Asian fintech companies consider the Middle East as their next target market due to low competition
Rising consumer spending, huge capital stocks and closer financial ties with the rest of the world are transforming Middle Eastern nations such as the United Arab Emirates, Qatar and Saudi Arabia. become attractive markets for investors. financial technology companies with global ambitions.
Michele Ferrario, founder of StashAway, a robo-advisory company based in Singapore, and one of the Luck’S Asian Fintech Innovators. In countries like the UAE, he says, there are a lot of people who have money but don’t have many investment options, other than “not so friendly” banks.
“[There’s] low level of competition and a future-friendly regulator,” Ferrario said of the UAE.
StashAway expanded its high-net-worth services, which offer consulting services and low fees for clients between $2 million and $10 million, to the Middle Eastern country earlier this year.
And after building its business in the UAE, Ferrario said, StashAway is aiming for further expansion in the Middle East.
Financial technology center
StashAway is not alone as the Middle East is becoming a fintech hub in its own right. McKinsey forecast that fintech funding in the Middle East, Pakistan and North Africa region could increase to $4.5 billion by 2025.
In July, Thunes, a global payments infrastructure provider headquartered in Singapore, now offers services in the Middle East and North Africa market, tick Saudi Arabia’s appeal is due to the kingdom’s desire to develop digital infrastructure as part of its plan to reduce its economy’s dependence on oil. It also helps that 97% of the country’s residents use smartphones.
Besides StashAway and Thunes, several other Asian fintech startups have also expanded their services to the Middle East in hopes of tapping into financial flows from tourists and workers abroad. Payment services like Airwallex and Philippines’ GCash offers their services in Middle Eastern countries such as Israel and Qatar. Even giants like Ant International do not ignore this area. Alibaba branch Working with Saudi Arabia’s Ministry of Investment as it wants to use the kingdom as a gateway to the wider Middle East market.
This is part of a larger effort by Asian financial centers such as Hong Kong and Singapore to strengthen links with the Middle East. In particular, the former is forging new links with Saudi Arabia, including the establishment of a new joint investment fund and the listing of Hong Kong ETFs on the country’s stock market.
Currently, Singapore is StashAway’s largest market, followed by Malaysia. Ferrario noted that while the wealthy tech company is not yet profitable, it is profitable in its home market.
What is StashAway
StashAway is a digital wealth management platform that offers investment products to middle-income and above people who want to use institutions other than banks to grow their spare cash. Surname. Ferrario, then CEO of Zalora, an apparel e-commerce platform in Southeast Asia, founded StashAway in 2016. The company is backed by investors such as Sequoia Capital and Fidelity .
Ferrario explains that Asian banks do not want to operate low-cost ETFs. Banks face a “giant cannibalization problem,” as established financial institutions stick with existing products that make a lot of money in fees. As a result, banks avoid ETFs because they make less money from those products.
That opens up “huge opportunities” for startups targeting new middle- and upper-class urban customers in Southeast Asia, Ferrario said. The company targets people with $100,000 to $10 million in cash.
And Southeast Asia’s young, growing and wealthy population could be an asset for fintech startups like StashAway. “Wealth is younger,” Ferrario said. People in their 30s in cities like Singapore and Kuala Lumpur in Malaysia may be wealthier than their parents, meaning they have more money to invest.
Ferrario also sees himself as an example of the type of customer StashAway wants to attract. He remembers that, during his time as CEO of Zalora, he struggled with finding a place to invest his idle money.
“I went to my bank to ask for help getting my money working, and I told them I wanted to invest monthly in a group of ETFs,” Ferrario said.
Instead, the banks tried to sell him mutual funds with a 2.5% entry fee. Ferrario said he was “shocked at how bad the experience was.” Ferrario said he sought alternatives in Singapore to no avail; That gap is what prompted him to switch from e-commerce to asset management.
“Maybe instead of selling T-shirts, this is what I should do,” he said.
