Eighth wonder • Chapter summary
Cracking the top 10, the Dubai International Financial Centre (DIFC) now ranks eighth in the Global Financial Centres Index. Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai and President of DIFC, notes that this is the result of DIFC’s “remarkable success in building an ecosystem that fosters financial industry growth." DIFC Governor Essa Kazim, meanwhile, highlights the center’s emphasis on innovation as the backbone sustainable growth and transformation of the future of finance.
Often, the conversation around innovation and fintech hovers around start-ups; indeed, the UAE is home to the highest number of fintech start-ups in the region. Not isolated to start-ups, stakeholders across the sector are integrating digital financial services to boost Dubai’s positioning as a fintech hub. From banks to exchange service providers such as Western Union, the best equipped to leverage technology will reap the rewards. Moreover, according to S&P Global, Islamic finance institutions have unique opportunities to harness the growth opportunities from technologies such as blockchain disrupting the sukuk industry.
On that note, Dubai’s sukuk industry hit a record in 2019 as Nasdaq Dubai became home to USD64 billion in sukuk listings. The Dubai Islamic Economy Development Centre plans to develop the sukuk market to boost economic growth and Dubai’s status as an Islamic finance capital. Nasdaq Dubai’s momentum will continue with new products geared toward the Islamic finance community as well as Chinese investors. The Dubai Financial Market general index gained 9.3% in 2019. The increased performance was buoyed by the construction and logistics sector. Likewise, the banking sector is set to benefit from knock-on effects of the upcoming Expo 2020.
DIFC’s independent regulator, Dubai Financial Services Authority (DFSA), shares this focus on innovation and technology overhauling the financial sphere. Key to digital transformation is the pace of change and the need to understand more deeply business models and risk profiles. As business models change, so too does DFSA’s organizational structure, making it a pioneer compared to other regulators. While DFSA looks to support financial services innovation with its own regulatory sandbox environment and develop technological security, CEO Bryan Stirewalt is also keeping an eye on climate change as a source of financial risk.
The growing awareness of insurance, thanks in large part to mandatory health insurance, coupled with the fact that penetration in GCC hovers around one-sixth of the global average, indicates opportunities in the UAE’s insurance industry. The UAE insurance market is expected to see large growth in the upcoming years as a result of the sustainable economic development. Harnessing the power of data will be a major factor in the boost of the insurance sector. Chedid Re sees ample opportunity in the reinsurance segment thanks to the aforementioned DIFC ecosystem. ✖