🏝️ FinTech Oasis — A Comprehensive Overview Of The UAE’s Trends, Players & Challenges

Sam

Published in

Included VC

22 min readOct 2, 2023

A quick look into the MENA region’s startup ecosystem will highlight two things:

The UAE’s significant lead in terms of activity, and
FinTech’s undeniable position as the most vibrant sector.

The UAE is currently home to over 40% of the MENA region’s scale ups (defined as startups that raised more than $1Million). Over the past decade, the amount of funds raised by UAE scale-ups represented an impressive 65% of the cumulative total in the MENA region. Since 2021, FinTech as a sector has accounted for 40% — 43% of the UAE’s funding.

Why and how did this happen? What are the key drivers & who are the key players behind this growth? Will this trend continue & what challenges may be ahead? The purpose of this article is to answer all these questions, and to provide a complete but accessible overview of the UAE’s FinTech ecosystem.

The Arabian Monetary Fund launched the FINXAR index which tracks FinTech development in the region against several measures such as legislation and infrastructure. The UAE took 1st place with a score of 75%

If you’re pressed for time, here’s a summary of what you need to know:

UAE FinTech startups account for the most significant amount of deals closed & funds invested in the MENA region. Several governmental, regulatory, economic & demographic factors have created a favourable environment for this growth. UAE based startups are now addressing the entire spectrum of FinTech innovation, with payment providers & NeoBanks leading the charge, followed by an emergent PropTech & RegTech scene. There’s a number of factors that can challenge the sector & the nation’s position as a leading hub. These include the availability of later-stage funding, regional competition & a historically small number of domestic IPOs as an exit. These challenges are already being addressed & the ecosystem’s growth trajectory is currently showing no signs of slow down.

At a Glance — Here’s what the article will be covering:

🧱 Chapter I: A break-down of the niches that make up the UAE’s FinTech ecosystem
🚀 Chapter II: The key drivers that have led to an explosion in FinTech adoption
📈 Chapter III: Key startups, investors & their FinTech portfolios
💥 Chapter IV: Potential challenges facing the ecosystem
🔮 Chapter V: A look into what the future may hold

🧱 CHAPTER I — THE UAE’S FINTECH LANDSCAPE

FinTech isn’t a singular entity; it’s a rich mosaic of innovation, each reshaping a distinct facet of the financial industry. Below is a further breakdown of the segments that broadly make up the overall sector.

💳 Payment providers: The surge in e-commerce spending across the MENA region has significantly bolstered a parallel adoption of payment processors. As online shopping gains prominence, there has been an increased need for convenient payment solutions in the form of payment gateways and digital Points of Sale. The inception of Souq.com (acquired by Amazon in 2017) marked a key turning point in the UAE’s e-commerce landscape.

In 2020 and as a result of the pandemic, online shopping grew by 53%, a trend which has only continued to accelerate since. Naturally, several payment processors, both local & international, have emerged to cater for this evolution. The rise in Payment providers has been an outcome of, as well as a key driver of the region’s growth in e-commerce.

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💸 Remittance Solutions: Compared to other regions, the adult population in MENA still remains largely under-banked (with some estimates reaching 67% of the population). However, it’s important to note the significant differences that exist between MENA nations. For instance, more than 50% of the UAE’s population is already using digital wallets, a figure which is significantly higher than that of several other countries.

Across the region however, there’s a large demand for domestic and cross-border transactions. For instance, in 2021, Saudi Arabia ranked as the world’s second largest source of remittance outflows, and Egypt ranked fifth for inflows.

One of the key drivers behind the MENA region’s remittance dynamics is the large percentage of foreign-born members of the population which represents some of the highest figures globally, especially within the GCC nations.

The UAE has the highest % of foreigners in the world which is a key driver of the nation’s vibrant remittance activity. Source: United Nations (2020) via worldpopulationreview.com

Historically, migrants would conduct these transactions through traditional exchanges and money houses at an average cost of 7% of the amounts sent. This is a figure which is more than twice as much as the United Nations Sustainability Development Goal of 3%.

With more immediate access through smartphones and smaller physical footprints, several players offering digital first solutions at more competitive prices have emerged. This influx in providers includes domestic (e.g Lulu Money), as well as international players such as TransferWise (who recently opened their offices in Abu Dhabi).

🧑‍🤝‍🧑 Crowdfunding | P2P platforms | PropTech: According to a study by the World Bank, the share of loans given to SMEs in the MENA region ranks as the lowest in the world, standing at an average of 7.6% of total bank loans. Despite the high contribution towards national GDP that SMEs provide (more than 60% of non-oil GDP in the UAE), it is estimated that 50–70% of SME funding requests are rejected by conventional banks.

In recent years, a number of crowd-funding and digital lending platforms have emerged in this space. Entrepreneurs and individuals who were once overlooked by traditional banks are now finding more avenues for funding through P2P platforms. Broadly speaking, these can be split into equity crowdfunding platforms (e.g Eureeca and the Dubai government’s Next platform), or peer-to-peer lending platforms such as Beehive which was recently acquired by e& enterprises.

A more recent development is the emergence of platforms offering fractional real estate investment solutions such as Stake and SmartCrowd. The full dynamics of the UAE’s Real Estate market cannot be fairly addressed in this article. However, it’s worth highlighting how PropTech startups are addressing several facets that have long challenged the market such as high deposit rates, limited mortgaging options & limited tenancy solutions for investors and tenants alike.

🏧 Digital Banking and Neobanks: The UAE ranks 6th in the world in terms of Neobank adoption, and a study by McKinsey illustrated that 80% of those surveyed in the region would be willing to shift at least a portion of their holdings to a digital-only proposition. Several factors are underpinning these changes which will be covered in the next section. For now, it’s clear that there’s a drastic change in how consumers are choosing to manage their finances.

In fact, a recent poll by Standard Chartered determined that the majority of UAE residents expect the country to be entirely 100% cashless by 2030.

At the center of this explosion in digital banking is a number of incumbents and traditional banks, many of which have formed their own digital-only platforms and/or strengthened their existing mobile offerings. This dynamic is due to regulatory mandates which require NeoBanks operating within mainland UAE (i.e onshore) to partner with existing banks for licensing purposes. A further break-down of this legislation along with the difference in jurisdictions & benefits that Financial Free-Zones can provide will be covered later in the article.

🔰 InsurTech & Comparison Sites: Historically, the region’s insurance penetration levels (measured as the ratio between insurance premiums written and GDP) have been amongst the lowest in the world. Interestingly, this trend persisted even when controlling for income levels.

According to a report by Zurich, for both the richest and poorest nations in the region, insurance penetration levels stood at around 2% compared to a world average of 7%. As a result, the last decade has seen the region, especially the GCC nations recording some of the world’s fastest growth rates in written premiums. This increase in adoption has also been in part due to legal modifications, such as the UAE’s implementation of mandatory medical insurance in 2013, and the obligatory requirement for unemployment coverage introduced in 2023.

The majority of incumbents within the insurance space have also highlighted their interest in collaborating with InsurTech startups (67% of UAE based insurers surveyed), further driving this particular niche’s growth.

A number of startups ranging from comparison sites to employee benefit scheme providers have emerged, an overview of which is provided below.

💹 WealthTech and Robo-Advisors: When it comes to prosperity, the Middle East has become a hub for some of the wealthiest individuals in the world. In fact, there are at least 18,000 multi-millionaires in the region who have a net worth exceeding $10 million, and in the UAE, there’s at least 92,000 millionaires with a net worth greater than $1million.

In 2022, the UAE clocked the highest inflow of high-net-worth Individuals in the world with 4,000 millionaires moving into the city, representing a 208% year-on-year increase.

This rise in prosperity isn’t contained to the ultra-wealthy, but also extends to a burgeoning middle class with a growing appetite for investment & wealth management services. Many startups have emerged in this field, taking advantage of the market’s preference for digital wealth management services whilst benefiting from lower operational costs.

🔗 Blockchain and Cryptocurrencies: In recent years, the UAE government has shown significant support for blockchain technology through various initiatives aimed at positioning the country as a leader in blockchain adoption. Some notable efforts include the Emirates Blockchain Strategy 2021, which seeks to digitize at least 50% of all government transactions, and the Dubai Blockchain Strategy which aims to make Dubai “the happiest city on earth” (powered by blockchain).

The adoption of Cryptocurrencies in the region has been diverse, with some countries imposing an outright ban (such as Egypt and Qatar at the time of writing), while others have had a noticeable increase in usage (like Lebanon after the Lira’s devaluation). In the UAE, the Central Bank along with the Saudi Arabian Monetary Authority launched Project Aber as a pilot to test the viability of a single dual-issued digital currency.

At present, more than 40 government entities and 120 blockchain companies covering 200-plus initiatives are operating in the UAE (source); a trend which has seen a parallel growth in startups spanning the entire gamut of Blockchain, Crypto and the overall Web3 sphere.

💰 Digital Wallets & Buy Now Pay Later: I already mentioned how e-commerce has driven the need for more digital payment options. The payments section above covered developments from a merchant/retailer side. However, it’s worth noting the trends & players reshaping the consumer landscape.

The use of e-wallets in the UAE has grown by 24% since the start of the pandemic, with 67% of UAE consumers now using them for purchases.

Digital E-wallets provide consumers with flexible payment options. Despite the significant overlap with mobile banking there are a few differences. Namely, digital wallets do not issue bank cards, nor do they provide a full set of banking services (e.g credit offerings or cheque management). However, they typically allow users to aggregate multiple bank accounts, to shop online, send transfers & split bills. A specific trend worth noting is the significant growth in BNPL providers.

These schemes allow buyers to acquire an item and pay it in installments over time, typically with zero per cent interest rate. In recent years, there has been an explosion on this front with several BNPL startups having raised some of the region’s largest mega rounds.

🔑 Open Banking | RegTech | Infrastructure: In short, open banking refers to financial institutions allowing for customer data to be shared with trusted third-party providers via open electronic APIs. This can serve a number of use cases such as account aggregation and personal financial management (e.g consider an app that can connect to all your bank accounts & make expenditure recommendations).

The root of Open Banking as a concept can be linked to the European Commission’s revised Payment Services Directive (PSD2) which made banking data more accessible. In terms of adoption, there’s been different regional and national approaches which can be categorised as legislation-led, industry-led or hybrid. For instance the UK’s Financial Conduct Authority enforced adoption whereas in the USA & Singapore, authorities implemented a more laissez-faire approach. In India a combination of both has taken place.

Out of all the FinTech sub-sectors mentioned so far, in my opinion, Open Banking seems to be one of the most nascent. A number of initiatives are taking place in the region e.g Bahrain and Saudi have already mandated open banking frameworks with slightly varying scopes on the institutions to be included.

In the UAE, it can be argued that a transition from an industry-led to a more hybrid approach is underway. In February 2023, the Central Bank launched the Financial Infrastructure Transformation Programme (FIT Programme) covering nine key initiatives including Open Finance, which are set to be fully implemented by 2026.

Though RegTech is a separate niche covering a wide range of regulatory provisions & technologies, for the sake of brevity, I have included it along with other Infrastructure providers (e.g Data aggregators) in this section.

🚀 CHAPTER II — CATALYSTS FOR INNOVATION

With an overview of the niches that comprise the overall FinTech ecosystem defined, this section will delve into some of the key driving forces, the convergence of which has propelled the UAE’s FinTech startups.

🏛️ Government Initiatives: I already mentioned a few government-led initiatives contributing to the rise of FinTech in the UAE. These have included compulsory mandates for insurance coverage and national policies addressing the adoption of blockchain to name a few. The role that the government has played in fueling growth is fairly extensive but below is a summary of the most pertinent points:

The creation of financial Free Zones with favourable legislative frameworks such as the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Markets (ADGM) which have been the bedrock for many of the startups formed
The creation of incubators & accelerators such as Hub71 & the DIFC’s Innovation Hub to support the rapid ideation, development and implementation of FinTech startups
The creation of government backed funds such as Dubai’s Future District Fund, Mubadala Capital & ADQ (which recently anchored a $200M fund launched by Further Ventures) to invest in some of the nation’s startups
Fostering global events such as: Expand North Star, FinTech Surge, Future Blockchain Summit & Insuretek which represent some of the world’s largest events

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⚖️ Regulatory Reform: The introduction of the Wage Protection Scheme which compelled employers to register all employee payments through approved banks & e-wallets laid the groundwork for the adoption of digital transactions.

In addition to broader reforms on foreign company ownership, data protection and intellectual property, there has been a number of initiatives aimed at supporting FinTech companies specifically. These efforts, such as the opening of the Central Bank’s FinTech Office have introduced favourable regulatory frameworks for digital payment platforms, crowd-funding providers and peer-to-peer lenders.

More specifically, the introduction of Regulatory Sandboxes such as ADGM’s Digital Lab and the Dubai Financial Services Authority’s (DFSA) ITL program have been critical in providing a controlled space for FinTech startups to test products and new business models without having to meet an overly cumbersome set of requirements. These Sandboxes create a space for startups & regulators to collaborate on innovation whilst enabling them to jointly navigate an evolving regulatory landscape.

A brief overview of the typical process for Sandbox licensing — Source: Dubai Financial Services Authority

👪 Demographic Drivers:

The UAE boasts one of the highest rates of digitization globally with internet penetration standing at 99% and mobile connections at 169% of the population.

This, coupled with a relatively young, tech-savvy and a highly urban population (88% living in major cities), has led to an increased demand for mobile-first solutions. Whilst the UAE is ahead in terms of overall education & literacy rates (ranked 17th globally at 98.13% of the population in 2021), there’s plenty of room for improvement when it comes to financial literacy.

The latter is measured by an individual’s understanding of four key areas (interest rates, compounding interest, inflation and risk diversification). A recent survey saw the UAE coming in at 54th place globally (with a score of 38% of the adult population, compared to Norway which took 1st place with a financial literacy score of 71% of the population).

In my opinion, this figure illustrates the size of opportunity that exists for FinTech solutions in the UAE, especially when we consider the nation’s fundamental economic drivers and increased prosperity.

UAE Demographic Drivers — Sources: Connectivity | Literacy

⛽ Economic Drivers: We already discussed the role that certain factors (e.g population demographics in relation to remittance activity) play, and touched on the nation’s increasing affluence. The UAE ranks 8th globally in terms of proven oil reserves, and ranks 7th in terms of national income per capita. These figures are important because, unlike the declining economic trends recently observed in other regions, the economic foundations of the MENA region have shown resilience.

Fueled in large part by high oil prices, the region is anticipated to outpace numerous major economies in the medium term. More immediately, the projected year-on-year GDP growth ranges between 2% and 5% across MENA, compared to the 1% growth estimated for Europe and North America (Mckinsey report).

These macro factors, coupled with an increased appetite for digital services provide fertile ground for FinTech startups in the nation. Similar dynamics are at play in neighboring countries such as Saudi Arabia, Qatar and Kuwait providing a sizeable market for startups to expand into other GCC nations.

UAE Economic Drivers — Sources: Reserves | Income

🦠 Coronavirus: The pandemic’s impact on shifting consumer habits towards e-commerce and going cashless is undeniable. Whilst it’s no surprise that forced lock-downs contributed to this growth (89% of UAE consumers shopped online in 2021), what’s interesting is that there has been no downward correction to suggest that the pandemic’s impact was an anomaly.

In fact, according to the same report by leading payment processor Checkout.com, in 2022 the UAE’s number of online shoppers grew to 98% further illustrating the enduring rise in digital payment adoption.

🛰️ Technological Drivers: In line with global trends, there are a few technological building blocks, the presence or limitations of which will determine the parameters under which the industry can grow. The variables below, along with others such as Open Source software, No Code/Low Code platforms, and event-driven automation can provide numerous benefits for FinTech startups.

These advantages are twofold as they a) allow these startups to exist in the first place and b) present more opportunities for them to capitalize on. This applies to the FinTech industry regardless of location but what does this mean for the UAE in particular? The positive news is that major players such as Amazon Web Services, Google, Microsoft, IBM and Oracle are already firmly established in the country meaning that the threat of limited growth due to a lack of technological access is greatly reduced.

Informed by Mckinsey’s report on technologies shaping the future of FinTech

📈 CHAPTER III — VENTURE CAPITAL INSIGHTS

With a general overview of the drivers covered, this section will look into the UAE’s FinTech investment trends. Following record-breaking investment levels in 2021, last year saw a global cooling off period. Driven by concurrent recessions in the USA, Europe and China, the global number of FinTech deals fell by 8% and total volumes fell to $75.2Bn, representing a staggering 46% global decline. The only exception was Africa which recorded a 5 year high following an increase of 25% in the number of FinTech deals closed (89% of which were early stage). Two points are important to note:

Firstly, while global FinTech funding in 2022 was down compared to 2021, numbers were still higher than 2020 globally.
Secondly, when it comes to assessing 2022’s FinTech investments in the MENA region, there’s divergent information. According to some sources, the downward trend has been less pronounced with a drop of 1.8% in the number of deals closed, and a drop of 3.6% in total funding value. According to other sources however, the total value invested into MENA FinTech has nearly doubled from 2021. This is an extreme divergence that could very well be due to an inconsistent definition of what comprises the MENA region (e.g if the former citation accounts for activity in Israel which is typically excluded due to a significant difference in dynamics).

Regardless, a few things are for certain:

🏆 FinTech takes the lead — As a sector, it continued to have the lion’s share of the overall funding in the region (29%), with more than twice as many deals having being closed compared to the next most popular sector (e-commerce)
🏆 UAE takes the lead — In line with previous years, the UAE was the most active FinTech country in the Middle East with a reported 73 deals closed in 2022, representing a 43% share of total transactions in the region.
🏆 FinTech Mega rounds are on the rise — FinTech companies (or those with FinTech solutions at the core of their offerings) delivered five of the MENA region’s ten largest mega-rounds in 2022

The point is this - FinTech startups in the UAE have had a significant and a disproportionately large share of both the nation and the region’s venture capital funding.

UAE FinTech Startups + Active Investor Portfolios

The following section highlights UAE startups, key investors & their FinTech portfolios. The list only reflects UAE based VCs and startups. A few international players with a significant presence/operations in the country have also been included. For the purposes of this article, I have not included FinTech startups in other countries funded by UAE VCs, nor did I cover VCs from other countries who have invested in the UAE’s startups.

But first, a few notable mentions. The following VCs are UAE based & active in FinTech. However, their portfolios are largely comprised of startups operating abroad which is why they haven’t been included.

Morningstar Ventures: Dubai based VC and one of the most active investors in Blockchain, Crypto and Web3
Global Millennial Capital: Abu Dhabi based investor operating at the intersect of AI, Data Science & FinTech
Empede Capital — Operating out of Dubai with several international household names & exits in their portfolio.

👉🏼 For any additions, exclusions or amendments, you can contact me here

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💥 CHAPTER IV — POTENTIAL CHALLENGES

🎲 Regulatory Complexity: The UAE’s regulatory landscape can be complex. Below is a snapshot of the challenges that startups may face. For a more detailed intro into this topic, the following guide by Thomson Reuter’s Practical Law is a good resource. To summarise, the UAE’s regulatory landscape can be split into two regimes.

The first is onshore regulation which is carried out by federal bodies (i.e the UAE’s Central Bank, the SAC & DVARA). Historically, the onshore legislative framework has been comparatively restrictive. It required companies to attain several licenses & to meet various controls such as minimum levels of national ownership (e.g Neobanks needed to partner with existing, licensed incumbents to offer their services on-shore).
The second regime is based on independent common-law principles and is found in both the financial Free Zones i.e the DIFC and ADGM. These Free Zones and their regulatory landscape have been a catalyst for promoting foreign direct investment. They are characterized by zero corporate taxes (guaranteed for 50 years and renewable), independent courts and international arbitration centers, as well as dedicated FinTech Sandboxes for testing new business models & products.

A key question for businesses wishing to enter the UAE is where to set up? This is not always clear and can be very context specific, depending on whether a business is intentionally marketing to UAE residents, and how much of their business comes from the UAE amongst other considerations. From data protection directives, to KYC and capital requirements, there’s a number of nuances to navigate depending on the offering in question. For instance, start-up banks or retail banks cannot operate in ADGM, and financial service providers in ADGM cannot deal in UAE Dirham.

Whilst this uncertainty can be a hurdle for new companies looking to establish themselves, it’s a testament to the positive evolution taking place. There’s plenty of evidence for the UAE’s push towards international standardisation and cross-border cooperation. For instance, The ADGM is part of the Global Financial Innovation Network, a group of 29 international regulators enabling FinTechs to test their products in multiple jurisdictions simultaneously.

Cross-border cooperation is also taking place as evidenced by ADGM and Singapore connecting their Sandbox environments for testing as early back as 2018. Even for the onshore framework, historic restrictions on foreign ownership were repealed in 2021 for most industries (except those deemed to be of strategic national interest). Whilst it’s unclear if some FinTech activities may still fall under this restriction, the push towards more openness is clear.

🚫 Lack of late stage funds: For the most part, VC activity has been centered on early stage (Seed to Series A rounds) with few domestic investors focusing on later stage companies. As a result, startups have had to resort to a limited number of sovereign wealth funds and international VCs.

Whilst this still remains a large gap, there’s evidence of increased interest in the region from international investors. For instance, 500 Global has had a longstanding presence in MENA, but more recently, Canada-based Alpha Wave Capital partnered with Mubadala Capital to form Abu Dhabi Catalyst Partners.

This year, Target Global which historically invested in Europe and Israel with 15 unicorns in its portfolio, established a presence in the UAE to build on its regional investments (such as Tarabut). In order to truly foster a vibrant ecosystem, the presence of domestic investors focused on later growth stages is required.

🪁 Market Scalability: In 2022, the overall MENA region witnessed a buoyant M&A scene which recorded a 30% increase from the year prior. The UAE specifically clocked the highest number of exits following the acquisition of 23 home-grown startups. Sectors-wise, FinTech recorded the highest number of exits.

Despite this level of activity, historically, the primary exit route for startups in the country has been through M&A with very few domestic IPOs. Out of the UAE-based startups that went public, going west has been the preferred norm (e.g. Swvl & Yalla, which listed in foreign exchanges). It’s difficult to judge how this trend will unfold, but so far, domestic market listings have not been an option that startups pursued.

With that being said, there are indirect signals which look promising. In 2022, the overall MENA region saw a record number of IPOs, bucking the global volume decline of 45%. Abu Dhabi National Oil Company’s recent IPO of its Logistics & Services arm made history as the nation’s largest listing, (as well as being the largest listing in 2023 so far). Last year, Mubadala-backed G42 which operates in AI and Cloud Computing listed its geo-spatial data provider Bayanat with several more IPOs planned in the near future.

Although much of the nation’s historical IPO activity has been dominated by state-backed companies, it’s expected that several independent companies, including younger startups will be listing in the nation’s stock market in the forthcoming future (source).

🤼 Regional competition: Despite the UAE’s significant lead, Saudi Arabia’s recent development must be noted. Driven by similar factors such as governmental policies and sovereign funding, there has been significant momentum driving the growth of innovation in the kingdom. In 2022, both the number of deals (up by 30%) and total funds deployed (up by 72%) grew to record levels in Saudi Arabia.

As a nation, it clocked the highest regional growth rate in VC activity, and is increasingly accounting for a significant portion of MENA funding totals. In the same year, Saudi Arabia also saw twice as many exits as the year prior (10). Saudi Arabia’s significant growth in funding has been driven by mega rounds (+$100M) by the likes of Tamara and Foodics which have drawn domestic & international investors.

Saudi Arabia’s acceleration has continued into the first half of 2023, and could be viewed as a signal of the country’s trajectory. Whether this is in direct competition with the UAE is a matter of opinion, but I believe that it’s a positive development for both nations. Saudi Arabia and UAE share a number of similarities that can act as a catalyst for providing startups & investors with a bigger/shared market for growth & investment.

🎓 Skills Gap: Depending on niche, some startups in the UAE may face challenges in accessing skilled talent, especially for deep-tech and highly specialised fields requiring longer incubation time-frames. Several investors have also cited a lack of experienced founders in the region as an obstacle to the rapid growth of the ecosystem.

The UAE government along with the private sector have been addressing this gap through the formation of several incubators & accelerators that can foster a pipeline of talent aligned with emerging industries.

Finally, recent legislative changes will need to be closely monitored to ensure that investors, entrepreneurs & skilled professionals continue to be incentivized in viewing the UAE as an attractive destination.

🔮 CHAPTER V — A LOOK INTO THE FUTURE

So what’s next? And will the UAE’s FinTech wave continue? On the one hand, it can be argued that the UAE’s FinTech market has already had its best years. A significant amount of funding has been deployed into an increasingly saturated marketplace that could soon plateau. Not to mention, many VCs will be considering their diversification & exposure risk which could further lead to a slow down. However, in terms of market size, there’s still significant room for growth. Compared to other developed markets, a recent report by Mckinsey highlighted the low percentage of overall banking revenues that FinTech in the region accounts for.

This figure should be treated with caution — especially given the significant differences between MENA nations (e.g the opportunities in Egypt are vastly different from Kuwait etc). In my opinion, it wouldn’t be unreasonable to suggest that the UAE will still enjoy a significant share of the region’s future growth. Why? Quite simply because it will be very difficult to replicate the regulatory, demographic & economic factors that have propelled the ecosystem within a short amount of time. In fact, due to many of the factors mentioned above, several startups initially originating from neighboring countries have chosen to base themselves in the UAE (e.g Swvl started in Egypt), a trend which will likely continue, at least in the mid-term.

It’s also worth noting the uneven distribution of startups and investments within FinTech. Whilst I don’t personally foresee Neobanks & Digital Wallets to present the biggest opportunities for future growth, the same cannot be said for PropTech, RegTech & Open Finance which still remain very nascent at a national & a regional level. With more interest in the MENA region from global VCs, as well as an increasingly capable workforce that can provide highly specialised human capital, there’s plenty of room for the sector’s growth. The UAE’s position as a regional hub for FinTech seems highly defensible, and replicating the pillars that have led to its success in the short term will certainly not be easy.

👋🏼 That’s it for now! I hope you found this overview useful in better understanding the UAE’s FinTech & VC landscape! I’d love to know your thoughts on the topics discussed. Feel free to connect or reach out to me on anything tech or startup related!

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