Digitisation of financial services has made it easier and safer for millions of people around the world to receive and make payments for goods and services, send money to families, and conduct business with greater privacy and security. It has created opportunities to build a more inclusive society and promote economic development.
Globally we have seen an acceleration in the adoption of FinTech during the COVID-19 pandemic. Despite severe lockdown measures in most countries, FinTech firms reported fair growth under the difficult circumstances[1], serving women, lower-income families, and small and medium businesses that faced harsh setbacks, to access finances during those difficult times.
FinTech-enabled business models and products can be an enabler for economies to become more resilient, promoting key macroeconomic policy objectives, such as economic stability, integrity, inclusion, innovation, consumer and investor protection, and data privacy.
FinTech’s greatest winning power is that it has the potential to reduce costs, while increasing speed and accessibility. It offers a more tailored and personalised approach, rather than a one size fits all financial solution, ticking the boxes of access, usage and quality that are important for financial inclusion.
According to the World Bank blog on FinTech and Financial Inclusion, in the last decade 1.2 billion people who did not earlier have access to any form of banking, gained access to financial services as a result of the increase in mobile money accounts, while the non-banking population fell by 35 per cent[2].
GCC, home to some of the wealthiest people in the world as well as millions of migrants who send most of their income back home, has diverse financial needs. This provides the opportunity for FinTech start-ups to develop different financial solutions and products, ranging from wealth management tools and migrant financial solutions to neo-banks and financing SMEs.
- https://www.weforum.org/agenda/2022/06/agility-resilience-and-impact-how-FinTech-charted-a-positive-course-through-the-global-pandemic
- https://blogs.worldbank.org/psd/FinTech-and-financial-inclusion
In 2022 DIFC-based FinTech and Innovation companies attracted over USD615 mn, with 291 new clients[3]. This level of growth is unprecedented and as a result of how we have revisited the depth of our FinTech and innovation offering, and relevance to our Strategy 2030.
What start-ups, growth stage firms and unicorns expect from us now, differs to what they needed when we were the region’s first FinTech Accelerator in 2018. We will continue to evolve our proposition, regulations and approach to licensing to keep attracting more firms and grow with those who are already with us.
Over time, supporting the FinTechs will contribute towards the success of the Dubai Economic Agenda D33 which aims to transform Dubai into one of the world’s top three cities for business.
The future drivers of this growth include leveraging the benefits of the metaverse, and technologies, such as crypto, blockchain, artificial intelligence, and machine learning. Financial inclusion improves economic growth and equity – two important macroeconomic objectives of every government.
With better financial products and services come greater flexibility, and the potential to narrow income inequalities, and close the gender gap.
However, this needs to be complemented with robust initiatives at the policy level with a stronger thrust on financial and digital literacy; standardisation of FinTech products and stronger regulations.
There also needs to be a global collaboration between countries that will help share knowledge and best practices to strengthen this sector.
Author: Arif Amiri, Chief Executive Officer at Dubai International Financial Centre (DIFC)
