The rise of financial technology has grown leaps and bounds since its conception. What’s more fascinating is that it is continuously achieving new benchmarks with every big and small nation following the fintech route. If independent researchers are to be believed then the global consumer use of fintech saw an increase of 75% between the years 2015-2019, with more and more people turning to technology to handle finances.
Joining the bandwagon of the fintech revolution is the Middle East. The region is showing a quick rise in the adoption of fintech services and topping the list is UAE, which is witnessing a tremendous transition in financial technologies.
Fintech Adoption 2021
The region’s National Vision for 2021 showcases its deep interest in fintech, aiming to become one of the world’s best economies through the commercial and economic capital of 2 billion individuals. Of course, the requirements to achieve the target need thorough knowledge and a tech-base system. The appointment of several Ministers of Artificial Intelligence along with Advanced Services is surely a step ahead in the direction, making the interest of the region on fintech clear. Smart Dubai, Dubai Future Foundation, Abu Dhabi Digital Authority are some of the initiatives that have started pacing in the different technology-related fields.
The Milken Institute Center For Financial Markets has been a prominent institution making sincere efforts in making sure that the governments in the Middle East and North Africa follow the regulatory frameworks that support a sustainable fintech establishment.
At present, UAE accounts for 47% of all financial tech deals and 69% of total funding and with mushrooming of fintech start-ups in the MENA region.
Positive Growth Trends
On the surface, it is just the 1% of the world’s fintech investment that the region upholds, however, the sector is rapidly growing across the Middle East at a CAGR (compounded annual growth rate) of 30%. According to an estimate for 2022, about 465 fintech organizations in the UAE will have around $2 billion invested in the capital funding as compared to the $80 million raised in 2017.
The most significant part is that the upcoming ventures in the region own a positive inclination towards the improved fintech structure in the region. Whether we talk about payment, online lending, remittances, crowdfunding, digital banking, blockchain, and crypto, the start-ups are pushing the establishment towards a new direction with creative and innovative business approaches.
Another crucial point to note is that cryptocurrencies are gaining popularity and on the forex markets, a majority of financial instruments are now traded using Bitcoin and electronic methods of payments.
Contributing Factors To The Growth Of Fintech In The U.A.E
Multiple contributing factors have resulted in the fintech transition in the region. Supportive government policies, a tech-enabled and inclined population, the idealistic measures of financial free zones, and the corporate sector are the key contributors to the growth of financial technologies in the U.A.E.
The increase in the use of mobile devices and better internet connection is among the top driving factors. The U.A.E, Bahrain, and Qatar were the most involved markets in the world in 2019. In addition, Kuwait and Saudi Arabia have plans to join these countries to launch a 5G network system. That brings a major portion of the country’s population under the category of hyper-active internet users, who are also responsible for making complete adoption of fintech services.
Not just the users, but it is the administration as well that is encouraging the development of more fintech-related businesses, collaborating with companies in the private sector, laying a strong foundation of the fintech ecosystem.
U.A.E financial system is currently experiencing a major transformation and financial technologies & services have a major role to play in it. Whether it is about cryptocurrencies, online payment methods, or e-wallets, there is no doubt that fintech has transformed the face of the financial system making the moolah-flow quick, seamless, and transparent.