Fintech 2023 – On Law & Practice, Trends & Developments in the UAE

Chambers and Partners published a great report. Extract from the introduction of the report on the Evolution of the Fintech Market

“The United Arab Emirates (UAE) has taken even greater steps since the COVID-19 pandemic to become not just a regional, but also a global, financial services hub. Fintech has been an important aspect of this. There has been sig-nificant investment in fintech start-ups in recent years and according to statistics issued by Fintech News, in the first half of 2022, investment in fintech start-ups accounted for 34% of the total capital invested in start-ups in the UAE.

The growth in the UAE’s fintech space has largely been driven by initiatives from the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM), the UAE’s two financial free zones. Both the DIFC and ADGM serve as hubs for innovative fintechs looking to establish a Middle Eastern base. Both the ADGM and DIFC have set up their own fintech hubs, the ADGM Regulation Lab (the “RegLab”) and DIFC Innovation Hub. The ADGM RegLab and DIFC Innovation Hubs are key accelerators for up-and-coming fintechs and support start-ups across the fintech spectrum, from open banking and payment services, to regtech, insurtech and wealthtech. The ADGM RegLab and DIFC Inno-vation Hub give fintechs access to an extensive network of investors, marketing and PR expo-sure, bespoke regulatory frameworks and regu-latory sandbox schemes, as well as networking events. In the words of the DIFC Innovation Hub, its objective is to “raise unicorns”.

The success of the UAE’s fintech market can also be attributed to the responsiveness of the UAE’s regulatory authorities to market develop-ments. This is demonstrated through, for example, the issuance of Dubai’s law regulating virtual assets (DVAL) and the establishment of a virtual assets regulatory authority (VARA), dedicated to governing virtual asset-related activities in the emirate of Dubai (excluding the DIFC).

It is expected that these regulatory reforms will continue in 2023 and for the next few years. From a market perspective, a focus on developing ESG and climate finance initiatives is expected ahead of COP28 (to be hosted by the UAE at the end of 2023) and further growth in open banking, digital and instant payments, as well as buy-now-pay-later is also predicted by many. The global market slow-down evident in Europe and the US has not really hit the Middle East and North Africa (MENA) region as at the date of writing in March 2023; as such, it remains to be seen what impact this may (or may not) have on the UAE’s fintech sector. Indeed, given the windfall revenue being generated through increased global oil and gas prices and the appetite of the region’s sovereign wealth funds and government-related entities to invest, the outlook for 2023 remains positive.”

Contact us for a copy of the report.

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