PYMNTS GCC: the Omani FinTech hub shows its potential

Often referred to as rentier states because of their dependence on oil revenues, the Gulf Cooperation Council (GCC) countries – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE) – have all established economic transformation to diversify their economies and reduce their dependence on fossil fuel revenues.

Formalized at different 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.

While Bahrain, Saudi Arabia, the United Arab Emirates and Qatar have articulated their medium-term economic development objectives around objectives for the year 2030 (Vision 2030), Kuwait has opted for Vision 2035. And Oman, which we analyze in this fourth installment of PYMNTS’ GCC FinTech Series, has set 2040 as the target date to achieve its development goals, including those related to digital transformation.

See Part 1: PYMNTS GCC Series: High Smartphone Penetration, Government Support Drives Fintech Growth in UAE

See Part 2: PYMNTS GCC Series: Bahrain Drives Open Banking Adoption in the MENA Region

See Part 3: PYMNTS GCC Series: Partnerships, PayTech Innovation to Bring Kuwait into the Digital Era

Laying the foundations of FinTech

Even though the global tech community often talks about a leapfrog effect, when it comes to fintech, certain fundamentals need to be established before cutting-edge innovation can take hold in any economy.

On a technical level, the fundamentals include modern payment rails, access to cloud services, and key components of a FinTech ecosystem such as digital wallets and e-money services.

And on the legal front, an agile licensing regime, regulatory sandbox, and open banking framework are among the 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 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, indicating that the country is working to strengthen its FinTech ecosystem and modernization of its banking sector.

Previously, 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-bank financial entity, FinTech startup Thawani Technologies, taking further steps to drive FinTech growth and innovation.

Today, Thawani provides electronic payment solutions via mobile wallet and payment gateway, allowing customers to easily pay bills, school fees 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 such as a virtual card solution and a “view merchants nearby” tab.

Driving fintech growth

While people like Thawani are building the tools consumers in Oman need for the economy to fully embrace digital payments, as in most countries in the Middle East and North Africa (MENA), the cash remains prevalent in the country.

To encourage the adoption of e-payments, the government has made it mandatory for some local business enterprises from this year to make e-payment options available to customers.

Omanis also have several options when it comes to cross-border transfers, especially for the large expatriate Indian community – they make up 20% of Oman’s total population of 2.3 million, according to 2010 national census data – in the country. .

One is a payment corridor between Oman’s second largest bank, Bank Dhofar, and Indusind Bank, which uses RippleNet technology to facilitate real-time mobile remittances.

Related: Arab Monetary Fund offers alternatives to CBDCs including FinTech Wise, SWIFT, Revolut and RippleNet

Overall, Oman’s FinTech ecosystem has huge potential for growth given the launch of various incubators, a FinTech regulatory sandbox, a startup hub and a technology fund. $1 million, but more should be done to bring it to the level of FinTech ecosystems in neighboring GCC countries.

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About: More than half of utilities and consumer finance companies have the ability to digitally process all monthly bill payments. The kicker? Only 12% of them do. The Digital Payments Edge, a collaboration between PYMNTS and ACI Worldwide, surveyed 207 billing and collections professionals at these companies to find out why going digital remains elusive.

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