The UAE’s Increasing Role as a Regional FinTech Hub

Home to two booming international financial centers — emirates 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 its shift from a post-oil economy to tech-focused industries.

With India, the country has inked the Comprehensive Economic Partnership Agreement (CEPA) which went into effect in May and is aimed at helping to build bridges between the business communities of the UAE and India and significantly boost trade between the two countries.

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In addition to that 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 startup ecosystem in recent years through sovereign wealth funds (SWF) like 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 holding firm 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 tech firms in Jordan — where 27% of tech entrepreneurs in MENA and over 600 tech companies are based.

And as SWFs increasingly invest their wealth in the FinTech sector, businesses are helping to build a more frictionless environment for commerce by focusing on digital payment technology.

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For example, Abu Dhabi-based NymCard is helping to drive the growth of digital banking with a suite of APIs intended to declutter otherwise complicated payment rails, helping a new generation of neobanks 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 firms are collaborating with established financial centers to make the UAE a natural home for MENA’s rising digital banks.

The Role of Traditional FIs

As is the case elsewhere, digital transformation in the UAE and broader MENA region isn’t only 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 boost open banking within the nation, enabling FinTech developers to build their own applications and products that interact seamlessly with ADIB’s platforms.

On the infrastructure side, since 2021 consumers in the UAE have benefited from more seamless, speedy, 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 being used to further integrate the country’s consumers into the landscape of global eCommerce.

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So, while the UAE’s economy was once largely dependent on oil reserves, a pivot towards strategic investment in growth industries has seen Emirati SWFs become major investors in tech startups, leading to a rise in foreign investors’ interest to support the growth of the country’s startups and FinTech innovators.

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