Currently, approximately 20% of global fintech startups and 47% of MENA start-ups are residing in the UAE. How is the fintech ecosystem employed in the country? Let’s oversee this article.

We will overview some of the initiatives in this article and would like to begin with the period of the emergence of fintech in the country.

2016-2017 can be labeled as significant in the UAE’s fintech landscape. The first fintech lab, ADGM RegLab was launched in 2016 by Abu Dhabi Global Market, followed by another key player, one of the major contributors to the development of the fintech sector in the country, which is the Dubai International Financial Center (DIFC). As we see it, the groundwork has been laid for further growth of the fintech ecosystem, and different initiatives have started to emerge in the two free zones, such as:

• ADGM and DIFC Free Zones
• DIFC Fintech Hive
• DFSA Innovation Testing License
• ADGM Reg Lab
• Fintech office
• Hub71

The growth of fintech in the Middle East was mainly driven by infrastructure needs to solve several domestic problems. In the past, when there were more than 70% of people with no access to bank accounts in the region, it was obvious that the region required new solutions. The covid-19 period at the beginning of 2020 served as a basis for the formation of partnerships and the establishment of investor funds for sponsoring fintech projects.

Read also: Types of funds in the UAE 

Fintech is also bridging gaps in a market where traditional banks have so far had limited success. And they have been successful in attracting financing, especially in digital wallets/money transfers, credit, payments, and insurtech, (technological innovations in the insurance sector). The digital payment sector remains among the top developing and prospering sectors. According to Statista, The Digital Payments sector has a global transaction value of USD 5,2 billion in 2020 and is the largest segment within FinTech. In the UAE, the market's largest segment is Digital Commerce with a projected total transaction value of USD 16.7 billion in 2022. 

As mentioned above, for the past 5 years, the fintech industry in the country transformed from an incipient to a competitive stage in the global arena. For instance, DIFC supplies approximately 12% of Dubai’s GDP, launched DIFC Fintech Hive in 2017, the largest accelerator in the region. The overall budget of the accelerator comprised USD 100 mln., and adopted more than 120 start-ups, with a total raised budget of more than USD 350 mln. DIFC now has 1,252 finance and innovation-related companies, which is 22% more, compared to the same period in 2021. The number of FinTech and Innovation companies increased from 406 to 599, a 23% increase over the same period last year.

Read also: New virtual assets law in Dubai 

According to the report from the Dubai Chamber of Digital Economy, the UAE had the most company scaleups (251) and attracted 59% of the region's funding, a total of USD 5.4 billion. Dubai alone accounted for 57% of funding. Together with Abu Dhabi, Dubai remains one of the leaders in project scaleups. With its advantageous fintech ecosystem, the Emirate can offer broader economic development and diversification. As a result, the fintech industry will have a bigger role to play in the economy's future.

If you would like advice or assistance concerning opening a fintech company in the UAE, kindly contact us.

Marsel Shadmanov

Head of Corporate Services at Garant Business Consultancy DMCC

Phone +971 4 421 4335

Email info@garant.ae