The growing role of the UAE as a regional FinTech hub

Home to two thriving international financial centers – the Emirates of Abu Dhabi and Dubai – The United Arab Emirates (UAE), the third largest economy in the Arab League after Saudi Arabia and Egypt, is increasingly becoming a key regional facilitator of FinTech innovation, as the country continues the shift from a post-oil economy to technology-focused industries.

Together with India, the country has entered into the Comprehensive Economic Partnership Agreement (CEPA), which entered into force in May and aims to help build bridges between the business communities of the UAE and India and significantly increase trade between the two countries.

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In addition to the cross-border collaboration initiative, another key factor contributing to this rapid acceleration in FinTech innovation has been at the government level, with millions being pumped into the start-up ecosystem in recent years through the Sovereign Wealth Fund (SWF) such as the Abu Dhabi Investment Authority (ADIA). ), one of the world’s largest SWFs with nearly $ 700 billion in assets.

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Another SWF, Abu Dhabi’s state-owned holding company ADQ, recently launched a $ 100 million technology-focused venture capital fund in partnership with the Jordanian Ministry of Digital Economy and Entrepreneurship to support high-growth technology companies in Jordan – where 27% of MENA technology founders and over 600 technology companies are based.

And as SWFs increasingly invest their fortunes in the FinTech sector, companies are helping to build a more friction-free trading environment by focusing on digital payment technology.

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For example, Abu Dhabi-based NymCard helps drive digital banking growth with a range of APIs designed to clean up otherwise complicated payment rails, helping a new generation of neo-banks deliver digital solutions to Emirati businesses and consumers.

See also: UAE approves new digital bank Wio

Liv, Mashreq Neo, Yap and the recently approved digital bank Wio also show how new PayTech companies are collaborating with established financial centers to make the UAE a natural home for MENA’s growing digital banks.

The role of traditional FIs

As is the case elsewhere, digital transformation in the UAE and the wider MENA region is not just a game for startups. Traditional banks and payment networks also have a role to play.

Abu Dhabi Islamic Bank (ADIB) has launched its own API developer portal to increase open banking in the country, so that FinTech developers can build their own applications and products that interact seamlessly with ADIB’s platforms.

On the infrastructure side, consumers in the UAE since 2021 have benefited from more seamless, fast and secure online shopping thanks to the launch of Mastercard’s digital service MasterPass. The initiative helps developers connect online wallets to Mastercard’s network and is used to further integrate the country’s consumers into the global e-commerce landscape.

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So while the UAE’s economy was once largely dependent on oil reserves, a pivot towards strategic investments in emerging industries has seen Emirati SWFs become major investors in technology startups, leading to an increase in foreign investors’ interest in supporting the country’s growth. startups and FinTech innovators.

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