Do you know UAE is the largest Fintech hub in the MENA region? And Dubai has some magnetic appeal that not only attracts tourists(being a top favorite)but also Fintech companies? Being ranked 8th position in the Global Financial Centres Index(GFCI), Dubai is all upbeat about Fintech growing as ever. The investment of US$ 237m in the last 5 years is enough to give you reasons to boost your business and leverage the massive opportunities the country holds for you. So, what makes UAE the hot spot for the Fintech industry? Who are the drivers behind this emphatic growth or the Fintech surge in the country? Let’s discuss!
Factors Driving Growth
The UAE’s national vision 2021 has led to the creation of several tech-focused institutions, viz., Smart Dubai, Abhu Dhabi Digital Authority, Dubai Future Foundation, specifically appointed Ministers of Artificial Intelligence(AI) & Advanced Sciences, to promote digital drive including the fintech sector. Some major drivers for Fintech growth are :
Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) are the two dominating financial free zones existing in the UAE. They both deserve a big credit for the massive Fintech surge in the region and the country as a whole. For example, take the DIFC initiative of ‘FinTech Hive. DIFC has specially created FinTech Hive for promoting Fintech Companies in the region. The very hive is dedicated to empowering companies with its massive $100million fund, which allows these companies to get access to varied accelerator programs, getting mentorship opportunities from some leading financial institutions as well as insurance partners. Few notable partners of DIFC’s Fintech Hive are Microsoft, Standard Chartered, and Visa, AWS, Cigna, Careem, Emirates, K&L Gates, MetLife, NBD, FAB.
Similarly, ADGM has come out with an initiative called ‘RegLab Fintech Sandbox’, an exclusively tailored regulatory frame that allows Fintech companies to develop, test, innovative Fintech solutions. This happens to be the first in the UAE and the second most active Fintech sandbox in the world. Plug & Play is a major partner of ADGM for accelerator programs. Few startups that flourished under this are Token and API Fortress.
Support from Government
The government institutions, regulatory agencies in the UAE have created similar environments like ADGM and DIFC, for facilitating the growth of Fintech startups across the country. For instance, government bodies like the Securities and Commodities Authority (SCA), Central Bank of the U.A.E., are diligently supporting the UAE’s burgeoning fintech industry. The Central Bank even has created an exclusive Fintech office that would help in developing national regulations for propelling the growth of financial technology firms in the country.
Adopting Digital Fintech Innovations
Private sector partnerships are driving a big surge in the Fintech sector in the UAE. Leading UAE banks, American banking & financial services operating in the UAE are actively adopting the latest digital models and Fintech innovations. For instance, Emirati banks like First Abu Dhabi Bank (FAB), Abu Dhabi Commercial Bank (ADCB), Emirates NBD are greatly focusing on mobile banking and digital payments, leading to partnership opportunities for varied Fintech companies. Then, the UAE Minister of State for AI is actively promoting myriad AI applications to Fintech, thus, acting as a big catalyst for this sector boom. Moreover, various prominent U.S. financial service companies have widely adopted the UAE’s Fintech space, like, Mastercard, AMEX, CITI, Metlife, VISA.
Today, millennials, youngsters are installing mobile applications in most of their day-to-day financial interactions with peers, be it personal grocery shopping or online bank transfer, all are done through financial apps. They don’t have time and patience to go to a bank and follow the legacy form of procedures there. They want all privileges, facilities within their mobile set.SO, they are also proving to be a major factor behind the Fintech surge in the UAE. A large base consisting of the young, tech-savvy potential customers are exceeding the UAE boundary to the wider MENA region. On average, people in the UAE have more than one mobile device. The mobile payment sector is set to grow nearly 30% in the UAE as per McKinsey.
Disruptive technologies are a significant factor behind the rapid Fintech surge in the UAE. It has an enormous impact on the financial industry in various segments especially payments, lending, capital market, wealth management, crowdfunding, as well as insurance. The UAE government duly recognizes the ongoing disruptive effect of FinTechs and is helping the industry by bringing out friendly policies and regulations from time to time, facilitating wider adoption of disruptive technologies and innovative Fintech models.
If you are an aspiring Fintech in the UAE, and you wish to leverage the latest in technology that enables you to set a new business model, feel free to reach us and take our industry experts’ guidance.