GCC Series: Smartphones Increase UAE FinTech Growth

Although not all Gulf Cooperation Council (GCC) countries – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE) – are known for their technology industry or digital finance leadership, a closer look reveals that the Arabian Peninsula is home to some of the most exciting innovations within FinTech today.

This PYMNTS series will assess each GCC member in turn, highlight some of their FinTech success stories and elaborate on their respective political-economic environments in terms of technological innovation in finance.

Of all the GCC nations, the UAE is probably the best known for its booming FinTech sector.

Read more: The growing role of the UAE as a regional FinTech hub

The country’s largest cities – Abu Dhabi and Dubai – act as global financial hubs and are home to some of the largest banks in the Middle East and North Africa (MENA). As the UAE increasingly views digital transformation as a key path to economic diversification, the country’s two megacities have not surprisingly emerged as key locations for FinTech innovation.

Pioneering wave of Neobanks

One area where the United Arab Emirates is a leader is in mobile banking, where a high level of smartphone penetration and a healthy retail environment have allowed digital-first banking apps to flourish.

Related: 59% of UAE customers use smartphones to improve the shopping experience, surveys show

Unlike in other parts of the world, where innovation has been left to a growing generation of neo-banks, in the UAE, established players were among the first to launch banking apps with more features on the market.

For example, although the parent company Mashreq is the oldest privately owned bank in the UAE, the digital first Mashreq Neo has been at the forefront of cutting-edge new technologies such as face recognition.

See also: UAE Digital-First Bank Mashreq NEO debuts face recognition

Other app-based solutions offered by UAE banks include Liv and E20 by Emirates NBD, and Abu Dhabi Islamic Banks (ADIB) ADIB Smart Banking and ADIB Amwali.

In order not to be surpassed by its peers in the traditional Islamic banking sector, in recent years a young group of neo-banks has also joined the fight.

Yap, Wio and Zand are pioneering a wave of mobile banking apps that take the branchless model that is popular in Europe and the US, while specifically meeting the needs of customers in the UAE and its GCC neighbors.

Read more: UAE approves new digital bank Wio

But their ambitions do not stop there. With foreign investment flowing into the country’s startups, along with the significant emirate of sovereign wealth funds, the United Arab Emirates has both human and financial capital to serve as a starting point for new FinTechs to take the step up to the international stage.

Related: UAE-based digital bank YAP raises $ 41 million to expand to Saudi Arabia, Pakistan, Egypt

In fact, UAE-based companies are playing an increasingly critical role throughout MENA’s financial system. Companies such as Nymcard set strategies around building regional dominance thanks to the UAE’s established banking center and close political and economic ties to other countries in the GCC and beyond.

In addition, as scaling up of startups from other countries appears to be growing across the region, Abu Dhabi and Dubai are seen as the best places to set up MENA headquarters.

See also: The key to solving MENA banking challenges starts with regulators

Active state support

According to GCC and global standards, the UAE is generally seen as having an economically progressive political environment that cultivates innovation and an entrepreneurial spirit. Since the 1970s, efforts to diversify the country’s economy have seen successive governments plow billions of dollars of oil wealth into the cities of Abu Dhabi and Dubai.

The government’s support has also contributed to the creation of several initiatives and business development programs, including business and innovation hubs, technology parks, free economic zones, Dubai Internet City and the Dubai International Finance Center – all aimed at shaping the country’s economic landscape.

Related: DIFC chooses Tarabut Gateway for MENA’s first open finance lab partner

As a further sign of its support for business growth, the government recently announced a scheme to offer up to one year of paid leave to government employees who want to start their own business.

Read more: Government employees in the UAE are offered annual paid leave to start companies

“Our goal is to encourage young people to take advantage of the enormous commercial opportunities offered by our national economy,” said Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and ruler of Dubai, in a translated tweet.

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