee for withdrawing it from ATMs more than once a month. The startup is also increasing investment in the regional market to expand its reach among the unbanked population.

In October 2022, Uala planned to invest $150 million over the next 18 months to support the growth of its digital banking business in Mexico and Colombia, to expand its user base fivefold in the next five years. It has brought results. Uala grows an immigrant customer base: almost 25 percent of its user base in Colombia helps Venezuelan immigrants. The company argues that its digital-only systems are a competitive advantage in serving this segment. In Mexico, Uala has been acquired by ABC Capital Bank. Through a strategic merger and acquisition, Uala is targeting unbanked and middle-class users in Mexico.


The rising number of unbanked individuals in the MENA region is a significant challenge with far-reaching implications. Fintech offers a promising solution that can revolutionize the way financial services are provided and accessed. By addressing the limitations of traditional banking and fostering a supportive ecosystem for fintech innovation, we can create a path forward that promotes economic growth and stability in emerging economies while giving millions of unbanked individuals access to the financial services they need to build a better future. The time is ripe to bridge the gap and ensure that no one is left behind in the digital financial revolution.

Tugrul Tasgetiren is the chief executive officer of red_mad_robot in the Middle East

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