Fintech to drive UAE's growth in 2020
The UAE's fintech sector is poised to enter 2020 with robust deals as more investors and startups explore investment opportunities.
The UAE is home to one third of fintech startups in the Middle East and North Africa (Mena), the largest community in the region and the number of fintech companies in the region are expected to reach 1,845 by 2022, indicating an impressive of 230 per cent from 559 in 2015.
Raja Al Mazrouei, executive vice-president, DIFC FinTech, said this is an exciting time for the financial services sector, where emerging markets are proving to be some of the most dynamic and rewarding destinations for investment and growth.
"The rise of fintech is one key factor driving this transformation, impacting every aspect of how financial services are accessed and consumed," she said.
With Dubai ranked eighth in the Global Financial Centres Index (GFCI) and recognised as one of the world's top ten fintech hubs, DIFC is well placed to drive this growth and serve as a platform for aspiring entrepreneurs to access these vast opportunities.
The DIFC is continuing to deliver upon the centre's blueprint for diversifying and transforming the financial services industry. This sustained focus on financial sector innovation is enabling the DIFC FinTech Hive to continue leading the region's efforts in providing an enabling environment for innovative solutions to contribute to the development of the financial services industry, in line with Dubai Plan 2021 and DIFC's 2024 Strategy.
"We expect to feature a larger pool of start-ups, covering a broader scope to include FinTech, InsurTech, RegTech and Islamic FinTech at the third edition of DIFC FinTech Hive's 2019 accelerator programme. The programme has grown approximately 50 per cent from 2018 with 31 innovative global start-ups that are selected to participate," added Al Mazrouei.
The Middle East and North Africa (Mena) startup ecosystem is growing quickly, with $517 million being invested in 354 deals in 2019 thus far, indicating an increase of 30 per cent compared to the same period of 2018 in investments, with a 3 per cent increase in the number of deals, according to the third quarter of 2019 Mena Venture Investment Report.
The report shows that the average deal size is at an all-time high of $2.5 million when excluding Souq and Careem. The UAE continued to account for the largest share of total funding, 62 per cent in 2019 year to date, while Egypt accounted for the highest number of deals, 27 per cent in 2019 year to date.
The fintech industry continued its dominance by number of deals in 2019 year to date, accounting for 14 per cent of all deals. This is an increase of 3 per cent to the same period in 2018, as more investors and accelerators invest in fintech startups.
Wai Lum Kwok, senior executive director (Capital Markets), Financial Services Regulatory Authority of Abu Dhabi Global Market (ADGM), said the fintech sector in the UAE has matured noticeably over the past 5 years, given the global evolution of technology and the uptick in local and regional projects designed to address market needs and consumer demand.
"In recent years, the Mena economy, and the UAE's in particular, has expanded to become more diverse, more competitive and innovative, thus increasing the need to financial free zones such as ADGM that provide support services to foster and promote this growth."
According to a recent report by the Milken Institute Centre for Financial Markets, the UAE has been a key recipient of the bulk of venture capital investment in the region, of which fintech is one of the main investment areas. Fintech start-ups that establish themselves in the UAE are ideally placed to enter the emerging Middle East, Africa and South Asia, which represents an $8 trillion market and is home to 3 billion people, 70 percent of whom have limited or no access to financial services.
Philip Bahoshy, founder and ceo, Magnitt, said the third quarter of 2019 continued the growth of venture funding into Mena-based startups as the figures are still ahead of 2018 in terms of funding, with a slight increase in the number of deals as well.
Moreover, he said there have been several underlying trends that show the maturing stage of the startup ecosystem.
Saeed Al Nofeli, programs manager, Sheraa, said: "With the number of start-ups growing in Mena, the entrepreneurial ecosystem has seen rapid growth. Several public initiatives have also been put in place, as government bodies have realised the importance of entrepreneurship and the role it plays in a growing economy. At Sheraa, we aim to bring the together like-minded individuals for a free flow of thoughts and ideas."