Fintech to drive growth in UAE by 2020
It’s the dawn of a new era in the United Arab Emirates’ FinTech industry as the government and the regulatory body start to look deeper into the effects of the sector on the country’s economy. The FinTech industry is prime for more interesting deals with startups starting to spring up and investors looking to capitalise on the opportunities in the country.
The UAE houses one-third of the startups in the Middle East and North Africa (MENA) region. In the last decade, the amount raised by FinTech startups was close to $100M going by the State of FinTech report. It is projected that the amount of investment in the region’s FinTech sector will increase two-fold by 2020. Adding to that, the number of registered FinTech startups jumped from 43 in 2013 to 105 in 2015, and it is expected to increase to 250 by 2020.
The industry players are predicting an exciting time for the FinTech industry with the growing markets demonstrating that it is has a very vibrant and rewarding atmosphere for growth and investment.
The Numbers Behind the Growth
Going by the Q3 Mena Venture Investment Report, the startup network in the MENA region is rapidly expanding accounting for $517M of investment from 354 deals in 2019 to date. That is a 30% increase from 2018 over the same period and an increase of 3% in the number of deals done over the same period. The report further highlighted the average deal size which stands at $2.5M, an all-time high if we remove outliers like Careem and Souq. The UAE is holding the top position for the total funding accounting for the largest share in the region standing at 62% in 2019 so far. Egypt is holding the top spot for the number of deals at 27% in 2019 so far.
Going by a report published by the Milken Institute Centre for Financial Markets, the UAE turns out to be a key beneficiary of most of the venture capital investment coming into the MENA region with FinTech sector one of the major areas of investment for investors. Startups in the FinTech industry in the UAE are well poised to gain entry into a growing market in South Asia, Africa, and the Middle East. That is a region with 3 billion people and an $8T market to tap into, of which about 70% lack access or have little access to inclusive financial services.
The Q3 Mena Venture Investment Report has shown that the MENA region has experienced a continued expansion of venture funding of startups in the MENA region, and the trend is set to continue as there are signs that the startup ecosystem is maturing well putting it in good shape for the year 2020.