The Gulf region is set for massive growth in the mobile payment arena says Cape Town-based Fundamo. The company will be focusing its efforts on this region but warns that Middle Eastern expansion comes with its own unique challenges.
Fundamo, most recently in the news after a R36 million investment from Shuttelworth's venture capital company, HBD, says it has chosen the Gulf countries as one of its key areas of expansion ahead of the more traditional European or Chinese investment regions.
"The Gulf Cooperation Council region's exceptional economic performance over the past four years has positioned the economic block to lead the Middle East region," explains Reg Swart, regional executive at Fundamo.
The region is made up of six member states: Saudi Arabia, Kuwait, Qatar, the Sultanate of Oman and the United Arab Emirates.
Swart says the Gulf region is an extremely good fit for mobile commerce solutions. There is a high level of mobile penetration and SMS adoption, high financial growth rates, strong GDP and a very mobile workforce.
"The entire region is performing well, but we will be concentrating on the states of Saudi Arabia and the UAE. Together these two counties account for 77% of the Gulf's IT spend – more than $5-billion."
More importantly, Swart says the mobile commerce market remains fairly untapped with few successful projects to date.
While the regions continue to invest heavily in IT, the growth potential will continue for many years and Swart says this is an ideal situation for Fundamo, which will be looking for a sustained and long-term development and presence in the market.
Islamic banking institutions, which have enjoyed double digit growth for the last decade continue to grow both in the Gulf region and internationally. There has also been a marked increase in new banking institutions to address this market.
"These new institutions together with the ongoing market liberalisation means greater competition in the financial services sector. A compelling mobile commerce offering can give an institution a great edge to their offering," Swart explains
Swart does, however, point out that the market poses significant challenges for international companies wishing to enter the region. This is a market where it is important to partner with the right companies.
Speaking at Gitex, the region's largest IT exhibition and conference, in September, Swart will be exploring the state of the mobile banking market and its unique opportunities in a paper entitled Mobile Banking – hype to reality.