FinTech in the UAE
Finance has reached a fork in the road. Either turn left to go down the route ending at the status quo or turn right to trudge toward the technological transformation that will disrupt the future of financial services for generations to come.
We are navigating toward the latter. The destination for the financial services sector is an exciting one as we are witnessing an extraordinary transition in the global financial landscape, where developing markets are rising to become some of the most lucrative destinations for investment and growth.
FinTech is a key driver in this transformation as it provides a bridge from the shiny offices of financial institutions to the fingertips of tech-savvy consumers who increasingly access their services from the palm of their hand.
The Central Bank of the UAE recognises the need for a dedicated FinTech office, which should be welcome news for aspiring financial technology companies, as it shows the government is prioritising digital adoption and transformation.
However, it is not only the Central Bank’s new body that FinTech firms should relish. There is already a substantial opportunity for FinTechs in the UAE to seize.
Three billion people live in the Middle East, Africa and South Asia (MEASA) region, but almost 50 per cent have limited or no access to financial services. Dubai’s strategic position at the geographical crossroads of the East and West means the emirate can provide convenient access to these fast-growing markets, with arguably an easier point of entry than other markets, some of which are already dominated by large corporations.
As more than 70 per cent of people in the GCC use smartphones, this represents a substantial opportunity for lean and nimble FinTech companies to thrive. This is particularly notable in the mobile payments sector, which is set to grow in the UAE at a rate of 30 per cent a year, according to McKinsey.
Beyond Dubai, the UAE has a huge opportunity to capitalise on the growing number of FinTech firms seeking to grow here. FinTech investment in the country is growing at 64 per cent – more than twice the global rate of 26 per cent. But more can be done to lower barriers to entry for ambitious firms.
FinTechs require flexibility and an enabling legal and regulatory environment that matches international best practice. It is a fundamental way for Dubai and the UAE to attract and retain local, regional and global players to conduct business into the MEASA region.
As Dubai is now a world-leading international financial centre, it is important we have straightforward licensing standards that match those of our international financial powerhouse peers in London, New York and Singapore.
For Dubai and the UAE to prosper and maintain its prestigious status on the global stage for generations to come, our young Emirati talent also needs to be nurtured in order to dictate the future of our industry, locally and globally. An enabling FinTech ecosystem encourages, supports and empowers the business leaders of the future to create breakthrough technology and deliver new financial solutions.
Through innovation, FinTech start-ups benefit. The wider society also bears fruit. Innovation is a key focus for Dubai and the Dubai International Financial Centre (DIFC) as well as creating opportunities to develop human capital in the UAE.
Whether it’s through accelerator programmes, like DIFC FinTech Hive, or connecting FinTech start-ups with leading financial institutions, we consistently witness first-hand the strong demand from ambitious entrepreneurs and FinTech start-ups requiring further opportunities to accelerate their growth.
Access to mentorship and a dedicated $100 million FinTech Fund have been key drivers in delivering on our vision to become the leading international financial centre disrupting the financial sector and supporting the diversification strategy of the UAE.
The number of FinTech companies in the MENA region will reach 1,845 by 2022, an impressive 230 per cent growth from 559 in 2015.
By giving FinTechs in the UAE a holistic, dynamic ecosystem with an independent regulatory and English Common Law judicial system and global financial exchange, start-ups can be better equipped to promote their innovative solutions and expansion plans to investors.
Accelerator programmes already exist for FinTechs in Dubai. A sustained focus on financial technology and innovation not only benefits firms but also makes a pivotal contribution to the realisation of Dubai Plan 2021 and its ambitious growth agenda, expanding and reinforcing our position as a leading international financial hub, driving innovation and forging new pathways to growth.
So let us keep the engine running and drive forward the opportunities that exist through innovation, robust infrastructure and fit-for-purpose-regulation. With subsidised licensing, providing seamless access to world-leading financial institutions and access to funding, FinTechs already have existing avenues to growth and driving forward the future of finance from the UAE.