The Fintech Boom in UAE Banking
How Fintech brings Innovation in UAE’s Business Banking
Technological evolution has significantly changed the UAE's economic sector. Now, the UAE has become a global leader in leveraging financial technology. Consequently business, banking, and other financial sectors have gained seamless experience. Government initiatives and venture capital investments are the main driving force behind this. Some leading companies like Sarwa, YAP, Tabby, and BitOasis are offering digitalized banking facilities, payments, wealth management, and crypto in the UAE. Therefore, we will observe a considerable change in banking and businesses through this Fintech Boom. In this article, we will be discussing the strategies and prospects of Fintech technology in the UAE.
Definition of Fintech
Fintech: The term Fintech is the short form of Financial Technology. This refers to the use of technology to automate financial services. Fintech is the accumulation of many different innovations and technologies becoming the major driving force in the financial industries in recent years. Technologies like digital payment systems, and blockchain-based solutions are all under fintech technology. Fintech has changed the financial industries and the behavior of people. Consequently, banks and many other financial institutions are reshaping their operations and getting seamless experience.
Fintech Company: A fintech company is a company that provides financial services that are technology-based. Fintech technology often can change the behavior of clients through digitalization. This allows the inclusion of clients, expands access to financial products, lowers fees, and offers speedy services.
Fintech's Working Procedure: There are different fintech apps thay provides safe operation of financial data. Some apps allow users track investments across omni platforms. Moreover, these apps create suggestions for users to check out the financial conditions. Some apps allow users to do trade stocks and crypto-currencies.
Types of plumbing necessary to make Fintech apps operate-
APIs- application program interfaces connect consumers’ bank accounts to fintech apps to share financial data, transfer funds, and verify their identities.
Mobile Applications- Fintech companies offer a mobile app to the users to access their funds and insights at any moment. It can be a digital banking app, financial management tool, or an investment platform, mobile apps are essential parts of fintech.
Web-based solutions- Some fintechs also offer a web-based solution where users can log in via a web browser and perform the same functionality as the mobile app.
Innovations of Fintech
The UAE's financial sector has seen an enormous change through the digital payment system. These include QR code scanning and the use of a digital wallet. Therefore, the digital payment system has simplified the way we used to pay for goods and services.
Crypto and Blockchain technology have another impactful strategy of digitalization. The decentralized service is ensuring recorded, safe and verified transactions.
The Fintech technology eases the loan borrowing systems. Advanced algorithms and big data analysis enable fintech lenders to access creditworthiness more efficiently. This service is faster than any other previous service.
Mobile banking services and digital wallets are enabling customers to save, invest, and finance planning forthe future more effectively and also adding those who were not at all included in the banking sector previously.
The UAE's digital payment sector is flourishing. In 2023, the digital transaction value was $27 billion. Consequently, this growth will create more job facilities regarding this in the UAE.
UAE as Global Fintech Hub
- Government Initiatives for Fintech Growth
The UAE government is aiming to transform the region into a global Fintech Hub with many initiatives. Some of these initiatives are- Fintech Hive in Dubai and the UAE Central Bank's Digital Transformation Agenda. These initiatives facilitate startups with the essential frameworks, assistance, and funding, especially for Fintech businesses. Moreover, the government took initiatives like Smart Dubai and UAE Blockchain Strategy 2021 are digitalizing the activities of public and private services.
Flourishing Fintech Investment
In the UAE
venture capital investment in fintech is increasing year by year. Many large investors have shown interest in investing in the region such as Sequoia Capital, Accel, and Softbank. Many sectors have flourished through this development like Digital Banking, Blockchain, Payments, and Insurtech.
Access to International Markets
The UAE's fintech revolution is aiming to facilitate global expansion. In UAE, one can leverage global Digital banking solution to expand the business. UAE has cross border transactions using advanced digital infrastructure.
Fintech Startups in UAE
Some Fintech Startups are discussed below:
Sarwa is a fintech startup they provides AI-powered wealth management services with a robo-advisory platform. They help customers to invest in international markets using data science and algorithms.
YAP is another digital banking platform in the UAE. They provide personal finance management, savings accounts, and express tracking through digital platforms. Ras AI Khaimah Bank (RAKBANK) is a partner of YAP and they work together to offer comprehensive banking services to clients.
Tabby is another digital solution sector whose strategy is Buy Now, Pay Later (BNPL) allowing people to purchase in installments.
Mamo Pay is another installment payment digital solution. This platform offers instant peer-to-peer money transfer and payment services in the UAE.
The UAE's leading crypto-currency exchange platform is BitOasis. This platform operates within ADGM's Fintech Sandbox to maintain regulatory standards.
UAE Fintech Funding
The UAE's fintech sector is facilitated by Government-Backed Programs and Venture Capital Firms. Moreover, new businesses are getting investment from global investors as well as locals. Venture capital firms are investing in Sequoia Capital, Accel, Wamda Capital, and 500 startups. These startups are scaling rapidly, developing new technologies, and expanding through investments. Furthermore, the UAE government is playing a vital role in fintech startups. They introduced many mentionable programs such as DIFC FinTech Hive, Abu Dhabi Fintech Lab, and Hub71. Again, Mubadala Investment Company is a government-backed fund that provides startups necessary capital to grow.
Traditional Banking and Fintech
For many years traditional banking has been the main factor behind every financial activity. Moreover, traditional banks help people with many queries like personal loans, business financing, loans for residents, and many more. Now, the revolutionary Fintech Technology has changed the thought of approaching economic and financial activities. The Fintech technology includes a bunch of innovative solutions that enhance and streamline financial activities. As a result, digital platforms, mobile apps, and AI-driven algorithms are reshaping the way people behave in financial activities.
Key Challenges in the Fintech Ecosystem in the UAE
The UAE is utilizing a digital banking strategy but still, some of 40% SME's are facing problems due to strict compliance and high transaction rates
The UAE businesses faced over 20 million cyber crimes and attacks in 2023. So, building strong cyber security and digital trust is a crying need in this sector.
Though UAE is a global trade hub still sometimes international payment processes face regulatory issues, delay and high rates.
Future Prospects
The UAE is becoming cashless by 2030. They realized that is a necessity in this era. As the fintech ecosystem grows, so if anyone wants to establish business he needs to frame their business in digital technology as the UAE provides enormous opportunities for Fintech companies.
Conclusion
The revolutionary field of fintech is transforming the business banking in the UAE. Consequently, the finance management is being smarter, faster and accessible. UAE’s USD 3.56 billion Fintech Market is expected to increase USD 6.43 billion by 2030. So, its a sector of huge opportunities for redefining the business sectors. AI powered financial tools and digital transactions demand is getting increased as this streamline the whole processes. So, in this fast growing competitive market of UAE Fintech will add more speed in future following the current trend.
This is for all business owners, financial consultants, brokers, entrepreneurs, legal consultants, or individuals seeking to finance their business or start a new company. Seek professional help, by reaching out to the contact below, you can get in touch with the author of this blog: WASIQ SUHAIL.
Contact: +971505053319
Email: abz.wasiq@gmail.com
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