Fintech, the ubiquitous term for financial technology, became a buzzword in the UAE finance service industry in 2017 as banks ramped up efforts to find digital solutions to make their businesses more efficient while keeping customers happy.
At the same time, the nation's two financial centres, the Dubai International Financial Center and the Abu Dhabi Global Market, both deepened their commitment to nurturing the nascent field with incubator and accelerator programmes designed to give a shot in the arm to fledgling fintech start-ups.
"We really want to consolidate the position of the DIFC to be at the forefront of the changes that are going to happen in the financial sector," Essa Kazim, the DIFC's governor, said on the sidelines of the DIFC-organised Global Financial Forum in Dubai this month.
The DIFC said in November that it had established a US$100 million fund to invest in fintech start-ups, the latest move in the free zone's bid to position itself as the regional centre for the fast-growing and disruptive sector.
"This is something that we really want to support in the region. You can see that it's underserviced today and that inclusion is very minimal. The allocation of funding going into this business in the Middle East is very limited as a percentage of the total," Mr kazim said.
Many regional fintech companies are targeting Dubai to make it a hub for their businesses due to a number of initiatives launched by the emirate including Dubai Blockchain Strategy, according to Links Group, an advisory firm.
"Promisingly, the Dubai Government recognises this and is eager to collaborate with emerging sectors, such as fintech, to put in place the necessary frameworks that will help cement the emirate's position as an epicentre for future industries and the fourth industrial revolution," said John Martin St Valery, the founder and chief executive of Links Group.
While fintech made a splash in 2017 in the UAE, there's still much room for growth. The global fintech sector has attracted more than $50 billion in investment since 2010, according to Accenture, but the Middle East and North Africa region has received around 1 per cent of this figure.
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Dubai is not the only game in town when it comes to fintech. Abu Dhabi has been accelerating efforts to attract fintech firms. Plug and Play, a Silicon Valley tech accelerator whose past investments include Google, PayPal and Dropbox, said in October that it will open an Abu Dhabi office as part of a new global partnership with Abu Dhabi Global Market, and plans to bring several of its fintech start-ups to the capital to work with local financial institutions.
The accelerator, which claims to be the world’s largest, signed a partnership this month with ADGM to launch a new fintech start-up acceleration programme in Abu Dhabi, which will see ventures backed by Plug and Play come to the emirate.
ADGM has focused heavily on the fintech space since opening its doors for business in late 2015, signing multiple collaboration agreements with local and international financial institutions and government entities. The free zone this month signed a cooperative agreement with the UAE’s Securities and Commodities Authority to exchange information and knowledge on fintech-related issues.
Banks in the UAE have not been oblivious to the technological developments transforming the financial services industry and over the past couple of years have been investing heavily in digital and artificial intelligence as consumers increasingly favour online banking over going to a physical branch.
Investments in technology and digitisation are also timely for UAE banks as profitability has been on the wane in the wake of the biggest oil price slump since the 2008 financial crash.
The year in business: Our biggest stories from 2017
