FinTech investments growing across ME region
Recent research has shown that FinTech investment have grown by 49 per cent in H1 2021 year-on-year
FinTech investments have been steadily growing across the UAE and Middle East region, enhancing the digital experience, experts have said.
Ramzi Khleif, general manager of StashAway MENA, DFSA’s first digital wealth manager, explained that the FinTech space in the UAE has grown exponentially over the past couple of years. Today, the UAE is ranked as the number one FinTech ecosystem in the Mena region, due to its agility, forward looking vision, and low barriers to entry.
“The rise of FinTechs in the UAE has made it possible for financial institutions such as banks, but also startups to offer digital services that are tailored to the needs of each customer,” he explained. “That being said, and with this sector growing and competition becoming more aggressive, customers now have a lot of options to choose from that will enhance their digital experience. Incubators like the Innovation Hub in DIFC and Hub 71 in ADGM, are doing a great job in helping fintechs and startups grow their ideas.”
“Over the last couple of years, we saw FinTech incubators investing heavily in companies,” he added. “They have also made sure to welcome international players into their markets to promote globalization.”
According to Fintech News, the UAE is home to around 46 per cent of FinTechs in the Mena region and this number is expected to increase. Recent research reports by Fintech Middle East also show that FinTech investment have grown by 49 per cent in H1 2021 year on year.
“New companies are being created across all aspects of fintech, banking, wealth management, insurance, and crypto, with all of them having one main point in common, which is to provide the best customer experience,” said Khleif.
He noted that other than the VC regular investment, The Innovation Hub in DIFC is helping startups grow by allocating around $100 million to their FinTech fund accelerator program. On the other hand, ADGM hosts their annual FinTech Abu Dhabi event that seeks to promote multiple startups and FinTechs in order for them to raise funds from the VCs.
Asked about what role FinTechs will play in wealth management in the UAE and the GCC region, he answered: “In the region, around 45 per cent of the total wealth is held in cash, a very high percentage by any standard. This goes to show that there is a huge amount of money sitting idly and not generating any returns for investors. There was a huge gap in the market for locally available platforms to help facilitate investing cash easily and effectively, without having to look to international platforms, which can result in higher fees.”
StashAway recently raised more than $61.4 million over six funding rounds from leading VC firms, such as Sequoia Capital India and Eight Roads Ventures. On the wealth-tech front, StashAway has invested heavily in offering customers new products to diversify their investments and stay on track to achieve financial freedom. With the launch of their new product, Thematic Portfolios, customers will have the ability to invest in what they believe could transform the world.
The portfolios feature ETFs from some of the world’s top fund managers, including ARK Invest, iShares, Global X, and VanEck. Since 2018, the amount of assets in thematic funds globally have grown at an annual rate of 37 per cent. In 2020 alone, assets in thematic funds grew by 77 per cent. Not only are thematic investments growing in popularity, but they are also eclipsing traditional equity sectors.
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