FinTech Hive at DIFC has received over 100 applications from more than 32 countries for its inaugural programme.

The Dubai International Financial Centre (DIFC) is playing an integral role in establishing Dubai as a financial technology (FinTech) hub in the Middle East, Africa and South Asia (Measa) as it believes in the development of financial technology that has immense potential to change the face of the economies in the region, its senior official says.

Raja Al Mazrouei, acting executive vice-president for FinTech Hive at DIFC, said the UAE sits at the heart of the Measa region, with a combined GDP of $7.4 trillion (Dh27.2 trillion) with 70 per cent of its population remaining unbanked with no access to financial services.

In the context of a 22 per cent exponential growth in the FinTech market and with more than $23.2 billion invested in global FinTech deals in 2016, she said the region has no other option but to develop financial technology to boost their economies.

"With Dubai set to become the region's first smart city, driven by the UAE Innovation Strategy and Dubai 2021 Plan, progression towards FinTech is a promising transition," Al Mazrouei told Khaleej Times in an interview on Thursday.

Referring to a recent research report by Wamda, she said FinTech startups have become more prevalent in 12 Arab countries, yet three in four startups are based in the UAE, Lebanon, Jordan or Egypt. The UAE is the most dynamic hub with a four-year compound aggregate growth rate of almost 60 per cent, with payments being the most popular sector, accounting for half of all Mena-based FinTech startups.

"Egypt used to host more than a quarter of Mena FinTech startups, however this position is now held by the UAE. The FinTech SME successes are yet to be comprehensively monitored; however, we expect the amount of investment to be bolstered significantly with the launch of initiatives such as FinTech Hive at DIFC," Al Mazrouei said.

A complete ecosystem

FinTech Hive, the region's first FinTech accelerator at the DIFC, will provide a complete ecosystem to financial technology firms to collaborate with partners and investors, while developing products that provide solutions to the Measa region's financial services industry. Launched in 2017, the programme will allow successful startups the chance to better tailor their products or services under arranged mentorship by senior executives of regional and international financial institutions.

Not only will FinTech Hive at DIFC offer access to industry leading mentors and potential funders; it will provide participants with a dedicated workspace in the centre for the duration of the programme, while helping to facilitate visa and licences requirements, as well as favourable accommodation rates. Beyond the accelerator programme, FinTech Hive at DIFC has a number of initiatives in the pipeline which will link the broader FinTech startup community to leading financial services firms.

"We are founding members of the Global Blockchain Council that is developing new standards and platforms for financial technologies internationally, and are looking at trialing the first global digital wills as part of this. Furthermore, the regulatory reforms being developed by the Dubai Financial Services Authority [DFSA] are key to creating an environment where FinTech can flourish," she said.

The DFSA is developing specific regulations to meet the requirements of FinTech firms.

In addition to the regulation around crowdfunding, the DFSA also recently launched an Innovation Testing Licence that will allow qualifying FinTech firms to develop and test innovative concepts from within the DIFC, without being subject to all the regulatory requirements that normally apply to regulated firms.

Tremendous response

FinTech Hive at DIFC has received over 100 applications from more than 32 countries for its inaugural programme. The majority of applications have come from the UAE, the UK, the US, India, Nigeria and Singapore, and cover a range of concepts, including big data and analytics, blockchain, payments, P2P and crowdfunding, roboadvisors and mobility.

"We are incredibly pleased with the response we have seen, and receiving over 100 applications for the first cycle of the accelerator programme is a testament to the need and demand for a platform that can support the growth of FinTechs in the region," Al Mazrouei said.

"The geographical diversity of applications was especially encouraging, as the majority of applicants came from the UAE, US, UK, India, Nigeria and Singapore, demonstrating how innovation is being stimulated in the Measa region that the DIFC serves as the gateway to," she said.

Furthermore, she added that the applicants focused on a broad range of sub-sectors, such as big data and analytics, blockchain, roboadvisory and mobility - all of which cover all aspects of FinTech. To a question about the programme's success, she said: "With a vibrant financial services community of over 1,600 firms, including a well-established cluster of FinTech firms, we are well-placed to achieve our ambition of being positioned on par with other global FinTech hubs."

"Our focus for now is to continuously build this ecosystem by creating a regulatory and physical environment where innovators can engage with leading financial services players in order to develop and adapt their products to meet the needs of the region. We are very confident that the accelerator programme, in addition other aspects of FinTech Hive at DIFC, will deliver on this."

On the progress on another DIFC initiative - a crowdfunding platform - she said the response is very much positive and indicated the growth potential in the sector.

"In November last year, the DIFC became home to Eureeca.com - the first innovative equity crowdfunding platform in the region - and in March, we welcomed Beehive - the first peer-to-peer lending platform to receive a licence from the DFSA - to the community."

"The response has been very positive and has demonstrated how the DIFC's dynamic regulatory framework is constantly adapting to create an environment that is conducive to innovation. The DFSA is continuously working to enhance regulation around the sustainable development of crowdfunding, and this is certainly space we expect to grow significantly in the next few years," Al Mazrouei concluded.

Source: Khaleej Times