Lebanon: Fintech Sector In Lebanon

Last Updated: 15 August 2017
Article by Shanda Consult Ltd

The FinTech also called, Financial Technology or Financial Services Technology sector became a very dominant sector all over the world. Global investments in the FinTech sector are growing at a fast pace. According to a report prepared by IDAL there were around 1130 fintech companies in the world in 2016. Most of those companies were specialized on payment and investment activities.

What is FinTech and why does it matter to the business world?

FinTech refers to an emerging financial services sector, which is using Information Communication Technology (ICT) and technology innovations to enhance the traditional banking and financial services sector and to create new and better services for both consumers and businesses. It encompasses various services, such as: mobile and online banking; payment and money transfer platforms; lending and capital raising platforms; blockchain and crypto-currencies; insurance services etc. In a way, Fintech companies compete with the traditional banking and financial institutions, but it can be a good opportunity as well depending on their strategy.

FinTech has changed the way companies do business today. With Crowdsourcing, online banking, online money transfers (just to name a few), companies can do their businesses easier and at a lower cost.

FinTech in the Middle East and North Africa (MENA)

In the MENA region, more Fintech startups have been launched than startups in any other sector. According to IDAL fintech startups in the region raised more than USD 100 million in funding in the past 10 years and this is expected to double by 2020. Only in 2017 MENA startup companies forecasted to raise USD 50 million in funding, which is a 270% increase from 2016.

105 FinTech startups were launched in 2016 and the number is expected to grow over the following years and to reach 250 by 2020.

Fintech Sector in Lebanon

Lebanon has a very well developed financial technology (Fintech) sector. Due to its advanced fintech ecosystem, 14% of the MENA region's startups are hosted in Lebanon. Lebanon is the 4th most served market by fintech companies.

The Lebanese population is open and adaptive to new innovative technology solutions.

According to Idal, 54% of the people having bank account adopted to digital banking. Lebanon ranks 3rd after the UAE and Egypt for the Adoption of Digital Banking Services.

Lebanon has a strong and supportive banking system. Despite of the global economic challenges and the regional imbalances the Lebanese banking sector could maintain its stability and profitability due to its consistent monetary policy. The Lebanese banks were open to new technology and to the financial innovations.

For example, Fransabank, a very well-established Lebanese bank invested USD 2.5 million in a local fintech startup company, called PinPay, an online payment platform.

Lebanon's largest bank, Bank Audi has launched its mobile contactless payment platform, the 'Tap2Pay' to optimize cashless payments in the country.

Lebanon has a highly educated and cost competitive labor force. According to IDAL: the country ranks 19th for the quality of its educational system and it ranks 6th for the quality of its math and science education globally. The number of university graduates in ICT is high as well. Approximately 2000 graduates join the ICT sector annually.

The high number of smartphone holders and internet users make it easier to the fintech companies to penetrate the market.

Lebanon was ranked on the 8th place in 2015 on the ICT Development Skills Index (IDI), measuring the ICT skills and capabilities (IDAL).

The continuous growth of the ICT sector is among the top priorities of the Lebanese government. The bandwidth of Lebanon has increased 10 folds, new business parks, research centers are developed in order to foster the digital industry.

Lebanon has a supportive startup environment as well. The government of Lebanon offers a series of financial and non-financial incentives to national and foreign investors. Many exemptions and tax benefits are offered by various ministries and agencies. In our previous article you may read more about the Investment opportunities and incentives of Lebanon.

There are also a number of venture capital firms providing funding to startup companies and small businesses. For example, MEVP (Middle East Venture Partners) invested USD 1.1. million in PinPay. 

The Central Bank of Lebanon supports the startup ecosystem as well. The bank has issued a Circular No. 331, encouraging banks to invest in startups, incubators and accelerators. These investments are 75% guaranteed by the Central Bank of Lebanon.

There are also other financing options, such as the Kafalat Ioan guarantee scheme.

Lebanon does not lack in incubators and accelerators as well. According to IDAL currently there are 8 incubators and accelerators providing mentoring, training, technical and financial assistance to fintech companies in Lebanon.

Due to all the above described facts, we believe that Lebanon is a great place for fintech and startup companies.

Shanda Consult is specialised in consultancy regarding project-based investments and as a partner in bringing together investors and investment projects. 

Shanda Consult is advising on numerous investments, ranging from Energy/Telecom/IT to industry, technology, tourism and agriculture investments.

Please do not hesitate to contact us if you wish to be guided with your Lebanon-related projects and business.

Source: IDAL (Investment Development Authority of Lebanon)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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