Often referred to as rentier states due to their dependence on oil revenue, Gulf Cooperation Council (GCC) countries — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE) — have all set out economic transformation agendas to diversify their economies and reduce their dependence on income from fossil fuels.
Formalized at various levels across the GCC, the transformation agendas, or “National Visions,” collectively emphasize digital transformation and technological advancement as cornerstones of the Gulf’s transition to a post-oil economy.
While Bahrain, Saudi Arabia, the UAE and Qatar have assembled their medium-term economic development goals around targets for the year 2030 (Vision 2030), Kuwait has opted for Vision 2035. And Oman, which we analyze in this fourth instalment of PYMNTS’ GCC FinTech Series, has set 2040 as the target date to achieve its development goals, including those related to the digital transformation.
See Part 1: PYMNTS GCC Series: High Smartphone Penetration, Govt Support Boosts UAE’s FinTech Growth
See Part 2: PYMNTS GCC Series: Bahrain Drives Open Banking Adoption in MENA
See Part 3: PYMNTS GCC Series: Partnerships, PayTech Innovation Move Kuwait Into Digital Era
Laying the FinTech Foundation
As much as the global tech community often talks about a leapfrogging effect, when it comes to financial technology there are certain fundamentals that need to be laid down before world-leading innovation can take root in any economy.
On the technical side, the fundamentals include modern payment rails, access to cloud services and the key components of a FinTech ecosystem such as digital wallets and e-money services.
And on the legal side, an agile licensing regime, a regulatory sandbox and open banking framework are among key factors that contribute to the overall health of a country’s FinTech environment.
In the case of Oman, the country’s nascent FinTech scene has a huge untapped potential given its young, tech savvy population and growing digital economy.
For example, the government-backed Oman Daily Observer recently reported that the Central Bank of Oman (CBO) is working on an open banking initiative, an indication that the country is working towards strengthening its FinTech ecosystem and modernizing its banking industry.
Prior to that in 2017, CBO launched a mobile payment clearing system to enable simultaneous transfers via a mobile phone number. Later in May 2020, the central bank issued its first license to a non-banking financial entity, FinTech startup Thawani Technologies, taking further steps toward driving FinTech growth and innovation.
Today, Thawani provides ePayment solutions through a mobile wallet and a payment gateway, enabling customers to easily pay bills, tuition and social insurance as well as top up credit.
For consumers, the Thawani app follows the typical mobile wallet model with QR payments and peer-to-peer transactions. It also incorporates innovative features like a virtual card solution and a “view nearby merchants” tab.
Driving FinTech Growth
Although the likes of Thawani are building the tools Oman’s consumers need for the economy to fully embrace digital payments, like in most countries across Middle East and North Africa (MENA), cash remains prevalent in the country.
To encourage the uptake of electronic payments, the government has made it mandatory for some local commerce businesses, starting this year, to make ePayment options available for customers.
Omanis also have several options when it comes to cross-border transfers, particularly for the large expatriate Indian community — they represent 20% of Oman’s total population of 2.3 million, according to the 2010 national census data — in the country.
One of these is a payment corridor between Oman’s second-largest bank, Bank Dhofar, and the Indian Indusind Bank, which utilizes RippleNet technology to facilitate real-time mobile remittances.
Overall, Oman’s FinTech ecosystem shows huge growth potential considering the launch of various incubators, a regulatory sandbox for FinTechs, a startup hub and a million-dollar technology fund, but more would need to be done to bring it to the level of FinTech ecosystems in neighboring GCC countries.
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