Tackling financial fragmentation through collaborative innovation in the Middle East

Financial fragmentation — when capital, credit, and payments stop flowing freely —  is a force that’s gaining momentum and threatening global economic growth.  

It results, Onur explains, from multiple friction points across financial systems that compound over time. “Financial fragmentation shows up in payments, trapped liquidity, sanctions, routing, and data standards, and ultimately has a negative impact on trade and GDP”. 

The consequences extend beyond businesses: consumers and small-to-medium enterprises (SMEs) often bear the brunt, facing higher costs and reduced access to financial services. Remittances are highly sensitive to these effects, as delays and inefficiencies directly affect families who rely on cross-border transfers. 

Interoperability as a necessity

The solution lies in interoperability and shared standards. Interoperability was discussed as the antidote to fragmentation, with ISO 20022 adoption in payments highlighted as a prime example. A common language for payments, it enables richer and more structured payments data, and will bring far-reaching benefits. 

“With richer data, financial institutions can better understand customer behaviour, reduce false positives, and lower the cost of processing transactions. These are benefits that ultimately reach consumers and SMEs,” Onur said.  

Onur stressed: “Interoperability cannot be an afterthought. Start-ups must leverage existing platforms and utilities to benefit from the network component,” He also underlined how shared infrastructure can reduce friction and costs for the broader ecosystem.

Scale and collaboration 

The DIFC Innovation Hub is the largest innovation ecosystem in the Middle East, Africa, and South Asia. Mohammad said that collaboration and co-creation have been key to its success. “Our ecosystem, the first initiative we launched, was built on co-creation,” he said. “When we started in 2016–17, it was with all the leading banks, and we’ve been collaborating with them on developing solutions ever since”.  

Today, the Hub is home to more than 1,500 AI, FinTech and Innovation firms. Mohammad said the Hub “continues to grow, and now we see that growth across other sectors too, like AI and PropTech. Both the private and government sectors are open to collaboration when it comes to innovation, and co-creation is the way to go between start-ups and corporates.”

Creating networks and encouraging mentorships

Mentorship and ecosystem support can also play an important role.  

“Mentorship is critical,” said Mohammad. “That’s why we launched Ignyte, a digital platform with more than 450 mentors. It connects start-ups directly with experienced mentors without intermediaries, making mentorship seamless and scalable.” 

Swift channels for the community, including the Innotribe platform, foster experimentation, knowledge transfer and leadership development.  

Onur also highlighted the importance of knowledge and talent flows in emerging markets: “The moment knowledge starts moving slower, and talent becomes less accessible, scale becomes harder to achieve.” 

Building on research and insights

The insights align with findings from the Economist Impact, supported by Swift, which examined the impact of financial fragmentation. The report underscored the need for global collaboration, unified standards, and interoperability.  

Financial fragmentation could cut 6% from global GDP by 2030, the report says, but by integrating its recommendations with practical pilots and infrastructure investments, the impact can be mitigated, while reducing friction for consumers and businesses. 

In Mohammad’s words: “At DIFC we work closely with regulators, corporates, and start-ups to make sure all voices are heard — through committees, working groups, and dedicated programs. The goal is to bring perspectives together and shape regulation collaboratively.” 

As Onur summarised: “The future is not going to be designed by a single technology or provider. It’s all about how we connect this ecosystem and achieve collaboration at scale.”  

Swift’s network and DIFC’s ecosystem illustrate how shared infrastructure, combined with regulatory support and strategic collaboration, can overcome fragmentation for a more resilient, interoperable and inclusive financial landscape.