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UAE Freezones Biz News Updates
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UAE a top hub for fintech startups
More funding, govt support to drive strong growth in fintech startups this
year
The UAE continues to strengthen its position as a hub for fintech startups
as the country is home to highest number of startups and investments into
this nascent sector, thanks to government support and initiatives taken by
the financial free zones in Dubai and Abu Dhabi.
According to Bloomberg Intelligence, the UAE is home to the highest number
of fintech startups at 67 followed by 44 in Turkey, 30 each in Jordan and
Lebanon. While South Africa leads in Africa with 184 startups followed by
146 in Nigeria, 111 in Kenya, 36 in Ghana, 34 in Egypt and 24 in Uganda.
Bloomberg Intelligence sees need for more venture capital to fund growing
fintech startups. The number of fintech startups and investments into this
sector will continue to rise in the coming years, increasing from 96 in 2019
to 465 by 2022 in the Middle East, while investments will increase from $287
million in 2019 to $2.28 billion by 2022, according to Accenture analysis
based on CBI Insights data.
Strong momentum will start from 2019. Even though the UAE showed a fast
growing number of fintech startups, the level of investment in the region is
still modest. In more than $90 billion by 2017 invested in fintech startups
globally since 2010, only 1 per cent was allocated to companies in the
Middle East and Africa, the report said.
Fintech friendly regulatory environment, government support and higher level
of funding are supporting the UAE in its journey, said Edmond Christou, GCC
financials analyst for Bloomberg Intelligence.
Citing example, he said Dubai Financial Services Authority introduced in
2017 an innovation-testing licence, allowing fintech firms to develop
concepts without being subject to full regulations. Also, Abu Dhabi's
Financial Services Regulatory Authority set up in 2016 a regulatory
laboratory with a legislative framework, which was the first of its kind in
the region to support innovators.
Commenting on what the UAE can do more to expedite the growth, Christou said
there should be a policy that continues to support innovation to keep up
with the pace of technological changes and its risk, an environment that
attracts talents and allows banks and insurers to prove the value and
applicability of these technologies to the market.
Arif Amiri, CEO, Dubai International Financial Centre (DIFC) Authority, said
DIFC's ecosystem continues to attract fintech startups with its unique
experimental licences, market leading pricing and collaborative workspaces.
We are committed to supporting this ecosystem by strengthening our
international partnership network. Just last year, we have signed over 10
fintech-related MoUs that have strengthened our partnerships with other
global fintech hubs, such as New York, London, Paris, Singapore, among
others. In addition, our very own home-grown initiatives, such as FinTech
Hive at DIFC and the DIFC's $100 million FinTech startups fund continue to
play a crucial role in shaping the future of the financial landscape in the
MEASA region, Amiri said.
The centre offers dedicated commercial licenses for fintech, regtech and
insurtech firms, an interactive and collaborative workspace as well as
access to the region's largest financial community - all available for
entrepreneurs looking to set up and operate from Dubai.
Commenting on the growth prospects, Amiri said DIFC's fintech ecosystem of
over 80 fintech-related companies, 34 of which are active registered
companies in the fields of fintech, insurtech and regtech, is testament to
the growing demand and interest in this disruptive sector.
In 2018, applications for the second cohort of FinTech Hive at DIFC tripled,
while the number of partners that are committed to the programme doubled.
This continued growth is testament to a healthy sector that is well on its
way to transform and dictate the future of finance, he added.
Khalid Saad, CEO, Bahrain FinTech Bay, said regional market for the fintech
industry is small but potential is huge.
When people tell me that Bahrain, Dubai and Abu Dhabi are competing with
each other, I say, no, that is the wrong way of looking at things. It is not
a zero-sum game. The market is still small in the region and currently the
opportunities are huge and it requires a lot of collaboration. We have
started expand collaboration and partnered with the DIFC FinTech Hive and
ADGM. We are working with them to explore different avenues which we could
collaborate and help fintech firms access different markets across the
border, Saad said during a recent meeting.
Commenting on potentially creating a fintech unicorn from the Gulf region,
he pointed out that it would require a company to expand way beyond the GCC
to hit the potentially unicorn status.
There are quite a few fintech unicorns globally, so why not one from the
region as well in the next 5 years. I think investments to flow in fintech
regionally and are expected to quadruple in the next 5 years. I hope more
smart money has started to flow into the region and that should help make
the next unicorn, Saad added.
Fintech's first wave centered on payments while the second wave focuses on
mobile and online banking by offering less costly, faster and better
user-experiences. Fintech's third wave has started to emerge with some banks
adopting blockchain technology, startups growing in fields like insurance,
regulation, risk solution and identity verification (KYC).
Not just conventional, the UAE is leading in Islamic fintech startups as
well in the Middle East. Globally, Indonesia has the highest number of
Islamic fintech startups, followed by the US, the UAE and the UK, according
to DinarStandard analysis.
February 5, 2019 |
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Courtesy Galadari Printing and Publishing LLC.
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