With the people in the Middle East becoming more affluent, there is a larger opportunity for them to invest their money in the hopes of increasing their earnings and saving up for retirement. Traditionally, investments are made in real estate, publicly traded stocks, sukuks, and other asset classes – often, these investments are made through an intermediary such as a brokerage firm. However, with the rise of the internet and other technological advancements, there is a gap in the market.
Hasan Haider, a partner at 500 Startups, a venture capital firm based in the United States, says so-called robo-advisers have a “massive opportunity” in the Middle East, since existing banking and wealth management efforts are mainly focused on ultra-high net worth and high net worth individuals. Robo-advisors gauge an investor’s risk appetite, according to which they assign a tailored investment portfolio of exchange traded funds (ETFs) while offering lower fees than many traditional investment options.
“A lot of investors don’t qualify for these wealth management services, and it hasn't been cost effective for banks to really provide those services to the ‘mass affluent’ market,” Hasan states. Learn more about robo-advisers and the startups that are trying to penetrate this market here.