Fintech Index in the Arab Region "Finxar" (2024)

Arab Regional Fintech Working Group

Questionnaire for

The Arab Region Fintech Index

“FinxAr”

Objective:

To establish a Fintech Index for the Arab region aiming to monitor the yearly progress of deploying Fintech activities in Arab countries, and countries’ efforts to improve Fintech adoption and growth of progressive, digital inclusive financial services. The index will provide a holistic view on Fintech developments in Arab countries and review it on regular basis. This can support Arab countries to follow up on regular basis their developments in enabling and promoting Fintech adoption, so they can harness potential opportunities and mitigate pertaining challenges.

Aiming at promoting a proper Fintech ecosystem in Arab countries and foster its adoption, the Arab Regional Fintech Working Group (WG) design an Annual Fintech Index for the Arab region “FinxAr”^[1], which provides insights about fintech developments at the regional level every year.

Approach and Methodology

With the objective of examining the Fintech landscape in Arab countries, the index provides deep insight into the six pillars that drive Fintech industry, namely: laws-policies and regulations, demand, access to finance, talents, financial markets infrastructure, as well as collaboration and partnership. 
Since the index aims to illustrate Arab countries progress in deploying fintech activities, it is composed of sub-indices that reflect the above-mentioned representative pillars of the Fintech sector. So that every sub index reflects the position of each pillar at every single Arab country responded to the survey. This will be reflected into a Weighted Index for each country showing the advancement of the six pillars. Afterwards, the individual Arab countries’ indices are aggregated into a General Fintech Index at the regional level “FinxAr”, via a simple average for all Arab countries replied to the survey.  
The general index consists of one hundred percentage points, ranging from zero (0% - the lowest level) to one (100% - the highest level), divided into six main pillars, sub-indices, representing the Fintech ecosystem, and weighted by individual pillars’ weights as shown below: 
 

Fintech General Index “FinxAr” is calculated via the following equation:

Where:

FinxAr : Fintech General Index.

[AVGSUB]_n: average value of the "n" pillar.

W  : weight of the "n" pillar.

n: Pillars (policies, laws and regulations, demand, funding, talents, financial markets infrastructure, as well as collaboration and partnership).

The general index FinxAr represents 100 percentage points that reflects the average scores of Arab countries in each of the six pillars, weighted by the pillars' weights in the general index. 

Total points for each country in each pillar range from zero (the lowest value) and one (the highest value), based on the total average score of the questionnaire answers in each pillar. This average is then weighted by the weight of each pillar to obtain the aggregate score of each country in the general index. Therefore, the percentage for each country represents the sum of the simple average weighted by the six pillars' weights.

It is worth mentioning that the index methodology and survey will be reviewed on yearly basis.

Supporting Definitions:

• Fintech (FSB, 2017): “Fintech is defined as technology-enabled innovation in financial services that could result in new business models, applications, processes or products with an associated material effect on the provision of financial services.”

• Fintech aspects (FSI, 2020): these include fintech activities, enabling technologies, as well as policy enablers. 

• Fintech Activities: digital banking, digital payment services, crowdfunding, P2P lending, cryptoassets, tokenization, e-money, roboadvisory, insurtech business models. 

• Enabling technologiesare identified as: Application Programming Interfaces (APIs), Cloud, Biometric, Distributed Ledger Technology (DLT), Artificial Intelligence & Machine Learning (AI & ML). 

• Policy enablers reside mainly in: Digital Identity, Open Banking/Open Finance, Data Protection, Cybersecurity, Regulatory and Supervisory Technologies (Regtech/Suptech), Innovation Facilitators (Innovation Office- Innovation Hub – Sandbox).

• Initiatives: can include policies, strategies, programmes, regulations, or announced initiative to promote Fintech aspects.

• Regulations: include rules, directives, procedures, …etc.

Response to the Survey:

It gives AMF great pleasure to invite designated calibers from Arab central banks and monetary authorities to respond to the annual survey for “FinxAr” index building on their expertise.

Arab central banks and monetary authorities will fill in the survey electronically via the below links:

Each pillar has a separate link as noticed below:

Pillar I: Policies, laws and regulations

Pillar II: Demand

Pillar III: Funding

Pillar IV: Talents

Pillar V: Financial Markets Infrastructure

Pillar VI: Collaboration and Partnership

Please fill in the survey by March 31st, 2024

Grading Process:

Grading process and countries’ scores are conducted according to the above-described methodology. Also, it is worth noting that providing supporting evidence as requested in respective questions, such as links, documents or any kind of supporting material, is taking part of the grading process and is adding to the country’s scores.  

In case of any queries, please contact the Arab Regional Fintech WG Technical Secretariat through the following contacts: