Richie Santosdiaz analyzes major fintech clusters in the GCC, specifically the four emerging regional and global centres
Blockchain, cryptocurrencies and other trending ideas in recent memory have propelled fintech to be a force in its own right. In fact, this year the value of fintech investments in the global economy is projected to be around $43 billion USD (157.9 billion AED). It has impacted financial services, tech and other sectors like Islamic finance.
This also has meant many cities, particularly those with strong financial services, to not only promote but foster and allow for their own fintech clusters to thrive as part of their respective city’s economic development. There are of course strong global fintech hubs of the likes of London, New York City, Singapore and Hong Kong, but in the Arabian Gulf, there are also emerging centres of fintech that are slowly playing its part not in the region but in the global market.
According to London-based FinTech Power 50, head of International Partnerships Mark Walker, says, “In the Middle East there are definitely strong contenders that are not only boosting the region’s capabilities and know-how in the fintech space. And these centres of fintech in the Gulf are playing a huge part in the global fintech space in a positive way.”
Four cities in the Arabian Gulf that are thriving and emerging in the fintech space:
— Bahrain FinTech Bay (@bahrainfintech_) January 19, 2018
Long known as a historic financial services hub in the region, the largest city and capital of Bahrain is keen to innovate and be a hub in the fintech space. For instance, last February The FinTech Bay was launched, which is the largest fintech hub in the Middle East. It is home to about 30 firms working on cryptocurrencies, blockchain, digital payments and other financial technology.
Bahrain’s government has implemented various initiatives for the country to become a regional fintech hub – which in 2017 Bahrain Central Bank launched a dedicated fintech and innovation unit, including a regulatory sandbox, which provides a testbed for fintech startups.
Riyadh (Saudi Arabia)
— فنتك السعودية (@FintechSaudi) January 7, 2019
In line with Saudi Vision 2030 to support entrepreneurship and the enhancement of financial technology (fintech) services, the Saudi Arabian Monetary Authority (SAMA) launched the FintechSaudi initiative last year – with an aim to support the fintech ecosystem in order to promote Saudi Arabia as a fintech hub embracing a thriving, responsible ecosystem of banks, investors, companies, colleges, and state institutions.
Similar to the region, Riyadh and wider Saudi Arabia is undergoing a massive economic transformation. With fintech and financial services that is evident, such as in Riyadh with the development of the King Abdullah Financial Center. Last year saw Saudi Arabia approve its first two financial technology licences to Riyadh-based start-ups Manafa Capital and Scopeer to provide crowdfunding investment services on a trial basis.
Abu Dhabi (United Arab Emirates)
ADGM Academy was honoured with the visit of H.H. Sheikh Hamed bin Zayed Al Nahyan, Chairman of Abu Dhabi Crown Prince’s Court as he stressed the key role of the ADGM Academy to meet the developmental & training needs of the financial services sector in Abu Dhabi. pic.twitter.com/aIwWEfPuAb
— ADGM Academy (@ADGMAcademy) May 31, 2018
UAE’s capital is investing heavily in the fintech space. With regards to the financial services in general Abu Dhabi is home to Abu Dhabi Global Market (ADGM), the capital’s international financial centre. According to its website, Abu Dhabi Global Market is a key pillar of Abu Dhabi’s Economic Vision, acting as a catalyst for the growth of its dynamic financial services sector in the UAE.
ADGM has created initiatives to boost entrepreneurship and innovation, particularly within fintech. For instance, they have had the FinTech Abu Dhabi Innovation Challenge and a Regulatory Laboratory Programme, allowing financial start-ups to test their ideas; last year they also announced the launch of a new commercial licence for start-ups with options starting at $700 USD. And in the city fintech is on the rise, such as the recent 2nd edition of the event Fintech Abu Dhabi.
Dubai (United Arab Emirates)
.@business: Opened in 2004, the @DIFC propelled #Dubai to the region’s top spot as a banking hub and attracted lenders such as Goldman Sachs Group Inc. and JPMorgan Chase & Co. pic.twitter.com/hZmlMlzhS3
— Dubai Media Office (@DXBMediaOffice) January 9, 2019
Dubai is a major hub and with regards to the financial services and fintech sector this is becoming evident. The Dubai International Financial Centre (DIFC), Dubai’s financial centre, will expand to three times its current footprint to include more offices, residences, retail and leisure offerings to create ‘DIFC 2.0.’This was a plan approved by Dubai’s ruler Sheikh Mohammed bin Rashid. According to analysts, the expansion should attract more investments and solidify the DIFC’s position as the region’s top finance centre.
DIFC is home to FinTech Hive, which according to its website is the first and largest financial technology accelerator in the Middle East, Africa and South Asia (MEASA) region. Dubai’s global attention and hub status puts it in a strong position to not only be a key player in fintech but also to lead the global innovative roadmap. For instance, Dubai has been very active in blockchain, where Dubai set up The Global Blockchain Council, founded in 2016 by the Dubai Future Foundation.
As the business and financial world continues to evolve and with fintech leading this charge, this puts the Arabian Gulf at a unique position to help not only foster but lead the way in initiative ideas that will impact the global economy.