A high standard of living, high income per capita and high smartphone and mobile data penetration, has led to the perfect testing ground for fintech startups in the UAE.
So what do you expect when you have experience talented pool of people meeting the young, ambitious startup fraternity? A very strong healthy startup ecosystem and the UAE's fintech sector is the classic example to affirm that government is making all the stake holders come forward and pitch in the best to help nurture the growth and development of this robust sector.
The sector has received massive support from the Ministry of Economy, government bodies such as Smart Dubai, Dubai Technology Entrepreneur Campus (Dtec), DIFC among others, and banking sector. In 2018, there were 142 fintech startups in the UAE listed on the Magnitt platform, which is an increase of 33 per cent compared to 2017. The first half of 2019 witnessed fintech recording maximum business and received the largest number of investments, accounting for 17 per cent of all deals - indicating an increase of 9 per cent compared to the same period last year.
Fintech has surged as the most successful sector as it eases the movement of finances seamless, without boundaries making payment gateways very crucial, with data and security being at the core. Technologies like big data, artificial intelligence (AI), blockchain are bound to play very strong role in the months and years ahead as most of these startups are born in cloud. For established players, there is a rapid race towards digitisation. Companies will continue to focus on and adopt AI solutions to drive innovation, moving from low-cost AI to in house built AIs and analytics that focus on consumers behaviour. An increasing number of startups will move to global cloud-based platform solutions.
Mark Chahwan, co-founder and CEO, Sarwa, said the UAE has all the right infrastructure to have a booming fintech sector: the growth of it is dependent on efforts across the private and public sector which is impacted by the diverse population that lives here creating a pool of talents that is bringing a lot of different ideas and innovation from across the globe.
"The regional market has many needs to be addressed, creating opportunities for disruption," he said.
"Another major plus point for fintechs located in the UAE is that the financial hubs are alongside the fintech hubs, allowing for a close relationship between entrepreneurs, institutions, and regulators. The government is continuously working on incentives to support startups and better the ease of doing business while lowering costs on setting up," he added.
Positive factors such as high standard of living, high income per capita and high smartphone and mobile data penetration, has led to the perfect testing ground for fintech startups and which has encouraged more ventures to make foray in the sector steadily over the years.
Philip Bahoshy, founder and CEO of Magnitt, said the government in the UAE has launched many initiatives to support entrepreneurship in general, including ones specifically targeted at fintech development and adoption. Examples include the Fintech Hive and $100M Fintech Fund in DIFC, and the regulatory sandboxes launched by ADGM and DFSA to encourage accelerated development of Fintech applications. Moreover, the UAE has long been one of the main business hubs in the region, with many regional headquarters of international corporations located in one of the emirates.
The UAE's fintech is no more restricted to the regional boundaries but has now grabbed attention of global players too. UK-based Michael O'Loughlin, vice president, global solutions, Token, Inc, said: "As Token spearheads the global open banking revolution, we look to enable innovative and forward-thinking geographies like the UAE to become reference points for the rest of the world. The rewards of open banking not only require a shift in mindset, they also need investment in technology, infrastructure and learning. The UAE supports all of these elements and continues to strengthen its position as a hub for fintech start-ups. The close relationship between the innovative government bodies, central bank and the emerging global fintech community is very encouraging. The state-of-the-art infrastructure and financial free zone investments in Dubai and Abu Dhabi also make the UAE the perfect hub for foreign direct investment."
Endorsing similar positive sentiment, Dhruba Jyoti Sengupta, co-founder, BankonUs, said markets, talent, capital, progressive regulation and strong government support are all necessary for any place to emerge as a strong fintech hub. The UAE has all of these and more.
"The UAE is a regional hub for financial services, the sector has always attracted top level talent, capital is now available in abundance, regulation has been balanced and progressive and most importantly the government has been very supportive to entrepreneurs."