1008. Insights: How to launch in the Middle East (Rewind)

22:01David Barton-Grimley:But there you don't have that opportunity. So there is the unbanked or unserviced segment. And this is where we got focused on that. We saw this is a massive opportunity. okay, what about those who are high earners, not rich yet, they have a certain lifestyle, but they cannot sustain it with the current wealth bracket. So, yeah, and as per the BCG report, the individuals will be one of the highest contributors to this wealth growth by 2027 in GCC.

22:37Benjami:Thank you for mentioning regulation and legislation because I wanted to move on to that. And Remo, I mean, obviously the governments in the region are not blind to the growth of fintech and so on. How important is the support from governments in sort of Abu Dhabi or Qatar or Saudi Arabia? How much, how helpful are government regulatory initiatives? And are there sort of countries that are standing out because of the extent to which they're supporting fintech, whereas maybe there's other markets where you just wish there was a regulation around, I don't know, electronic signatures or something that's holding businesses back.

23:11David Barton-Grimley:Definitely positive and definitely very important. Because if you look at what's happening in the UAE specifically, we noticed that in the last couple of years, the regulators and multiple players in the ecosystem, they really open up and accommodate more fintech in the, I would say, individual ecosystem. Just by thinking the fact that Checkout.com was the first international company got the payment license last year. It's an element that you know showcased that you know there is more opening when it comes to attracting foreign companies to come to the country and the amount of local players they've been regulated both in the U.A.

23:52David Barton-Grimley:and Saudi is also the list is very long essentially so the regulators definitely accommodating more and they're working towards the right direction to make sure that they can attract more and more businesses in specifically in the FinTech ecosystem. Zid spoke a lot about investment, trading platforms, definitely more. We see more and more at checkout.com. We process for a lot of them already locally. We see more global players coming into the region. It's also interesting that if you go to, if you come to Dubai and you go and shake that road, the main road, you can see how much offline marketing some of these players are doing, which is definitely also showing there is like a good push, a good interest.

24:36David Barton-Grimley:and also for the population. But one thing I also want to share by looking at the data, without spoiling too much the report we will publish next year. This year we saw an increase of digital remittance in the region. You probably are not surprised if you look at the top three countries in the world in terms of remittance, two of them are in the region, which is Saudi and UAE. But most of them, they actually moved from offline to online. and we've been seeing an incredible growth, talking about also the unbanked and people that not necessarily might transact online. So a lot of consumers not necessarily use the digital cars to buy a product or service online, but they start to use digital services and fintech to send money back home.

25:21David Barton-Grimley:And this is an interesting trend that we picked up this year. We have noticed an exponential increase in the UAE, but very quickly in Saudi. We can see a couple of local fintech, which they are literally growing double digits month over month, which they're extremely strong. You know, companies such as TICMO in Saudi, they started less than one year ago and they already have double digit growth on a monthly basis. You have companies such as Karim, which kind of almost changed the business model, became a super app where Karim Pay became like a central part of the business model, which obviously also helped also the unbanked from that perspective.

26:00David Barton-Grimley:And then you have the Western Union, TapTapSign, all these big players, they're also coming in. So definitely we see this line of business growing quite a bit. And on your question is also because the regulators, they are making it easier to make sure that people in a compliant way, they can actually help to develop the digital landscape.

26:23Benjami:Thank you. Gaea, last question in this section and for you because we're running out of time in this section. How are governments sort of across the region sort of balancing the need to encourage sort of foreign investment, encourage foreign talent, encourage great people from either within the region or from outside the region to come and set up fintechs and so on in their country, with the need also to sort of protect and encourage their own citizens and, you know, try and make sure there are jobs for their citizens, because you don't just want foreigners, you know, you want locals to get jobs and to gain skills and so on.

26:57Benjami:How are sort of different governments trying to balance that? Of course. I think the balance is yet to be striked. Definitely even just look at the UAE, you know, the number of experts is well beyond the number of local Emiratis. So it's still, especially in the fintech scene, not there yet, but you can see that changing quite a lot. Saudi Arabia is a prime example for that. used to be much easier to sort of like eat a piece of the cake from Saudi Arabia, be able to do business. This is even beyond financial technology. It was much easier a few years back to be able to interact with Saudi Arabia as a partner, as a client.

27:44Benjami:And now I think the requirements from the government in order to expand your business in Saudi Arabia are changing quite drastically. You do need to set up a local office. Oftentimes, you need to abide by certain local laws by which there are quarters for hiring staff that is local. And I think, you know, obviously this is only fair. It fosters talent locally. And I think obviously these are countries where finding capital is quite easy because of the concentration of family offices, because of sovereign wealth funds. And I think it's fair for companies to set up or expand, but also interact directly with the local talent.

28:26Benjami:And you can see that from the bottom up also in terms of like education programs and interest in new technology, especially in Dubai, there are more and more academies opening that are focusing on, for example, AI, which is the new frontier actually of competition within the GCC. just to mention one there is the Future Foundation in Dubai that it's constantly sort of training local young professionals to hit a global what is now a global market and have very specific very technical skills so I think it's still a work in progress it's still you know not so close to be reached but it's drastically changing and I think it's something that the companies that are now looking into expanding the business, relocating, setting up offices locally, need to take into account and probably are already starting to take into account.

29:19Benjami:Thank you. Okay, we're just going to take a quick pause before we dive into how to launch in the Middle East, which is coming up just after this quick break.

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30:29Benjami:Welcome back to FinTech Insider Insights, where we're talking about expanding into the Middle East. In the first half of the show, we talked about the booming FinTech landscape across the wide and diverse region. In the second half, we're going to discuss the things founders and chief executives need to know before they look to grow their business there. So I'm going to start with the question of where do you build a base in the Middle East? um ziyad i'm gonna come to to you first um you know because if you look at population you know egypt turkey these are the these are the biggest countries um and yet cairo is not necessarily the hub how do you how do you think about which markets to start in you've you've chosen saudi arabia i believe how how should you go about thinking about which of these markets potentially most attractive?

31:18David Barton-Grimley:Yeah, so if you want to be fair and honest, this is a difficult decision to be made and it differs where is your stage of the business that you are in. So for example Revolut has 40 million users when they want to think of where to expand, they will have different consideration versus vendor. We are a small startup, we were just about to start and we just want to pick it up quickly. For us, we made the decision, we looked at different considerations, doing business, where's the biggest gap in the region, where can we put our footprint, and where do we have an advantage, for example. So for example, for us, we had an advantage, we have a local co-founder as well, who joined us and joined effort, that was in Saudi Arabia, with a different consideration.

32:11David Barton-Grimley:We had people who backed the business from day one who are local as well. And they doubled down on the thinking of why this is a solution for the local market. From our perspective, honestly, we saw it a good time ago before now people speaking more and more about Saudi Arabia. So when we started the journey around the end of December, we said the next one after UK set up and London and so on would be Saudi Arabia for the region. And honestly, I want to tap into the Saudi Arabia market. You have really to embrace the local culture and the national population. And you need to think, want to build a solution for them.

32:50David Barton-Grimley:It's completely different than just going in, I will use the word of Gaia, to take a piece of the pie and get out. This is wrong and this won't work. And if you approach it this way, don't go there. My advice is just cut your journey and don't go there. You have to go there from perspective. You want to really build the solution for the local population. And that was really exciting comparing to UAE for example or other countries. We plan on expanding on a second office as well. We haven't announced it yet. Honestly speaking, some people say by conclusion it could be that country or this country.

33:27David Barton-Grimley:No, we're doing it differently. But this is where we see the pickup in the last year and the funding and the adoption of technology, the young population, the high adoption rate of tech and is very attractive in Saudi Arabia. And the different segments of the sub-national population, whether it is a male, female, different population bracket is very, very interesting to explore.

33:57Benjami:Remo, how about you? Checkout.com has offices, I believe, in both the UAE and Saudi Arabia. How do you think about where to sort of base your people, where to have your sort of hubs and where you operate?

34:09David Barton-Grimley:So it's not an easy question because obviously we see opportunities in multiple countries and as he said as well, it's also important to prioritize and decide obviously, based on the business you're doing, where is the biggest opportunity. And I would also add obviously to keep in mind a very long-term view because we mentioned Egypt as well we know it's perhaps not attractive as the other two countries we just discussed right now but if you look at the population and the potential is definitely in the next three five years is a region where is a country where obviously i would expect to see more and more activity uh going uh going from there and we really see you know a lot of good good companies out there and we decided 10 years ago to come to the UAE.

34:50David Barton-Grimley:I think it was a very obvious choice, still quite brave if you look at infrastructure 10 years ago was not great, but obviously our job was also try to support all these players that were expanding. But also we realized very quickly two things. I mean, first of all, that the MENA region is very fragmented. We said this before and it's very important that obviously you serve consumers, your customers and for us merchants, they have consumers locally in the home country And that's why we realized very quickly that it's very important. We need to have local presence in the countries where we want to have a key focus.

35:24David Barton-Grimley:And second of all, how Saudi Arabia was changing and how they were embracing good innovation and things were moving towards the right direction. And that's why we decided obviously to set up an office in Riyadh as well. So obviously today we support both countries locally, but we do also help merchants everywhere else in the GCC. from Bahrain, from Qatar, from Oman, from Egypt, we'll do business in Kuwait and including the local payment methods, which is very important to mention for our line of business. Because as we do digital payments, it's also important to understand that in some of these countries, people are not necessarily having a Visa or Mastercard card, but they likely have MADA in Saudi, KENET in Kuwait, or QPAY in Qatar, which is a local scheme, which is regulated and sponsored by the local central banks.

36:13David Barton-Grimley:And again, it goes back with the fragmentation which means obviously it's really important to decide in which country you want to focus and now what i see is more and more focus in Saudi we see more company from overseas setting up companies directly in Saudi Arabia before we noticed companies they were setting up first in the UAE Abu Dhabi or Dubai and then expanding to Saudi now we often we see company from Asia as well not only from Europe coming straight to Saudi Arabia which obviously it's a good sign that the biggest market in the region is becoming more open and it's clearly showing in our data as well because we keep processing volume.

36:52David Barton-Grimley:We see the processing volume on some of the largest e-commerce in the world. And we do see that Saudi obviously growing at a very, very fast pace. If you just allow me to come in here to say one of the key things that facilitated those companies coming from outside the region to set up first in Saudi Arabia is the legislation. the Ministry of Foreign Investment, MISA, you can set up a fully owned subsidiary from a foreign holding entity. Those are things that probably, Remo correct me if I'm wrong, but 10 years ago were not as easy as, so for you guys were, okay, let's go, if you want to open up to the region, let's go to Dubai.

37:32David Barton-Grimley:But now it became different and we set up our subsidiary and it was honestly a smooth experience in terms of the process. You still have a lot of room of improvement, how digital it is, what is needed and so on. But it is now from legislation perspective, it is doable, it's not complicated. Before you needed a local partner to set up a Saudi entity and those were very challenging requirements versus now. 100%. We saw this on our side, but like you would see it as well. And that's what we mentioned about obviously regulators to the legislation moving towards the right direction. We actually were one, probably were the first UK company with Sagia before MISA, before they got rebranded to set up in 2019.

38:19David Barton-Grimley:So definitely this has accelerated quite a lot, for sure. And we definitely see that obviously as accommodating more and more companies, plus one.

38:27Benjami:Gaia, I'd love to bring you in. But in particular, thinking about the culture of the region. So for companies coming in from North America or Europe or Asia or elsewhere, how important is it to sort of understand the culture of the region and indeed Islam? I mean, Islam obviously pulls the whole region together and creates that sort of cultural continuity. I realize it's not a monolith, but there is a continuity across the region. How important is that and how different is that for doing business than doing business in Europe or Asia? Of course, 100%. It's something you would have to consider.

39:07Benjami:I can mention a few points because that's not going to be exhaustive. But just to start with, up until maybe a couple of years ago, the working week was completely different. And it still is in some areas of the Middle East. The UAE just realigned with the rest of the world using, you know, the Monday to Friday working week. But in Saudi Arabia, for example, in Israel, and even in Sharjah, which is in Emirates, just north of Dubai, Fridays are still a holiday so it's considered a weekend so that's something that just like operationally obviously has to be taken into account it's a deeply religious society so public religious holidays do affect workflows as well just think about Ramadan it's a month long festivity it affects stuff and sensitivities at work so it's something that definitely employers, companies looking at your client base is definitely something to take into consideration And then, you know, obviously you mentioned Islam, something that companies operating in the finance space may want to think about is aligning their product to Islamic finance or part of their products.

40:19Benjami:And just to summarize that, it's basically a system of financial laws that follow Islamic laws, basically are compliant to what is called the Sharia. So Islamic laws by which, for example, you wouldn't get interest on your money because money from money for no need is not aligned to the value system of Islam. And investments should be directed into asset classes that are sort of approved by Islamic standards. So definitely no gambling, alcohol or, you know, any other asset classes, tobacco that do not follow these standards. And then as a final note, I would probably say this is very timely, but the Middle East, it's a region that is currently facing a conflict.

41:09Benjami:So I think that also requires the different sensitivity for new businesses operating in this region in terms of having that kind of approach to how they operate, the communication strategies, the staff they hire. And it's something obviously that has to be taken into account. Indeed, thank you for saying that because we're having this conversation as if there wasn't a huge conflict going on between Israel and Palestine and of course your own country, Lebanon, being increasingly pulled into that. In Sudan and Yemen and several countries where the situation has been stagnant for quite a few years.

41:47Indeed, there has been too much conflict.

41:49David Barton-Grimley:It's a hot region from all kinds of aspects.

41:52Benjami:Yes, in a good way and a bad way, yes, indeed. um what about um i don't want to gloss over that but we're not going to solve maybe this piece in this in this in this podcast what about finding finding talent and maybe i'll come to you on that one remo i mean one of the it's great when you've got a place like dubai that's sort of hotbed or fintech activity but also it means presumably that it's quite hard to find really good developers or really good designers or really good product people or whatever because you know there's 50 other or 100 other companies trying to hire those exact same people How challenging is it finding talent?

42:28Benjami:And to the point we were talking about earlier, particularly sort of homegrown talent, you know, Emiratis or Yemenis or Egyptians or other people from the region.

42:38David Barton-Grimley:It is definitely challenging. At the same time, I'm telling you, year-over-year is getting easier because I think on one hand, it's also becoming this region more attractive for expats to come, not only UAE, but also Saudi. And we as a global company also, we have an opportunity to let potentially employees to relocate from other regions. I know we recently have somebody from Saudi, from France, from our Paris office, they moved to Riyadh. We have some people from the UK office that came to the UAE. So we always focus on obviously trying to have homegrown talents, but also try to get people. I wouldn't say necessarily straight freshman university, but like young talents.

43:25David Barton-Grimley:At the same time, we will always attract people from multiple regions. They actually, they want to spend some time here. And also we notice, what I notice also over the years, that people tend to come and, okay, I'll come to Dubai for two, three years before I move on. And then they end up staying there for a long time. One of them is me. Ten years, I'm still there. You need a pension. live and they need a pension i'm waiting for ZIT to come up with a book good plan for me

43:52Benjami:you're welcome have you hit your golden visa yet that's such a really good point that guys

43:58David Barton-Grimley:mentioned there also the uh the overall government has been supporting also people to stay longer by introducing the golden visa which allows the specific um jobs to get the permission to work for 10 years and not necessarily attached to a specific employer, which used to be a challenge in the past. So it definitely obviously shows that also the government wants people to stay for longer and to call you a home rather than just transitioning there from one place to another.

44:32Benjami:So last quick big question for you Ziad. One of the obvious ways to sort of overcome some of these challenges of culture and talent and so on is partnerships. And you talked earlier about how you know one of the partners in your own company is from Saudi Arabia and you're from from Lebanon and so on um how important are forming partnerships with um other companies as a sort of strategy to to enter the market can you imagine for your own business or other businesses potentially partnering with companies in in different countries across the region to sort

45:04David Barton-Grimley:of expand your reach so so tapping on to the cultural nuances doing partnership as well is different it's done differently from one culture to another for example you want to have a partnership in saudi arabia you need to meet the counterparties you need to align with them it doesn't happen easily let's set up a zoom call for example so i always share this as a story that i've been traveling consistently to saudi arabia to to grow our footprint there and i usually go on like a schedule like every every month one week 10 days and often my wife asks me do you have a schedule and I tell her no not yet she says why are you traveling I said once you are there you call people you tell them I'm around let's grab coffee let's meet let's this happens while for example when I used to set up my trips to London I could have scheduled them two months before the trip and then I can justify to my wife why I'm traveling to London so the point is that But you need to understand how even you set up meetings.

46:06David Barton-Grimley:If someone ghosts you and doesn't answer your WhatsApp, it doesn't mean, no hard feelings. But this, you know, there are little things on day to day that you need to deal with them. It's completely different. And this goes to partnership. How do you partner? How do you align? How do you come to the partnership? Do you want to really hit and run or you want to build something long-term? And this is very unique. And again, for me being Lebanese, I've had a lot of Lebanese people in my family who worked in Saudi Arabia and the region and my parents. And you get to understand it differently and you get to embrace it differently.

46:43David Barton-Grimley:I think the key point is that understanding culture, local culture, whether it is from Islamic perspective or non-Islamic perspective. So Gaya spoke about Islamic finance and Sharia compliant opportunities or Sharia compliant investments. But you tend to see even people who are not strictly Sharia compliant, they want Sharia friendly opportunities. Let's put it this way. So don't pitch for them an opportunity to back a gambling business or an army or a weapon, for example, warehouse, something like this. So the point is sharia friendly or ethical friendly or even cultural friendly. Understanding how the schedule in Ramadan, it needs a dedicated podcast about how you manage your schedule in Ramadan in Saudi Arabia.

47:32David Barton-Grimley:It's very, very, very different. Staying up till 6 a.m. and starting afternoon, but then business happens. Tough. Actually, business happens. And for someone coming out from a different region, say why would I stay till 3 am, 4 am to have Suhoor, but maybe I might be closing the deal. I don't want this. This is not part of my office hours, but just go enjoy it, have a good food and make a deal happen. If you accept those things and you go in an open-minded approach, it's different. I want to say as well, Jeddah is different than Riyadh, Khobar is different than Riyadh and Jeddah, Dubai is different than Abu Dhabi.

48:07David Barton-Grimley:and as Guy mentioned, Sharjah is different as well. So would you call someone to say, let's have a meeting on Friday morning and Friday he has prayers and he's going to prepare himself for the prayers? He won't accept it. So I think really it needs a local understanding and it's not difficult to get this understanding, honestly.

48:31Benjami:Siyadah was empathizing so much when you mentioned your schedule being completely empty until you land. Because as a producer, I face this constantly. You know, we get sent out there for big productions and my entire interview schedule is TBC. And it's what we call the Inshallah mentality, right? It may happen, it may not happen, but you got to believe it, push until the end. And you may get interviewed at that meeting. But yeah, you really have to trust the process.

49:00David Barton-Grimley:Exactly. And then when someone tells you, please send me that document, and then you get to a point where your AI can conclude that he's not going to look into it. He's just seeing it because for the face of the... Like he doesn't want to turn you down. So I fully agree.

49:16Benjami:All right. We need to wrap this call up, unfortunately. So I'm going to ask all three of you one last question, which is what one piece of advice would you give to somebody who was looking to sort of expand an existing company into at least one market in the Middle East? if you could give them one piece of advice what would it be? Gaia, I'm going to come to you first what one piece of advice would you give someone looking to expand into the Middle East? I think we covered pretty much them all gosh, I think the cultural piece is probably the biggest one, so you know having probably familiarize yourself and your business with the region first before setting yourself out there because it's a big change.

50:05Benjami:It's not to be taken for granted. And I guess many people get attracted by the capital and the growth opportunities without having done the due homework before. Thank you. Remo?

50:16David Barton-Grimley:I will probably go with get ready for the diversity and obviously need to be agile and flexible to adapt to the changes here. By the way, I'm 100 % keen for Ramadan follow-up podcast. I have a lot of stories about one o 'clock in the morning meeting to discuss with all of you, if you're interested. But essentially it's definitely important to make sure that people understand that MENA is a big region when it comes to digital payments specifically. It's very fragmented, the cultural nuances is very different. It's also a region that moves very, very quickly and this diversity needs to be kept in account.

50:52David Barton-Grimley:I see a lot of companies adapting this very well. Equally many companies failing from that point of view when they just copy paste. And Ziad? I second what Gaia said and what Remo said. I think if you allow me to direct the message to people who are outside the MENA region, like from Europe or America, don't parachute your solution or things like as the way it worked in the US or European market, it will work in the MENA region. go in with certain thesis try to have a lot of conversations validation and understand how it can be derived as well locally and you just need to go and sit and hear people and understand how they think and how they make decisions and their behavior I think that's the way I followed it and that's the way Vanry followed it and that's why we ended up as well we were able to attract a local co-founder to join the effort and he saw like really this is very exciting that it is not only coming to parachute from London to Saudi Arabia solution, that we are deriving that solution or building that solution from the region as well with the support of whatever you have in the UK and London ecosystem.

52:05Benjami:Thank you. Thank you all so much for your fantastic insights. Thank you so much. That wraps up today's discussion. Thank you all for joining me. Where can people find out more about you? Gaia, where can people find out more about you and the work that you do. Well, I already mentioned our show, Horizons, so watch that on Bloomberg TV weekdays at 8 a.m. Dubai time. Also, my work is on LinkedIn. And for those who still wander around X or Twitter, how you call it nowadays, I'm on the platform at Gaia Lanterti. Thank you.

52:38David Barton-Grimley:Remo. You can find me on LinkedIn. Very excited to be. Thanks for joining. Thanks for being. Thanks for inviting me today.

52:46Benjami:And yeah, where can people find out more about you?

52:47David Barton-Grimley:So personally, I'm on LinkedIn, Ziyad Mopsut, and for the company, venry.com, and we have our app on the Apple Store and Google Store. They are keen to know more, but LinkedIn could be the easiest one.

53:00Benjami:And you can find me, Benjamin Ensor, on LinkedIn, and you can find out about the work the team is doing at 11fs.com. So thank you all very much for listening. If you like what you heard, please do follow our podcast. Please let us know what you'd like to hear about in future shows. If you want to join the conversation, find us on social media. Just search for 11FS or Fintech Insider or email us at podcasts at 11fs.com. Thank you all so much. Thank you again to my three guests. Goodbye.