Qatar is among the two countries in the Gulf Cooperation Council and a very few in the Mena region to have cybercriminal and cybersecurity legislation in place by end-2016, the IMF has said in a report.
The overall cyber risk preparedness remains weak in many countries in the Mena (Middle East and North Africa) region, the International Monetary Fund said in its regional economic outlook.
According to the IMF, cyberattacks can lead to operational disruptions, financial loss, reputational damage, and systemic risk, and could become a binding constraint unless cybersecurity frameworks are strengthened.
Although cyber risks are not unique to fintech (financial technology), greater connectivity from digital solutions expands the number of entry points for cyber hackers. In addition, while there have only been a few incidents of successful cyberattacks on financial institutions in the region, the number of attacks on banks is reported to have increased (Symantec 2017), and the nature of cybercrime is evolving rapidly and becoming more sophisticated.
The fintech ecosystem is still at the developing stage in the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) and Caucasus and Central Asia (CCA) regions, but there is strong momentum toward adoption of fintech by both incumbent banks and other companies.
The MENAP region has made comparatively greater strides than the CCA region in developing its fintech ecosystem, although investments remain concentrated in a few countries, the IMF noted.
In the MENAP region, governments are playing a leading role in fostering fintech innovation, with the entry of international fintech companies providing further impetus. A recent survey covering 12 MENAP countries (WAMDA 2016) shows a sevenfold increase in fintech start-ups since 2009.
These start-ups have emerged alongside and in competition with banks, which are also harnessing digital technologies to move toward more customer-focused business models.
The payments and lending segments account for the bulk of fintech investments in the MENAP and CCA regions, in line with global trends.
In the MENAP region, payments and lending account for 50% and 30% of the startups, respectively.
However, cash transactions still dominate, and fintech remains a relatively small channel for providing access to finance by SMEs.
The IMF report said the potential of fintech is being unlocked in the region.
“Policymakers in the MENAP and CCA regions recognise the potential fintech presents, and some countries are proactively creating an enabling environment; however, more is needed,” the IMF said.
Priorities include reforms to close gaps in the regulatory, consumer protection, and cybersecurity frameworks, improve the business environment, and tackle ICT infrastructure gaps along with measures to address the trust gap.
To support development of fintech and ensure risks are managed, changes are needed to legal frameworks and regulatory practices, the IMF said.
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