Today's Edition
SARA ALZAABI (ABU DHABI)
The UAE has experienced a remarkable rise in its fintech ecosystem in recent years, cementing its position as a regional leader in financial technology, according to the UAE Fintech Report 2024 produced by Fintech News Middle East, with support from PayTabs.
The report provides an in-depth analysis of the country's fintech landscape, exploring key trends, challenges, as well as opportunities shaping the sector.
As of 2024, the UAE boasts 329 active fintech companies, a staggering 128.5% increase from the 144 companies recorded in 2021, reflecting the rapid evolution of the industry.
At the heart of the UAE's fintech transformation is the Financial Infrastructure Transformation (FIT) Programme, which was launched in 2023.
This initiative revolutionises the country's financial infrastructure, promoting open finance, central bank digital currencies (CBDCs), and payment system innovations.
In the first half of the year alone, fintech startups in the UAE secured $225 million in venture capital funding, accounting for 32% of total funding in the MENA region.
Despite a 36% contraction in regional fintech funding, the UAE's sector has shown remarkable resilience, marked by large funding rounds and a surge in mergers and acquisitions.
This funding environment further solidifies the UAE's position as a fintech hub, with the country outpacing other MENA nations, securing $73 million in funding during the first half of 2024-surpassing both Saudi Arabia and Egypt.
Abu Dhabi and Dubai play pivotal roles in fueling the UAE's fintech growth.
On one hand, Abu Dhabi's Abu Dhabi Global Market (ADGM) is a key player in the UAE's fintech ecosystem, offering a strong regulatory framework and innovation-driven programmes, particularly in emerging sectors akin to blockchain and digital assets, attracting fintech startups and investors.
Programmes like the ADGM RegLab and Digital Lab offer fintech firms a controlled environment to test and develop new solutions.
On the other hand, Dubai is home to over 1,600 fintech companies, making it the largest and most dynamic fintech ecosystem in the region.
Dubai's success in fintech is attributed to the Dubai International Financial Centre, tax exemptions, foreign ownership, a responsive regulatory framework, as well as its focus on trade, tourism, and technology.
A significant trend highlighted in the UAE Fintech Report 2024 is the rise of cashless transactions. By 2024, the UAE is on track to become a predominantly cashless society.
According to a Mastercard report, 88% of UAE residents have embraced digital payment methods, including mobile payments, Buy Now, Pay Later (BNPL) services, cryptocurrencies, and wearable technology.
This shift is further supported by government initiatives like the Dubai Cashless Strategy, which aims for cashless transactions to account for 90% of all payments by 2026.
In fact, the UAE is a leader in digital wallet adoption in the MENA region, with 72% of UAE banking customers preferring online payments and digital wallets.
Another important development is the growing importance of digital banking.
As per UAE Fintech Map 2024, 89% of UAE consumers now hold digital-first accounts, underscoring the widespread adoption of digital banking solutions.
Consumers are increasingly seeking personalised banking experiences, with 87% of respondents desiring apps that offer tailored financial insights.
The UAE is positioning itself as a leader in open finance with the Central Bank's 2024 Open Finance Regulation, enabling secure data sharing for more transparent, inclusive services.
The 2024 Payment Token Services Regulation further enhances this by enabling secure, robust digital payment systems.
UAE fintech startups like ZIINA, Huspy, and Qashio have secured significant investment and are expanding across the region, leveraging the country's favourable regulatory and business environment.
