UAE’s Developing Fintech Space

As technological innovations continue to develop, many financial institutions seize the opportunity to modernise their offerings. On the global scale, fintech is outperforming other finance subsectors in terms of growth. On the aspect of M&A deal volume, fintech increased 10% higher than wealth management and private banking from 2020 to 2021. Furthermore, the global fintech market is forecasted to grow around 20% annually for the next four years, reaching a market value of $305 billion by 2025. 

For the last couple of years, steady growth in the FinTech investments across the UAE and Middle East region was observed. Currently, the UAE home 46 per cent of FinTechs in the Mena region and is expected to increase. FinTech investments in the country have grown by 49 percent in H1 2021 year on year based on the report of FinTech Middle East. According to Ramzi Khleif, general manager of StashAway MENA, due to UAE’s agility, forward-looking vision, and low barriers to entry, the country has grown as the number one FinTech ecosystem in the Mena region. 

“New companies are being created across all aspects of fintech, banking, wealth management, insurance, and crypto, with all of them having one main point in common, which is to provide the best customer experience,” said Khleif.

The U.A.E. identifies fintech development as a national priority. It calls for the country to become the commercial and economic capital of 2 billion people by transitioning to a knowledge-based economy.

Aiming to shift 50% of the government transactions to blockchain within three years, the U.A.E. government launched Emirates Blockchain Strategy 2021 in 2018. This initiative will result in more efficient transactions and document processing, savings on printed documents, and lesser workforce expenses by utilizing blockchain technology.

A year after, the U.A.E. government began implementing its National Artificial Intelligence Strategy 2031. This strategy is led by the U.A.E. Minister of State for Artificial Intelligence that seeks to invest in the latest AI technologies and tools to enhance U.A.E. government performance and efficiency. Central Bank of the UAE (CBUAE) also established a dedicated fintech office to develop national regulations for financial technology firms, supporting the U.A.E.’s expanding fintech industry late the same year.

Concurrently, entities like Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC) were established to provide the ideal financial technology ecosystem within the MENA region. Focus areas are digital banking and crowdfunding, financial technology licensing, crypto assets, regulatory laboratories, and testing licenses.

To further collaborate on the development and growth of the U.A.E.’s fintech sector, the CBUAE and ADGM have signed a memorandum in October 2021. MoU signing was held during Expo 2020 on 13-14 October 2021 as part of CBUAE’s inaugural Future of Finance conference. It was signed by HE Ahmed Ali Sayegh, Minister of State and Chairman of ADGM, and HE Khaled Mohamed Balama, Governor of CBUAE.

The agreement plays an important role in enabling the greater proliferation of FinTech solutions across the UAE. It may attract key FinTech players to the country and result in an enhanced environment that enables innovation to thrive in alignment with the nation’s ambitious economic growth plans and digitization aspirations.

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