DIFC and ADGM nur­ture fin­tech sec­tor to be­come a re­gional leader

Both cen­tres fund in­cu­ba­tors to men­tor start-ups,

The National - News - - BUSINESS - Mah­moud Kasem re­ports

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 Mena re­gion has re­ceived around 1 per cent of this fig­ure.

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 ADGM, 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 with ADGM this month 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 co-op­er­a­tive 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.

Mona Al Mar­zooqi / The Na­tional

ADGM runs a fin­tech ac­cel­er­a­tor Plug and Play

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