Fintech
$3.3 billion in venture capital funding fuels growth for DIFC FinTech companies
Financial technology companies of Dubai International Financial Centre have raised a total of $3.3 billion in venture funding, with growth in line with the objective of the onshore financial hub of doubling his contribution to the emirate’s economy, the DIFC governor said.
FinTech was the fastest growing sector for the DIFC last year, with Dubai’s location allowing FinTech companies “unprecedented access” to a market of more than three billion people with an aggregate GDP of more than 12 trillion of dollars. Essa Kazim he said at the Dubai FinTech Summit on Monday.
“We saw unprecedented growth in 2023, with FinTech and innovation as the fastest growing sector with 902 companies registered, a 31% increase from the previous year,” Kazim said.
The total number has since grown to more than 1,000 companies DIFCone of the major financial centers in the Middle East, Africa and South Asia region.
“This accelerated growth trajectory is perfectly aligned with the objectives of the Dubai Economic Agenda D33,” he said.
Launched in January, D33 aims to double the size of Dubai’s economywith the aim of reaching Dh32 trillion by 2033.
Sheikh Maktoum bin Mohammed, Deputy Prime Minister of Finance and Economic Affairs and First Deputy Ruler of Dubai, at the Dubai FinTech Summit. Chris Whiteoak / The National
The economic agenda it also aims to make Dubai a global digital economy leader, the fastest growing and most attractive global business center, a hub for sustainability and economic diversification, as well as an incubator for talented citizens and unicorns.
The DIFC has expanded five times faster than the emirate’s average GDP growth over the past 10 years, contributing around 6% of its GDP as of last year.
It aims to double its contribution to Dubai’s economy by 2030 and is targeting sectors such as asset and wealth management, as well as financial technology, to help it achieve its end-of-the-decade goals.
Last year, 316 FinTech companies established a presence at the DIFC, while the number of asset management and asset management companies grew to 350, pushing the number of total active companies to 5,523 employing more than 41,500 people.
Dubai has experienced a surge in FinTech investment in recent years, with total FinTech funding reaching $2.3 billion in 2023 alone, according to Magnitt data.
Global investment in FinTech companies also crossed the $100 billion mark in 2023, an annual increase of 50%, which underlies “strong investor interest in FinTech innovations,” Kazim said, citing data by CB Insights.
The rapid growth of FinTech is also pushing global asset managers and exchange operators to develop their own products and technology offerings to remain relevant amid increasing competition from FinTech companies at all levels.
“If we look at the growth trajectory of our business, we already generate more revenue on elements of our business outside of our exchanges … compared to our exchange businesses,” said Adena Friedman, Nasdaq’s chief executive.
“Over the next 10 years we will likely become more of a financial technology provider than an exchange operator, although both roles are equally crucial to our strategy.”
Having exchange operations creates the foundation and allows Nasdaq to grow and expand and “everything we do is interconnected,” he added.
For asset managers, it is also important to evolve alongside the way their clients consume information and make investments in a rapidly evolving technological landscape.
“Our customers have changed over decades and years and will continue to change, and Julius Baer must continue to be part of this change. In terms of our customers, what we see these days [changing] it’s obviously information,” said Nic Dreckmann, chief executive of Swiss private bank Julius Baer.
“I think we always have to look to expand, we have to look at what our value proposition is.”
Updated: May 06, 2024, 12:28 pm