dubai fintech
Fintech Ecosystems Middle East & Africa Thought Leadership

DIFC: Why Dubai is the Fintech Capital of the Middle East, Africa and South Asia Region

In the financial world, a demand for digital services is often meet with an introduction to fintech. It is impossible to implement successful digital solutions without it – but that then begs the question: where is the best place to find these fintech solutions? 

The answer in the Middle East and North Africa (MENA) region is Dubai. Why? The demand for fintech from both businesses and customers in the region has catalysed its adoption. In Mastercard’s Borderless Payments Report 2021/2022, it found more than half (51 per cent) of those in the UAE who made online cross-border payments to family and friends over the last 12 months believe recipients would have struggled financially without that support.

Furthermore, the acceptance of non card payments in Dubai increased from eight per cent in July 2019 to 13 per cent in August 2021, a growth of 60 per cent. This was according to a whitepaper from the Department of Economy and Tourism (DET) in Dubai and the Visa Economic Empowerment Institute (VEEI): Dubai MSMEs: Digital and resilient.

One of the biggest players impacting this change is the Dubai International Financial Centre (DIFC). A financial hub governed by private laws and an independent judicial system, the DIFC has contributied to Dubai’s vision of becoming the leading city for venture-building in MEASA. 

DIFC funding was key to the financing of several fintechs’ growth, including investment app Sarwa, cloud-based B2B employee benefits platform FlexxPay, and migrant-worker financial services platforms Now Money and Go Rise.

Mohammad Alblooshi, head of DIFC Innovation Hub and FinTech Hive spoke to The Fintech Times to further explain why Dubai is at the heart of everything fintech in the MENA region:

Why Dubai is the Fintech Capital of the Middle East, Africa and South Asia Region

Innovation is the most powerful force of transformative change. As economic paradigms are shifting, innovation is placing the financial services industry at a pivotal point in its evolution. Even before the pandemic became a catalyst for digitisation, fintech, one of the most innovative sectors, profoundly streamlined the way financial services are structured and delivered.

Well positioned for growth, the global fintech-as-a-service market size is expected to reach $949.49billion by 2030, growing at a CAGR of 17.2 per cent. Fintech investments in the MENA region have already reached $819million in the first half of 2022. Financial services providers in the Middle East, Africa and South Asia (MEASA) region, operating in this evolving landscape, are now presented with an unprecedented opportunity to redefine the industry’s future.

Leading in fintech innovation, the UAE is home to the largest fintech ecosystem in GCC, with more than 600 fintech start-ups based in Dubai. Driving entrepreneurial innovation under the wise leadership of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, the emirate has emerged as one of the most powerful financial hubs in the world.

As a launchpad for global entrepreneurs, Dubai attracts fintech companies looking to join the ranks of some of the most successful innovators.

Budding entrepreneurs 

Entrepreneurship is an important aspect of economic development, and Dubai’s highly successful businesses are fuelling the ecosystem by encouraging others to launch ventures of their own. The emirate accounts for 57 per cent of scale-up funding in MENA, with investments in physical and digital infrastructure enabling start-ups to access a large and diverse audience.

Dubai has also gained a competitive advantage upon the introduction of the UAE’s Golden Visa, which helps entrepreneurs secure a long-term future in the city. In addition, the UAE government issued a new business entry visa. This attracts investors and entrepreneurs to explore business and investment opportunities in the country.

Aside from the emirate’s seamless incorporation procedure for businesses, Dubai offers full ownership to foreign investors. The city is a magnet for highly skilled overseas workers, with studies indicating that tech talent earns significantly higher salaries in Dubai than most global technology hubs.

Consistently leading the Middle East region in quality of living rankings; the emirate’s impressive man-made islands, magnificent architecture and high-net-worth; and the 88.52 per cent expat population are factors that contribute to Dubai’s quintessential entrepreneurial city reputation.

The Government’s impact

Innovation forms an integral part of the Government of Dubai’s strategic objectives, and the emirate’s location is a key element of its status as a hotspot for FinTechs. Dubai provides access to MEASA’s less saturated young market within an entrepreneurial ecosystem that attracts international venture capitalists aiming to tap into the opportunities available across the region.

Demand for fintech services has grown significantly in the last few years, powered by the digital technologies and innovation reshaping the payments, lending, insurance and wealth management industries. Over the last eight years, there were several key factors which have enabled fintech start-ups to grow and scale successfully in Dubai.

Facilitating change

The emirate has emerged as the MENA’s scaleup hub by accounting for 57 per cent of funding in the region. Among those scale-ups was 3S Money, an international payments platform which recently obtained a license from Dubai Financial Services Authority (DFSA), the independent regulator of financial services conducted in or from DIFC.

Serving as a platform to facilitate access to MEASA opportunities in emerging markets and beyond, DIFC has driven the development and growth of Dubai’s reputation as a hub for innovation and technology. The Centre houses the FinTech Hive, the first and largest financial technology accelerator in the MEASA region, and the Innovation Hub, the region’s largest innovation community, currently home to more than 600 growth-stage tech firms.

The Centre’s Innovation Hub is home to education and accelerators designed to nurture entrepreneurship, it provides access to mentors, cost-effective operating and regulatory licensing, expertise and is the largest cluster of venture capitalists in the region.

Long lasting impact

In addition to VC support, the Centre demonstrated its initial commitment to provide funding to grow the sector in 2018. This was through the $100million FinTech Fund, which has now been integrated into AED2billion Dubai Future District Fund anchored by DIFC.

The success of Dubai’s fintech sector is a testament to why global start-ups consider the emirate to be an ideal breeding ground for innovation to thrive.

This will be reinforced further when DIFC hosts the Dubai FinTech Summit on 8 and 9 May 2023. More than 5,000 delegates are expected to come to Dubai, making it one of the world’s largest gatherings dedicated to fintech. We will use this opportunity to capture the business world’s attention and solidify our position as MEASA’s fintech capital.

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