FinTech growth ‘helps DIFC outpace’ Dubai’s economic expansion

The FinTech sector has emerged as a major contributor to Dubai International Financial Centre’s growth and has helped the financial center outpace the emirate’s economic expansion in recent years, the Governor of the DIFC has said.

DIFC, one of the top financial centers in the Middle East, Africa and South Asia region, has become a “main engine of growth” for Dubai’s economy and a significant contributor to the gross domestic product, Essa Kazim told delegates at the FinTech Summit on Monday.

The financial center has grown five times faster than the emirate’s average gross domestic product growth over the past 10 years, contributing around 6 percent to GDP, Kazim said in his keynote address in Dubai.

“A key growth driver in the last three years has been FinTech and innovation companies, which have contributed over 27 per cent to the centre’s overall customer growth.”

The strong growth of the emirate’s FinTech industry is in line with Dubai’s Economic Agenda D33, which aims to double the size of Dubai’s economy, with financial, trade and investment targets of DH 32 trillion ($8.71 trillion) during the the next decade.

The overall growth roadmap also aims to propel the emirate into the world’s top four financial centres.

Dubai’s economy grew by 4.6 percent year-on-year in the first nine months of 2022, according to the emirate’s statistics center.

Emirates NBD estimates Dubai’s full-year growth for 2022 at 5 percent and expects GDP to grow by 3.5 percent in 2023.

DIFC grew at a record pace last year, with the number of active registered companies climbing by 20 per cent while the financial centre’s annual turnover passed Dh1 billion for the first time.

The number of active registered companies in DIFC rose to 4,377, almost doubling from the pre-coronavirus 2019 level of 2,431.

New companies registered in DIFC last year passed 1,000 for the first time since its inception.

FinTech and innovation was the fastest growing sector in the DIFC last year, with the total number of companies in the sector growing 36 per cent to 686.

Kazim attributed the rapid growth of the FinTech industry to the “proactive approach taken by policy makers”.

Public entities are mandated to provide the right ecosystem to enable innovation, testing, investment and growth, which is why DIFC has invested heavily in its FinTech ecosystem, he said.

With demand for digital payments and other FinTech services continuing to grow, DIFC FinTech and innovation companies raised more than $615 million in funding last year, Kazim said on Monday.

Since the outbreak of Covid-19, people have turned to online banking and other contactless technologies to transfer money and pay for e-commerce transactions, boosting the FinTech sector.

The industry is expected to double in size to around $270 billion in 2027, from more than $135 billion in 2021, in the wider Middle East, Africa and South Asia region, according to the DIFC FinTech Hive 2022 report.

Globally, digital payments are expected to grow to $8.26 trillion by 2024, from $4.4 trillion in 2020, according to Statista’s data.

DIFC will continue to invest heavily in its FinTech ecosystem by creating a “supportive and flexible regulatory framework, which provides access to funding, sandbox environments and resources for both start-ups and established companies”, Kazim said.

“As we move towards an increasingly digitally connected world, FinTech is destined to play a significant role in shaping the financial landscape and Dubai is well positioned to lead the way in this exciting and dynamic sector,” he said.

Updated: May 8, 2023, 10:43 am