Abu Dhabi’s fintech opportunity

From automated compliance to cross border payments, AI-driven trading algorithms and the brave new world of blockchain and digital currencies, Fintech is transforming how the world does business.

One of the less recognised aspects of how Fintech is shaking up the old order is how the rise of Fintech hubs is shifting the axis from traditional finance players.

According to a report issued in 2020 by Findexable, eight of the world’s 20 most important financial centres do not feature in the world‘s 20 biggest fintech hubs. And, of the world’s top 100 leading Fintech cities, almost half are in emerging markets.

The UAE – represented by Abu Dhabi and Dubai as financial centres – may only now be appearing on the global industry’s radar as emerging Fintech hubs, but the ambition of both cities cannot be discounted.

Abu Dhabi, in particular, has made Fintech a priority, in terms of supporting and implementing Fintech solutions to create efficiencies in the public and private sectors, and by establishing a holistic Fintech ecosystem where start-ups and established players alike can thrive and prosper.

The growth potential for the cities that establish themselves as Fintech hubs is huge: the global Fintech market is anticipated to grow around 20 per cent a year over the next five years, and reach the market value of around $305 billion by 2025.

Not only that, the World Economic Forum estimates that 60 percent of global GDP will be digitalised by 2022, with growth in every industry driven by digitally enhanced offerings.

As it makes its play in the space, Abu Dhabi has significant advantages over more established Fintech counterparts.

Its strategic location and advanced infrastructure make it an ideal base for companies targeting emerging markets in Africa and Asia, where mobile payments and tech-enabled microfinance solutions are bringing financial services to hundreds of millions of previously unbanked people, as well as supporting sophisticated new businesses.

And, for both established and start-up Fintech players looking at opportunities in these exciting new markets, Abu Dhabi Global Market, the emirate’s international financial and business hub, is transforming what it means to be the playground for digital innovation, not just for the Middle East, but for the world.

ADGM is uniquely placed for a number of reasons, but chiefly because it provides an independent, well-governed jurisdiction based on the internationally recognised English Common Law, with a track record in supporting global transactions for enterprises that want to do business from and with the region.

Another key proposition for ADGM is in how it champions innovation. Going way beyond soundbites, ADGM has demonstrated its commitment to new thinking by embracing digital-first offerings and sustainable finance frameworks, including several regional and world firsts.

These include the Digital Lab, a virtual environment hosted by ADGM enabling collaboration between financial institutions and Fintech innovators to test pioneering technology that can transform the financial services sector; the first comprehensive digital assets regulatory framework and the digital banking licensing regime in the Middle East and North Africa region; and the world’s first fully digital courtroom that enables seamless resolution of dispute cases – from filing, to hearing and ruling – in a completely digital mode.

ADGM also leads three of the regional financial sector’s most prominent events: the recently concluded FinTech Abu Dhabi Festival, Abu Dhabi Sustainable Finance Forum and Salt Abu Dhabi, which between them welcome tens of thousands of visitors, exhibitors, and partners from around the world each year.

Abu Dhabi has made FinTech a priority, in terms of supporting and implementing Fintech solutions to create efficiencies in the public and private sectors

Regardless of an enterprise’s size, geographic focus or economic sector, ADGM is working to ensure that tailor-made licences, registration packages and support are available to fit every need, promoting investor choice and ensuring marketplace liquidity across all horizontals and verticals.

For tech founders in particular, ADGM provides several end-to-end entrepreneurship offerings, including its tech start-up license, which is designed in collaboration with strategic partners to deliver a one stop shop solution for innovative companies.

Fully backed by the government of Abu Dhabi, another advantage of ADGM is its built-in resilience to political and economic storms, and volatility in global markets.

When the Covid-19 pandemic hit, for example, ADGM worked with the government of Abu Dhabi to swiftly implement measures to mitigate the impact on its operations and safeguard the continuity, stability and continued growth of its business community.

ADGM, and Abu Dhabi’s leaders, are aware that the FinTech space is going to remain highly competitive for many years to come and even with the strong foundations now in place, there is still a lot to do in our commitment to establish Abu Dhabi in the top tier of global Fintech hubs.

But the emirate’s track record in setting out and achieving ambitious targets and supporting the key industries that help it diversify its economy away from hydrocarbons surely make it one of the key emerging Fintech player to watch over the next few years.

Juma Al Hameli is the senior executive director of Strategy & Business Development at Abu Dhabi Global Market