Though fintech remains a relatively nascent sector in Qatar, the industry is growing at a rapid pace.

A new report by Switzerland Global Enterprise (S-GE), the official Swiss organization for export and investment promotion in the country, explores the key drivers of this growth and the emerging trends shaping the sector.

The report highlights the remarkable growth of the Qatari fintech industry. It emphasizes the dominance of digital payments in this ecosystem, fueled by Qatar’s high internet penetration rates and widespread smartphone usage. Notably, 99% of the 2.7 million overall population in Qatar is using Internet, contributing to a robust environment for the adoption of digital payments

Furthermore, Qatar boast a well-developed IT infrastructure, including 5G and fiber-optic technology, and is one of the countries with the fastest mobile Internet connections in the Middle East, providing startups a favorable environment to innovate and thrive.

In an interview with The Peninsula in November 2024, Visa’s Vice President and General Manager Kuwait and Qatar Shashank Singh, highlighted the impressive growth of Visa’s contactless payment system in Qatar.

Since the launch of its digital payment solution in the country a few years ago, transaction volumes have increased five-fold, and the number of individual transactions has grown six-fold, now covering over 5,000 merchant locations, including Karwa Taxis, DHL, and Hi Wash, he said. Today, 96% of all in-store digital payments in the country are made using contactless technology, indicating a strong shift towards the payment method.

The rise of embedded finance

In addition to digital payments, embedded finance is rapidly gaining traction in Qatar’s fintech landscape, fueled by the advent of open banking.

Adoption of open banking initially stemmed from the private sector, with the largest bank in the country, the Qatar National Bank (QNB), announcing in 2022 the launch of its open banking platform and becoming the first bank in the country to offer such services. The platform allows for secure integration between QNB’s core financial systems and third parties like fintech startups and corporate partners, facilitating data sharing and payment processing.

In May 2024, QNB took it a step further by launching the country’s first open APIs services specifically tailored for its corporate clients.

While the private sector pioneered open banking in Qatar, the Qatar Central Bank (QCB) has also embraced the trend, introducing its fintech strategy in 2023 with a particular focus on open banking initiatives. The central bank is now said to be preparing an open banking framework scheduled for release by 2026, marking a significant step towards open finance.

The embedded finance market in the Middle East and North Africa (MENA) was worth US$10 billion in 2024, a valuation that’s projected to grow by 45% to 2030.

Digital assets and blockchain technology

Another emerging fintech vertical highlighted in the S-GE report is digital assets and blockchain technology. Blockchain, in particular, is perceived as a powerful tool for businesses in Qatar, offering efficient, secure, and affordable transaction systems.

Tasmu Digital Valley, an initiative in Qatar aimed at fostering digital innovation and technology development, expects Qatar’s blockchain market to reach US$253.4 million by 2026, up from US$33.2 million in 2022.

In addition, QCB is actively pursuing digital currency opportunities. In June 2024, it completed the development of the infrastructure for its central bank digital currency (CBDC) project. This initiative aims to enhance access to capital markets for operating banks in the country, enhance domestic settlement, and improve the efficiency of securities transactions.

National strategies and government initiatives

The report emphasizes the significant role of government initiatives in accelerating fintech growth in Qatar, particularly through initiatives like the Qatar Fintech Hub (QFTH). Founded by Qatar Development Bank (QDB), a government-backed financial institution, QFTH is an innovation and entrepreneurship center aimed at supporting the growth of the Qatari fintech ecosystem.

To date, over 50 fintech startups have graduated from programs run by QFTH, with a combined portfolio valued at US$500 million. The hub is set to allocate US$16 million in pre-seed investments from 2020 to 2028, with the aim of supporting another 50 fintech startups over the next five years, according to S-GE.

The report also highlights Qatar’s strategic push towards a fully digital environment. The Third Financial Sector Strategic Plan, introduced in November 2023, aims to create a financial and capital market that leads the region in innovation, efficiency and investor protection.

The strategy is founded four pillars, namely banking, insurance, digital finance ecosystem and capital markets, alongside five cross-cutting themes to ensure successful implementation and delivery: governance and regulatory oversight; Islamic finance; digital innovation and advanced technologies; environmental, social and governance (ESG) standards; and talent and capabilities.

The plan has set ambitious targets for the financial sector, including increasing the number of licensed fintech and insurtech players to 35, up from 10 in September 2023, achieving an annual growth rate of 4.7% in the financial sector until 2030; and increasing private sector credit by 15%, bringing the percentage of commercial credit to private companies up to 77%.

Another key national plan is the Qatar Fintech Strategy 2023. Launched in March 2023, this strategy aims to support the diversification and innovation in the financial sector and invest in a knowledge-based economy.

It’s based on four main axes:

• The establishment of a pioneering infrastructure including advanced regulatory rules and electronic platforms supporting the development of fintech;
• Prioritizing innovation and fintech sector growth, especially Islamic fintech and sustainable development, as well as insurtech;
• Empowering companies and enhancing their performance by using fintech solutions, in addition to making Qatar a fintech hub, aided by the country’s leading educational infrastructure; and
• Providing smooth mechanism and support for the transition towards cashless transactions.

Other key initiatives that been launched in Qatar and which are worth mentioning:

• The National Blockchain Blueprint, released in March 2023, establishes a nationwide framework for blockchain technology, covering regulatory standards, infrastructure, and innovation strategies;
• The National AI Strategy for Qatar, unveiled in 2019, aims to integrate AI to bolster Qatar’s economic and strategic future, in line with the Qatar National Vision 2030; and
• The Express Sandbox, launched in May 2024, is an expedited program designed to facilitate quicker market entry for tech solutions or innovations that demonstrate product readiness and potential.

Featured image credit: edited from freepik