Lebanon’s Fintech Industry Stalls Amid Economic Crisis

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The future of fintech in Lebanon is uncertain as the country’s economic crisis deepens. Despite showing interest in exploring digital solutions and cryptocurrency, the Bank of Lebanon (BDL) has dropped plans to establish a regulatory sandbox due to the current economic situation.

Struggling to Find Partners

Fintech startups are struggling to find partner banks to operate with, with many entrepreneurs citing lack of awareness and ignorance on the part of banking institutions. Two Lebanese fintech startups, Anachron and Juno, have reportedly failed to secure a licensed partner and are considering alternative markets such as Egypt and Bahrain due to Lebanon’s regulatory hurdles.

“It’s not within our strategy” is a common excuse given by banks when approached for partnership, said Norman, co-founder of Juno. “Some are afraid of the tech, some don’t understand what we’re trying to do.”

Regulatory Support Needed

Galaxy’s Sleiman believes that fintech requires regulatory support and that Lebanon’s lack thereof has led to many startups failing or leaving the country. “Fintech requires regulatory support. Full stop,” he said.

Regional Progress

Regional countries such as Bahrain, the UAE, Egypt, Saudi Arabia, Jordan, and Oman have made significant progress in creating an attractive environment for fintech by introducing sandboxes and innovation-friendly legislation. Bahrain’s sandbox has incubated over 35 startups, while Egypt’s central bank has established a $58 million fund to invest in fintech startups.

A Snapshot of Lebanon’s Fintech Scene

• BDL was in talks with Prime Minister Saad Hariri’s office about establishing a regulatory sandbox, but dropped plans due to the economic crisis.
• Two Lebanese fintech startups, Anachron and Juno, have failed to secure a licensed partner and are considering alternative markets.
• Lack of awareness and ignorance on the part of banking institutions is a major obstacle for fintech entrepreneurs.
• Regional countries such as Bahrain, UAE, Egypt, Saudi Arabia, Jordan, and Oman have made significant progress in creating an attractive environment for fintech.

The Road Ahead

As Lebanon’s economic crisis deepens, it remains to be seen whether the country will take steps to create a more favorable environment for fintech startups. For now, many are looking elsewhere in the region for opportunities.