Fintech Landscape of Abu Dhabi in 2022

Here in our latest spotlight on the United Arab Emirates (UAE), we venture into the capital’s most current economic development through the lens of fintech.

The emirate of Abu Dhabi is home to around three million people, with half of the population living in the capital of the same name.

There are a total of seven such Emirates (or states) located in the UAE, with Dubai, Sharjah and Ras al-Khaimah as neighboring examples.

The United Arab Emirates has the sixth largest crude oil reserves in the world (2020), with Abu Dhabi holding the largest share of the other six Emirates, with around 92.2 billion barrels of oil (2019).

Its vast oil reserves have transformed the economy of Abu Dhabi from a small fishing village to a prosperous and prosperous capital of the Emirate, home to $3 billion Emirates Palace (the world’s most expensive hotel ever built) and Sheikh Zayed Grand Mosqueone of the world’s largest mosques.

The neighboring countries in the Gulf have also experienced similar prosperity on the back of their oil reserves.

Abu Dhabi is also a regional hub, hosting the headquarters of the likes of The Arab Monetary Fund.

Just like the rest of Gulf Cooperation Council (GCC) nations – Saudi Arabia, Qatar, Oman, Kuwait and Bahrain – the UAE is implementing long-term economic development strategies aimed at diversifying its economy away from oil.

Attention is increasingly directed towards knowledge-intensive sectors such as technology and fintech.

In the case of Abu Dhabi, parallel to the wider UAE, the Emirate has Abu Dhabi 2030which addresses the Emirate and the city.

Financial services and fintech are becoming a growing priority for Abu Dhabi. Millions have been channeled into the start-up ecosystem in recent years via sovereign wealth funds (SWF) which Abu Dhabi Investment Authority (ADIA), which is one of the world’s largest SWFs with around $700 billion in assets.

This is clear with Abu Dhabi Global Market (ADGM), located on Abu Dhabi’s Maryah Island. ADGM is the city’s international financial center and free zone and has been the main catalyst in Abu Dhabi driving its fintech agenda, which contributes to overall economic development.

When we discuss the enormous growth of the city’s financial sector, Emmanuel Givanakismanaging director i Financial Services Regulatory Authority (FSRA), explains Abu Dhabi’s strengthened focus on key high-growth sectors.

These include “information and communication technologies, renewable energy, agritech, high-tech manufacturing and defense,” comments Givanakis.

This focus is accompanied by various initiatives that promote innovation in sustainable economic development.

“ADGM has emerged as a solid example of Abu Dhabi’s success stories, and a premier facilitator of international investment and business growth in Abu Dhabi and beyond,” he continues, noting the financial hub’s contribution to the sector.

To cement its position as the international financial center of choice, Givanakis explains how ADGM’s business ecosystem is built on three pillars.

These include a business-friendly registration facility that ensures flexibility in licensing for different businesses, state-of-the-art jurisdiction based on English common law and a reliable and innovative regulator that maintains the integrity and credibility of the financial centre.

“As part of efforts to support the digitization transformation of the financial services industry, the FSRA launched several enabling regulations and guidance that better support and guide the use of technology to deliver financial services and build a more inclusive financial sector,” adds Givanakis.

The FSRA remains in close contact with industry to ensure that its regulatory framework and approaches are fit for purpose.

“The FSRA has just implemented its regulatory framework for spot commodity and environmental instrument activities, making it the first international financial center in the MENA region to do so,” comments Givanakis.

“Another region-first inclusion in this framework highlights purpose-built offerings and listing rules relating to mining and petroleum companies.

“Taking a leaf from its innovative approach to virtual asset regulation, the FSRA recently released a Decentralized Finance (DeFi) Discussion Paper to actively engage industry stakeholders in developing a regulatory framework and creating the potential opportunities arising from DeFi. “

Givanakis explains how ADGM fully embraces the use of regulatory technology that not only monitors but also supports the financial industry’s compliance capabilities.

This, he says, lays the foundation for a robust and transparent center for sustainable finance.

“More importantly,” reiterates Givanakis, “it reinforces the International Finance Corporation’s institutional governance and oversight effectiveness, cementing and expanding Abu Dhabi’s footprint in the global financial industry.”

What have been key highlights in Abu Dhabi for 2022 with fintech?

Firstly, the Emirate has hosted various events, discussions and forums related to finance, fintech and wider digitalisation.

One that will put the spotlight on Abu Dhabi in the region is the planned one Abu Dhabi Finance Week which is organized by ADGM in November.

According to ADGM’s website, this event builds on the success of the flagship initiative Fintech Abu Dhabiwhich it has hosted since 2017.

Second, also located on Al Maryah Island, is Hub71which has also been a major catalyst for Abu Dhabi in promoting and expanding its tech ecosystem and was first launched back in 2019.

This year, in August, Hub71 selected its latest batch of tech startups, which includes fintechs as well as other sectors, from a large number of applications worldwide.

Participants will see them take part in a two-year program by Hub71 called Incentive programwhere they will benefit from equity-free incentives worth up to $136,124.80 (AED 500,000).

Thirdly, there have been various announcements, launches and innovations from the capital.

For example, Wio Banka digital banking platform regulated by The Central Bank of the UAE (CBUAE), officially launched in September with a focus on providing ‘state-of-the-art digital banking apps for customers’ and embedding financial services into digital businesses.

Commonly owned by Abu Dhabi Development Company (ADQ), Alpha Dhabi Holding, Etisalatone of the UAE’s major telecom companies and First Abu Dhabi Bank (FAB), one of the largest banks in the Middle East and Africa (MEA), Wio is built around three main functions: digital banking apps, embedded finance and banking-as-a-service (BaaS) solutions.

This, according to them, is the first platform bank in the region and is on par with the UAE Digital economy strategywhich aims to double the contribution of the digital economy to the country’s gross domestic product (GDP) over the next decade.

It aims to strengthen the position of the UAE as a hub for the digital economy in the region and globally.

The ecosystem that serves fintech – from the fintechs themselves to other direct and indirect enablers – has also grown in number.

Fintechs headquartered and/or founded in Abu Dhabi include the likes of the trading platform MidChains and the wealth technology company Finamaze; to mention some.

The capital is also home to various accelerators such as Plug & Playand also grow and advance the broader tech and fintech ecosystem as VCs and mentors.

No doubt I expect more to come out of Abu Dhabi as it implements its wider economic development agenda; fintech will play a role in that.