The State of FinTech In UAE

 In Fintech, Startup Thought Leaders

A constitutional federation of seven states, United Arab Emirates exists in the south-west Asia, also called the Middle East. It shares its border with Saudi Arabia on the west and south and Oman to the south, south-east, and northeast.

The Persian Gulf and the Gulf of Oman in northern and north-eastern region respectively provide UAE with a long coastline of 400 km. Out of all the seven emirates – Abu Dhabi, Dubai, Sharjah, Ras Al Khaimah, Ajman, Umm Al Quwain and Fujairah ? Dubai is the most populous with 35% of UAE population.

According to, the UAE’s population as on December 1, 2016, was 9.3 million, which is equivalent to 0.12% of the world population.

The population density stands at 111 per sqr km with 85% population in urban areas. About 80% population is in between 15 to 64 years, and the overall literacy rate is 93%. The number of women graduates is more than men.

UAE’s fortune transformed with the discovery of oil in 1950. With the starting of oil export in 1962, it emerged one of the Middle East’s most dominant economic centres.

With limited scope for employment, the government is encouraging entrepreneurship as part of the curriculum in universities in collaboration with Stanford University, which will make youngsters innovative and self-dependent. Less dependence on oil and more on other economic activities for revenue generation is government’s main aim behind pushing entrepreneurship.

A report by Khalifa Fund says that 42% population of UAE is between the age group of 15 to 34. The young population, in the age group of 20 to 34, is more unemployed than others. 62% young females are jobless.

90% of those in jobs work with public sector companies, which have caused job saturation. The government has pinned its hopes on entrepreneurship to tackle the unemployment issue. It’s entrepreneurship, which can transform the oil-based economy into the knowledge-based economy.

The startup scene in UAE:

The startup landscape in UAE, especially in Dubai and Abu Dhabi, is changing with each passing day, thanks to the presence of expatriate foreigners who have influenced every aspect of life here. Since the customer base is diverse comprising people from various nationalities, it comes as challenges as well as opportunities for startups.

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The top five startups in the list of Forbes “The fifty most promising UAE startups” are Careem (founded in 2012 to offer on-demand car service), Ftecher (launched in 2012 for GPS-base shipping), Mumzworld (started in 2011 as an online retailer of children’s apparel and items), The Luxury Closet (opened in 2001 as a marketplace for pre-owned designer labels) and HolidayMe (started in 2014 to offer Customized travel services).

Other noticeable entrepreneurship initiatives are Mybox (an on-demand home services, Compareit4me and (financial products comparison site), ReserveOut (an online restaurant guide and booking), GlamBox, (subscription-based retailer of beauty products), (moving and home services), Bayzat, (health insurance comparison site), Growl Media (edutainment apps) to name a few.

All of these companies, which came up after 2011, started as a small idea but today they have translated into a successful business venture.

Startups from consumer services sector, e-commerce, financial services, and insurance dominate the startup scene. According to Forbes, (Middle East), venture capitalists, investment arms of corporate firms and angel investors have pumped in around $175 million of funding.

Some of the VCs companies are Emerge Ventures, Wamda Capital, MENA Venture Investments Ltd, Middle East Venture Partners (MEVP) to name a few.

WAMENA, an angel investment network formed in 2013 to encourage women to invest in startups, organises events and ventures money in startups.

There is no dearth of wealth in UAE as it is ranked 28th wealthiest nation in the world; however, venture capitalists don’t invest in a company unless they are confident about its success. This makes entrepreneurship somewhat challenging here.

How big is the FinTech pie in UAE:

A report titled State of Digital Investments in MENA (The Middle East and North Africa), which was released in May 2016 in Dubai, details the number of investments between 2013 and 2015.

The report shows 137 deals in UAE between 2013-15. Its share of dollars, in terms of investment, has gone up three times in these three years. While in 2013, the value of deals was $33; it went up to $139 in 2015.

FinTech startups such as PayFort, which offers online payment, Beehive that deals in a peer-to-peer (P2P) lending platform and Bridge Payment Solutions, which facilitates payment transactions, are changing the financial behaviour of people.

Magnitt, which lists startups to help connect with investors, mentors and potential partners, shows 20 prominent FinTechs operating in UAE. It reflects the nascent stage of FinTech. However, it’s gearing up fast with government’s support.

Other companies in FinTech space such as Finerd, a Dubai-based robo-advisory investment manager; Pi Slice, a micro-financing business firm and Democrance, a mobile micro-insurance company is offering better, personalized and increasingly remoter financial service to their customers.

In a recently held UAE Banking & Finance Congress, International Data Corporation invited experts to discuss the importance of Blockchain technology in improving efficiency and minimizing the cost of operation.

Status of policy regulation for startups in UAE:

Government’s several keen initiatives in accepting innovative ideas and supporting entrepreneurship are contributing in building a healthy ecosystem.

Out of seven emirates, Abu Dhabi seems to have taken the lead in Fin-Tech-supportive approach. It has developed a “sandbox” regulation like UK and Singapore, which allows companies to start functioning under lighter regulations so that they can test the viability of their products. Abu Dhabi Global Market, established in October 2015, helps position the state as an international centre for business and finance.

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Dubai has emerged an archrival of Abu Dhabi within UAE, as it is the fastest growing metropolitan areas in the world. It has diversified its economic activities from oil-based to mostly service-based. With around 80% expat population, today, the service sector accounts for 70% of the total GDP. There are several reasons why an entrepreneur wants to set up a company in Dubai. Besides being an entry point to access the markets of Asia, the Middle East and Africa, Dubai doesn’t levy any income or sales tax on any company and individual. Further, the law in Dubai encourages foreign investment.

Startup Incubators in UAE:

In August 2016, TURN8, a Dubai-based startup accelerator, announced a $60 million venture capital for seed and follow-on funding for those startups which enter the market after passing through the accelerator test. Formed in 2013, TURN8 has its presence in 60 countries out of which 15 are in the Middle East.

Just a month ago, Sheikh Mohammed bin Rashid Al Maktoum, the vice president & prime minister of the United Arab Emirates (UAE) and Emir of Dubai, had announced the launch of Dubai Future Accelerators program, with $270 million fund to support innovation in artificial intelligence, robotics, genomics, 3D printing and biotechnology.

Other government initiatives include Khalifa Fund, which offers 7-year interest-free loans, training, mentorship and after funding support to 100 per cent Emirati-owned startups; Mohammed Bin Rashid Establishment for Young Business Leaders which provides office space, incubation, funding and training; and Innovation 4 Impact which supports Islamic digital entrepreneurs from anywhere in the world, to gain mentorship, investment and advice. GITEX Global Start-Up Movement is another government’s initiative, which provides a platform to startups to access investors, mentors, buyers and networking opportunities.

In 2016, the event witnessed the launch of UAE’s first 3-D printed unmanned vehicle by the robotics company DigiRobotics. The company has innovated a six-axis machine, DG3Print 3D printer, which can manufacture complex, large-scale shapes.

Drone for good is a unique government initiative to transform civilian drones technology to solve other issues to impact people’s day-to-day work. According to reports, the government is also sponsoring a Blockchain hackathon in February 2017 with $140,000 with prize money.

Flat6Labs, which runs startup accelerator program to fosters and invests in entrepreneurs with innovative ideas, claims that a person can achieve the desired result by registering with it in only four months. The same will take about a year if he tries to do on his own.

Besides mentoring, Flat6Labs helps provide seed funding, round-the-clock office space, startup workshops, educational programs, best business plan and execution strategy. Besides the regional support, companies like Mastercard offer programs such as Start Path Global, which help in scaling up the businesses of many startup firms with strategic collaborations. The company allows access to its global ecosystem to startups.

Current status of financial institutions in UAE for FinTech:

All the banks in UAE are regulated by the Central Bank of the United Arab Emirates, which manages the currency, makes monetary policy and banking regulation.

With growing interest of people in digital banking, experts see it as a threat to the traditional financial institutions. Many believe a collaborative approach between banks and FinTech can be an ideal situation. A range of FinTech firms has come up to disrupt the conventional banking system. The increase in the smartphone penetration rate and connectivity has decreased the cost and challenges to start a business.

The expert believes that despite government initiatives, some regulations need to be amended to boost the FinTech firms. For instance, unless a customer physically signs on an undertaking, he can’t buy any financial product be it insurance or credit card. Similarly, KYC (know-your-customer) norm mandates face-to-face meeting between banking staff and a customer. That’s another challenge for any product which offers automate investing.


The only difference of FinTech sectors of a developed country like UK and UAE is the scale. Rest is almost the same. The UAE has no dearth of opportunities, talent and capital for emerging as a global Fin-Tech hub; it’s just the matter of time and government supportive measures before this happens.

As the Dubai has been selected to host Expo 2020, a world event that gives opportunities to countries to showcase latest in architecture and technology, it is believed that such events provide a tremendous impetus to UAE’s startup scene.

Alex Kong

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