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Oman as a fintech hub

Research · September 2020

DOI: 10.13140/RG.2.2.33598.82242

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 Sultan Qaboos University
Collage of Economic and Political Science
Economics and Finance Department

OMAN AS A FINTECH HUB

brief analysis of the concept and main players in Oman’s economy

Submitted to: Dr. Hatem Alshanfari

Done by: Hamida Mohammed Alajmi 119261

Course: Special Topics in Finance FINA4365 Fall 20

 Declaration

I declare that this report is all my work, using secondary data to finish the report which is

required in FINA4356 course, and all information that are related to their creators are quoted

and cited. This report which titled with: (Oman as a FinTech hub - Brief analysis of the concept

and main players in Oman’s economy) is focusing on understanding the concept of FinTech

and the story behind it. Besides, trying to analyze how Institutions, the Government and

Customers are act toward FinTech, in order to answer the main question: “Can Oman be a

FinTech hub?”

Contents
1.Introduction – What is FinTech? ....................................................................................... 3
1.1. FinTech in Oman ............................................................................................... 3
2.Opportunities for Fintech startups ...................................................................................... 4
2.1. Institutions ..................................................................................................... 4
2.2. Government .................................................................................................... 6
2.3. Customers ...................................................................................................... 7
3.Can Oman be a FinTech hub? .......................................................................................... 8
References ................................................................................................................ 9

2
1. Introduction – What is FinTech?

FinTech is basically a combination of Finance and Technology, that is introducing the

transformation of traditional institutions into a modern shape. “It describes the evolving

intersection of financial services and technology. It refers to startups, tech companies, or even

legacy providers. (PWC, 2017)”. This new field will help individuals and institutions to finish

their financial transactions and operations through easy and safe environment, by using secure

specified algorithms and software, which are used on computers and smartphones. It can be

used in blockchain, banks and e-payments, investments, robo-advising ...ext.

This report will look closer on the concept of FinTech in Oman, and address the behavior of

the main players in the economy toward it in the Sultanate, to understand the possible outcomes

in the field, through looking at different opportunities and what kind of attention they give,

wither it is just on papers or process in action.

1.1. FinTech in Oman

Oman has Always worked on improving its infrastructure and sign lots of contracts/partnerships

in order to empower technology. Majid Alamri, the CEO of Thawani said in his speech at the

opening of the Banking and Finance Conference and Expo held at Sundus Rotana Muscat 2017

the following: “of the 105 fintech firms currently operating in the MENA region, there wasn’t

a single fintech in Oman. The GCC accounted for 43 per cent of the region’s fintech firms,

almost all of them located in the United Arab Emirates”.

Between mid-2015 - mid-2016, The Middle East reached an increase of 71% in growth in

fintech investments, and This is really small compared to South America, Australia, and China

where there is an average of 300% growth in fintech investments. Sometimes comparisons

3
between different parties from around the world is unfair due to the different capabilities and

resources, so let us take a deep look on Oman.

“In Oman, 63 per cent of the people have access to smartphones with an estimated 8 million

smartphone devices registered. It is twice the population of the country. And 74 per cent of the

people represent the banked adult population. Hence, as a country we are very much ready to

adopt the technology,” Al Amri said. He added that if banks work with FinTech startups, “both

can leverage on big data and analytics. Fintech allows one to have access on big data which can

help into making big decisions. Both respond positively to rapidly growing technology trends

which ultimately enhance customer experience and generate new revenue streams”.

It is important to mention that data is a very crucial component in the process of using FinTech,

through using data all parties can expand within the correct way. In Oman, the government

established in 2012 the national center for statistics to be a database for the researchers. There

is also Oman Data Park that was established in 2011. These two and other centers can

contribute a lot to support FinTech in Oman.

2. Opportunities for Fintech startups

2.1. Institutions

Since banks are one of the major players in the economy, and due to the relevance of the

benefits, all of them are aware of the big potentials that FinTech startups can bring to finance

and banking in Oman.

Oman Arab Bank established in January 2019 its first Innovation Hub hackathon platform, to

encourage students, professionals/Fintechs and employees to collaborate and bring innovative

solutions (in the form of a prototype) around specific subjects that added value for OAB and its

4
partners in 24 hours only. The bank also run some workshops to ensure that all participants are

fully prepared to work on their new ideas. The winning team had the chance to work on its ideas

in the innovation lab with the employees to get support and guidance.

OAB continued the mission, in January 2020 it launched an innovation Lab in Oman, a sandbox

that was inspired by visits to some of the tops Innovation Labs all around the world, such as

Harvard University's Innovation Lab and Barclays Rise Labs. According to that, students and

employees will be engaged to develop innovative Proof of Concepts and solutions, which will

be a plus for the Bank's consumers to enhance their banking experience.

On Saturday, March 14, 2020, Startup Grind Muscat and Oman Arab Bank collaborated to host

3 entrepreneurs in the FinTech space, with 3 different applications and target markets. They

were Brendan Mckittrick - the CEO of Aeroband that is working on developing the first

dedicated blockchain protocol for the Aviation industry. Ahmed Moor - the CEO of Liwwa that

utilizing technology to enable SME lending in Jordan and Egypt. Majid Alamri - the CEO of

Thawani that scaling the first Omani Mobile Payment Platform. All of them shared stories and

experiences in a discussion, focused on their trips, challenges, and the trends they saw emerging

in FinTech. This kind of events are important to support the concept of FinTech and bring

important experiences into the focus.

On February, March 17, 2020, Oman Islamic Finance Fintech Forum 2020 was held. It was a

daylong event done by the College of Banking and Financial Studies (CBFS) in cooperation

with Bank Nizwa, the first Islamic bank in Oman. The dean of the college Dr. Nasser Al

Maawali said “Oman is well on its way towards fintech adoption. Initiatives such as the

establishment of the Oman Blockchain Society, the setting up of a $100m fintech investment

by Bank Muscat, and the establishment of an ad hoc committee on fintech by the Central Bank

of Oman, are examples of this ecosystem being created in Oman”. He also mentioned that CBFS

5
has established a Fintech Taskforce, that will be a knowledge taskforce for financial institutions

and banks in the sultanate.

2.2. Government

“Indeed, fintech has grown rapidly in recent years, driven by technological advancements,

customer expectations and government support. (Dr. Al Maawali, 2020)”. Government role is

very important, it either support or disable, through the regulations. In the Sultanate, fintech-

related legislation is lacking, with no revealed plans to fill the gap. However, digital economy

is good for profitability. Hence, when governments bless the steps of empowering Technology

and innovation, they can increase the efficient working spaces and economic sustainability.

As the government of Oman is aware about FinTech importance, it contains technology in the

2040 vision and gave it a good attention. That was clear when it organized the Comex 2019

Exhibition at the Oman Convention and Exhibition Centre. The annual exhibition’s goal is

emphasizing the main trends in the technology and IT globally and presenting important

electronic initiatives and services.

Also, the government went through lots of conferences, events, contracts, and partnerships to

facilitate the upcoming leading role of FinTech as one of the most important investments, which

will shape the future of our modern country and economy. For example, on June 29, 2019, The

Gulf region’s first blockchain-based platform was launched in Oman for the crowdfunding of

Waqf charities and sharia-based investments. The launch of the Waqf Blockchain by Singapore-

based Finterra, which is a leading blockchain social solutions provider, took place in the Oman

Islamic Fintech Forum 2019. At that event, Oman’s government representors were Dr. Qais

Issa al Yahyai, Executive Vice President at Central Bank of Oman (CBO), and Dr. Ammar al

Obaidani, President of the Blockchain Club. The event focused specifically on principles of

6
Islamic finance and banking, as it is growing these days. Hamid Rashid, the founder of Finterra

said “With the blessings of the (authorities in Oman) we were able to reach out to various

Islamic (financial institutions here), and in the last one year, we have been able to sign several

MoUs”. He also added “With a tool like the Value-Added Intermediation (VBI) based Waqf

Blockchain allows for the community to participate in the development of Awqaf”. (Rashid,

2019)”.

2.3. Customers

Individuals and SMEs are essential players in the market; therefore, it is important to improve

the direct and indirect services, in order to keep their loyalty and sustainability.

In 2019, Bank Muscat request has been accepted from Central Bank of Oman to launch a $100m

(OMR38.5 million) strategic Fintech investment programme. Abdullah Zahran Al Hinai, chief

wholesale banking and strategic growth officer at bank Muscat said “In line with our corporate

vision ‘to serve you better, everyday', the bank always focuses on adopting cutting edge

technology to provide the best in class services and offering innovative digital channels catering

to all segments”.

The bank partnered with venture capital funds to create a high-quality direct investments, that

target investments in fintech companies. This will add value for the bank, but most likely

improves financial inclusion for underserved segments of the economy, especially for SMEs

and personal banking consumers, since bank Muscat is the biggest financial institution that has

big and different customers.

7
3. Can Oman be a FinTech hub?

First, a FinTech hub is “The focal point for FinTech activity within a region or a network.

(Deloitte’s Inside Magazine, 2017)”. It is possible to measure the value and success of any FinTech

Hub through many factors, but most importantly by demand, capital, human talents, and

regulations. According to the analyses above, all players are demanding for FinTech startups.

They all are spending sufficient capital and signing agreements to invest in it, and there is

always more. As it was written about Oman Arab Bank, for example, it worked to support the

youth to practice the concept. With less clarity in FinTech regulations, Oman can study the

situation to adjust its policy in this field.

So, Oman can be a FinTech hub. With its infrastructure capabilities, individuals and institutions

awareness, and government adding clear regulations; FinTech can reform the financial services

sector and economy of Oman. Besides, it will support banking field through many

collaborations with the new startups to facilitate wealth management, assessing fraud and

reducing money laundry. Also, it will change the traditional financial institutions’ ways of

operations and its impact on the future financial intuitions.

Khalid al Kayed, the chief executive officer of Bank Nizwa said “FinTech is a huge opportunity

for the banking sector in Oman for all players and more so for Islamic finance to be more

competitive in the marketplace. Data and technology are converging, so, we are all service

providers at the end of the day, yet provide value for customers whether retail or corporate”.

Fintech practices adoption is going to enhance the experience of moving toward digital

institutions, which will increase the level of efficiency and effectiveness. By making Oman as

a FinTech hub, it will attract new investors, researchers, clients and even tourists to discover

and study the nature of transformation and dependence on technology.

8
 References

PWC Q&A - What is FinTech? (2017). https://www.investopedia.com/terms/f/fintech.asp#fintech-and-new-tech

KAGAN, J. (2020, August 28). Financial Technology – Fintech.

https://www.investopedia.com/terms/f/fintech.asp#fintech-and-new-tech

Mendoza, J. (2017, December 11). Oman has potential to become major fintech player in MENA.
https://www.omanobserver.om/oman-potential-become-major-fintech-player-mena

Building A Collaborative Ecosystem. (n.d.). Retrieved September 16, 2020, from

https://omanstartuphub.om/ecosystem_supporter_companies/oman-arab-bank

Mckittrick, B., AlAmri, M., & Moor, A. (2020, March 14). Event presented about Faces of Fintech - In
partnership with Oman Arab Bank, in Oman Arab Bank Auditorium, Muscat.

Prabhu, C. (2019, June 29). First Waqf Blockchain platform launched in Oman.
https://www.omanobserver.om/first-waqf-blockchain-platform-launched-in-oman/

Gonçalves, P. (2019, December 16). Bank Muscat launches $100m fintech investment programme.
https://www.internationalinvestment.net/news/4008271/bank-muscat-launches-usd100m-fintech-investment-
programme

Deloitte, what makes a successful FinTech hub in the global FinTech race. (2017).
https://www2.deloitte.com/uk/en/pages/financial-services/articles/what-makes-successful-fintech-hub-in-global-
fintech-race.html#

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