UAE Fintech Market Assessment, By Deployment Mode [On-premises, Cloud], By Technology [Application Programming Interface, Artificial Intelligence, Block Chain, Robotic Process Automation, Data Analytics, Others], By Application [Payment and Funds Transfer

UAE Fintech Market Assessment, By Deployment Mode [On-premises, Cloud], By Technology [Application Programming Interface, Artificial Intelligence, Block Chain, Robotic Process Automation, Data Analytics, Others], By Application [Payment and Funds Transfer, Loans, Wealth Management, Insurance and Personal Finance, Others], By End-user [Banking, Insurance, Securities, Others], By Region, Opportunities, and Forecast, 2017-2031F

UAE fintech market is projected to witness a CAGR of 15.68% during the forecast period 2024-2031, growing from USD 2.96 billion in 2023 to USD 9.49 billion in 2031.

Fintech covers everything from digital payment systems and online lending to applications for financial management and blockchain-based solutions. Recently, with great force, Fintech has gained much momentum in the financial world. The financial technology market in the UAE has enjoyed phenomenal growth in the last couple of years due to its strong entrepreneurial culture, friendly investment environment, and heavy support from the government. These neobanks, together with improvements in digital services by traditional banks, are considered one of the major driving factors behind the growth witnessed by this market.

Neobanks are targeting customers from incumbent banks with their products and services at better pricing. Additionally, the fintech regulatory environment in UAE has contributed to the growth of neobanks.

Innovation is driving the fintech services industry into an important inflection point in its development, where the economic models are fluxing, and the need for software engineering solutions in finance is becoming pivotal. With over 600 fintech start-ups already thriving in Dubai, the UAE holds pole position for fintech across the GCC with the largest fintech ecosystem. Dubai is a powerful magnet for international entrepreneurs, tapping into fintech companies that wish to be among the leaders in innovation. Also, machine learning is revolutionizing interactions with banks and insurance companies by personalizing offers and support. More recently, several integrated payment providers have appeared to complement some highly capable business management platforms. The rest of the use of NFTs apart from digital art sales, including but not limited to, involving authors in the increase of revenues from digitally sold products, allowing artists to generate royalties, or using them as tickets/membership cards/etc.

For instance, UAE-based fintech startup Mamo announced in July 2024 that it had successfully completed a funding round worth USD 3.4 million. The company intends to use the fresh capital for offering extended product portfolios and market presence. The funding round was led by the existing investor 4DX Ventures and the Dubai Future District Fund.

Rise in Entrepreneurship to Lead to Market Growth

In the year 2023-2024, UAE ranked globally in first position for three consecutive years as per the newly released Global Entrepreneurship Monitor report, beating many advanced economies. The UAE was deemed to be the best global destination for starting new business ventures, operating them with a score of 7.7; this is the highest that has ever been recorded according to the history of the report. With the introduction of the UAE's Golden Visa, which helps the entrepreneurs secure their long-term future, the country gained a competitive advantage. The UAE government issued a new business entrance visa. This attracts entrepreneurs and investors interested in learning more about the country's business and investment opportunities.

For instance, Abu Dhabi was ranked this June 2024 as the fastest-growing emerging ecosystem in Middle East and North Africa. It has experienced a 28 percent growth in ecosystem value in the 2024 Global Startup Ecosystem Report by Startup Genome and the Global Entrepreneurship Network. Moreover, it included the Golden Visa and Abu Dhabi's strategic location as one of the reasons a startup should move into the ecosystem.

Regulatory Environment to Aid Market Growth

Indeed, during three consecutive years, the United Arab Emirates ranked first globally in the Global Entrepreneurship Monitor, GEM, report for the period 2023-2024 and outran so many advanced economies. The United Arab Emirates was ranked the best global destination for starting and running new business projects, as it scored the highest score ever in the history of the report, 7.7 points. In addition, with the Golden Visa, the UAE was able to manage the competitive advantage of winning these entrepreneurs for the long-term future. The UAE government introduces a new business entrance visa. This appeal attracts various entrepreneurs and investors who show interest in exploring avenues of businesses and investments within the nation.

In June 2024, it was ranked as the fastest-growing emerging ecosystem in the Middle East and North Africa, with an outstanding growth in value within its ecosystem of 28 percent. According to 2024 GSER, which Startup Genome releases together with the Global Entrepreneurship Network, Abu Dhabi has been trumpeted for its Golden Visa and its strategic location, which have drawn startups to set up base within its ecosystem.

For instance, till June 2024, more than 2600 fintech companies have been registered in UAE, which has 9 regulatory sandboxes and RegLabs, 5 regional investment funds, and 4 government fintech accelerators.

Rise in Technological Innovations to Drive Market Growth

The need to promote innovation while protecting consumers led the United Arab Emirates to develop a progressive regulatory approach for fintech. In promoting the growth of fintech firms, the government has taken steps to adopt numerous initiatives and regulations.

These include the UAE Central Bank's Sandbox programs, which give a chance for fintech startups to test their innovative products and services in a controlled regulatory environment that encourages experimentation with reduced regulatory barriers. The UAE Securities and Commodities Authority has also introduced licenses specifically for fintech companies, giving them a different regulatory regime with increased investor confidence, among others. Strict data protection laws have been implemented to safeguard financial information during these digital times. The UAE may have few listed certification and regulation agencies, such as ADGM, DFSA, CISI, that support startups and SMEs with regard to regulatory matters. The over-regulatory environment of the UAE facilitates innovation and truly supports the road map for growth in this industry. Therefore, the UAE is a very good destination for FinTech companies.

Cloud Segment to Dominate the Market Share as the Mode of Deployment

A set of key advantages places cloud computing on a path to be the dominant deployment mode in the UAE's fintech market. This is because scalability and flexibility allow fintech companies to easily scale resources up or down depending on demand. Cost efficiency entails no large upfront investments, since a pay-per-use model is implemented. In addition, cloud providers deploy comprehensive security measures and compliance certifications to protect sensitive financial information. This rapid deployment of new services encourages innovation, and integration with advanced technologies such as AI, ML, and big data analytics is supported by cloud platforms. Secondly, the reliable options for disaster recovery and business continuity availed by cloud services are extremely crucial for operational stability in financial services. All of these advantages make cloud computing a very attractive option among the fintech companies of UAE. Also, while on-premises solutions offer so much more in customization and control, the cloud does suffer from scalability challenges, substantial upfront expenses, and agility in comparison with cloud alternatives.

Dubai Dominates Fintech Market Share

Dubai now leads the charge in UAE fintech activity, hosting the largest number of fintech startups and retaining its position as one of the key global financial innovation hubs in the MENA region. The city has an enabling infrastructure, a supportive regulatory environment, and a strategic location that attracts both domestic and international fintech companies. Abu Dhabi is also quite relevant, especially in view of the inclusion of the Abu Dhabi Global Market-ADGM, which lately became the new essential focal point in fintech. Various initiatives, coupled with regulatory frameworks, make ADGM an ideal environment for fintech startups. Put together, both regions are thrusting the wheel of growth and development in UAE's fintech sector.

For instance, in 2022, DIFC, Dubai International Finance Centre, has recorded phenomenal growth in the number of FinTech and innovative firms. In partnership with introducing the India-UAE Startup Corridor with the Federation of Indian Chambers of Commerce & Industry-LEAD, DIFC aims to identify, support, and scale ten unique fintech startups residing in India and the UAE to Unicorn status by 2025.

Future Market Scenario (2024 – 2031F)

Innovations in blockchain, open banking, and artificial intelligence (AI) will continue to shape the fintech landscape.

The government of UAE shall continue to support the development of fintech by implementing projects including regulatory sandboxes, funding programs, and fintech clusters. Such an initiative will further attract innovative developers and local and international fintech companies.

The UAE fintech market will have a high focus on financial inclusion, aimed at reaching out to the financial services for the underprivileged sections with utmost ease. This includes banking solutions to be provided for low-income workers and small businesses.

The evolving regulatory environment that will affect the fintech industry in many ways requires organizations to reassess compliance requirements and standards so as to achieve sustainable growth.

Key Players Landscape and Outlook

The research focuses on top competitors in the UAE fintech market. The fintech market in UAE is notably fragmented, with numerous global businesses investing substantial amounts into this sector. Many companies are competing for a limited market share within the UAE's fintech landscape. As organizations adopt new technologies and FinTech platforms, they are encountering increased competition. The market is being driven by government moves towards startups growth, technological advancements, local reach, and other considerations.

In June 2024, Tumodo Travel Services Ltd has joined forces with Saudi Arabia’s fintech, Tabby Technologies LLC to accelerate growth in UAE travel industry. Integration of Tumodo's services into Tabby’s travel management will enable Tabby’s HR team to easily plan and manage business trips.

In December 2023, Qashio, a FinTech company providing financial tools, Corporate Cards, and Expense Management solutions, launched Qashio Insurance in partnership with YallaCompare. The branded health insurance product is a cost-effective solution with a simplified and automated digital declaration process, which takes less than a minute to process.