UAE: A Regional Fintech Hub
In 2017 Fintech emerged in the Gulf region. Ever since, the region has been a Fintech hotbed with UAE taking the lead. Today, the UAE hosts approximately ⅓ of fintech startups in the Gulf region. The country received a big number of investments within a short period of time and continues to be a fast-emerging home for fintech startups and entrepreneurs.
As part of the UAE Vision 2021, the UAE aims to transform the country into a fintech leader in the region and to become one of the world’s top 10 innovation leaders by 2021. Abu Dhabi and Dubai have proven themselves to be prominent locations for such innovations due to their outstanding technological infrastructure.
Startups that focused on sectors such as payments, digital lending, insurance, and crowdfunding received the highest amount of fintech investments in the region.
Financial Free Zones and Government Support
The UAE government introduced various initiatives that focused on fostering the growth of the fintech ecosystem. In Abu Dhabi, the Abu Dhabi Global Market (ADGM) launched RegLab to permit financial institutions to develop. RegLab is a specially tailored regulatory framework that provides a controlled environment for fintech participants to develop and test innovative fintech solutions. It is also the first RegLab in the region and the world’s second most active fintech sandbox.
In Dubai, the Dubai International Financial Centre (DIFC) launched “Fintech Hive” as an accelerator that focuses on Fintech companies, RegTechs, and Islamic Fintechs. DIFC also introduced a women-only accelerator programme, AccelerateHer, that focuses on female fintech talent and encouraging females to have a stronger presence in the regions fintech development.
UAE governmental institutions have also worked to support the fintech ecosystem along with ADGM and DIFC. The Central Bank of the UAE and the Securities and Commodities Authority (SCA) have been major supporters of the UAE’s fintech industry growth. In 2019, the Central Bank dedicated a fintech office to support the development of national regulations of fintech firms.
In addition to the governmental support, the Private Sector also displayed great interest in Fintech. Emirati banks such as Abu Dhabi Commercial Bank (ADCB), First Abu Dhabi Bank (FAB), and Emirates NBD increased their focus on digital payments and banking which sets an opportunity for fintech companies to thrive in the future.
Private Sector Fintech Support
Besides UAE’s prominent banks that embraced the UAE’s fintech industry, U.S. financial service companies also joined this movement. Some of them are:
Amex launched a corporate accelerator focused on delivering innovative digital solutions to customers and business partners in the Middle East.
Citi announced a MENA Fintech Challenge in 2019 that gave Fintech companies a chance to unravel solutions for issues such as Digitizing Cash Collection, Assured Payments, B2B2C Enablement, and Digitizing Trade Processes.
Matercard launched “Start Path Summit” in Dubai bringing together fintech startups to pitch their innovative solutions in financial services and commerce.
- MetLife Foundation & PayPal
Village Capital and MetLife Foundation selected 11 early-stage ventures operating in the MENA region, including Finllect from the UAE, for the Finance Forward: MENA 2019 accelerator programme, part of a multi-year global initiative led by founding partners, MetLife Foundation, PayPal, and Village Capital.*
Visa partnered with 2 Fintech accelerators in the UAE: DIFC Fintech Hive and Startupbootcamp. The partnership between Visa and the accelerators provides mentoring and consultation services. Visa also launched the global “Fintech Fast Track Program” that provides established and new fintech startups with innovative and speedy financial solutions.
An expansive Fintech Ecosystem
Recently, the UAE’s Fintech ecosystem witnessed several partnerships and fudings, here are a few:
In 2018, Investera launched an end-to-end investment-management platform that introduced a user-friendly and cost-effective technology aimed to help private equity firms, venture capitalists, investment banks and family-owned investment enterprises to enhance their processes and enable its users to capitalize on profitable opportunities quickly and easily. The next generation investment management platform allows effortless investment management processes on a single and secure platform
- Now Money
In partnership with Commercial Bank of Dubai, NOW Money will give low-income users the ability to open accounts to extend their banking services. The users will get to enjoy a range of innovative low-cost financial services and a user-friendly digital experience with benefits.
- Abu Dhabi Islamic Bank (ADIB)
ADIB recently launched a virtual banking sales platform that will enable customers to converse with ADIB and apply for personal finance, covered cards, takaful, and other banking products without the requirement of visiting the bank’s premises. ADIB also recently brought Apply Pay to its users to give them the facility of making contactless payments.
The Hong-Kong based platform has been granted in-principle approval to operate a Private Financing Platform (PFP) for the Abu Dhabi Global Market (ADGM), in line with the jurisdiction’s wider regulatory regime for digital assets and securities. Once granted in full, Liquefy will be able to offer tokenized securities backed by real world assets such as private companies, venture funds and other alternative investments to investors in the UAE on its Alternative Global Marketplace.*
- Mamo Pay
The Fintech firm established by former Google employees secured a $1.5 million fund to streamline P2P in the UAE and the Middle East.
The UAE-based fintech startup aims to enable customers to conveniently shop yet remain in control of their finances.
Thanks to the supportive regulations, the government, and the private sector the UAE’s Fintech ecosystem is in for a very prosperous future. The current pace of disruption and cross-industry alliances will continue to drive the growth of fintech and its acceptance as a credible component of the banking ecosystem.
Moreover, the Covid-19 outbreak has been a key driver of fintech investments in the UAE. The use of contactless payments and the demand for digital financial services accelerated the use of these trends which made them more of a necessity rather than a luxury.