DIFC: Why Dubai is the Fintech capital of the Middle East, Africa and South Asia region

In the financial world, the demand for digital services is often met with an introduction to fintech. It is impossible to implement successful digital solutions without it – but it 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 companies and customers in the region has catalyzed its adoption. In Mastercard’s Borderless Payments Report 2021/2022, it found more than half (51 percent) of those in the UAE who made cross-border payments online to family and friends in the past 12 months believe the recipients would have struggled financially without this support.

Furthermore, the acceptance of non-card payments in Dubai increased from eight percent in July 2019 to 13 percent in August 2021, a growth of 60 percent. This was according to a white paper from Department of Economics and Tourism (DET) in Dubai and Visa Economic Empowerment Institute (VEEI): Dubai MSMEs: Digital and robust.

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

DIFC funding was key to funding the growth of several fintechs, including investment apps Sarwacloud-based B2B platform for employee benefits FlexxPayand financial services platforms for migrant workers Now money and Go Ladder.

Mohammad Alblooshihead of the DIFC Innovation Hub and FinTech Hive spoke to The Fintech Times to further explain why Dubai is at the heart of all things 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 for transformative change. As economic paradigms change, innovation places the financial industry at a pivotal point in development. Even before the pandemic, a catalyst for digitization, fintech, one of the most innovative sectors, thoroughly 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 $949.49 billion by 2030, growing at a CAGR of 17.2 percent. Fintech investment in the MENA region has already reached $819 million in the first half of 2022. Financial service providers in the Middle East, Africa and South Asia (MEASA) region, operating in this evolving landscape, now have an unprecedented opportunity to redefine the future of the industry.

The UAE is a leader in fintech innovation and is home to the largest fintech ecosystem in the GCC, with more than 600 fintech startups based in Dubai. To drive entrepreneurial innovation under the wise leadership of His Highness Sheikh Mohammed Bin Rashid Al MaktoumVice President and Prime Minister of the United Arab Emirates and Ruler of Dubai, the emirate has emerged as one of the most powerful financial hubs in the world.

As a launching pad 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 fuel the ecosystem by encouraging others to start their own ventures. The emirate accounts for 57 percent 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 edge with 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 visa for business entry. This attracts investors and entrepreneurs to explore business and investment opportunities in the country.

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

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

The impact of government

Innovation forms an integral part of the Government of Dubai’s strategic objectives and the emirate’s location is a key element in 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 capitalize on the opportunities available across the region.

Demand for fintech services has grown significantly in recent years, driven by digital technologies and innovation that are reshaping the payments, lending, insurance and wealth management industries. Over the past eight years, several key factors have enabled fintech start-ups to grow and scale successfully in Dubai.

Facilitate change

The emirate has emerged as MENA’s scale-up hub by accounting for 57 percent of financing in the region. Among these scale-ups was 3S Money, an international payment platform that recently received a license from Dubai Financial Services Authority (DFSA), the independent regulator of financial services carried out in or from the DIFC.

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

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

Long-term impact

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

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

This will be further reinforced when the 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 attention of the business world and consolidate our position as MEASA’s fintech capital.