Global Fintech Ecosystem Report 2020
Transforming Abu Dhabi Through Fintech
With 80 percent of the world’s population just an eight-hour flight away, Abu Dhabi has long been a center for global finance and trade. Now the government and local partners are working to turn the city into a fintech hub as well. And the effects of the Covid-19 pandemic are only accelerating their efforts.
As Richard Teng of Abu Dhabi Global Markets (ADGM) explained to Startup Genome, Abu Dhabi’s efforts to develop into a fintech hub are built on two pillars. The first is regulatory innovation. The UAE capital was the first ecosystem in the region to embrace fintech, setting up a regulatory sandbox in 2016 to work closely with founders to understand risks, support innovation and facilitate partnerships.
Now, just four years later, Abu Dhabi has gained the confidence to tailor regulations to the needs of the ecosystem, understand new business models, and devote resources in a targeted and effective way.
The second pillar of Abu Dhabi’s growing success as a fintech hub is its system-wide vision. Rather than piecemeal actions, key organizations such as the Abu Dhabi Investment Office, Abu Dhabi Holdings (ADQ), Mubadala and Hub71, together with local authorities, are taking a holistic approach to supporting the ecosystem, offering access to capital, market and talent through streamlined visa procedures, affordable work spaces, government funding and an investment office to connect innovators with investors. As a result, this year Adu Dhabi experienced the fastest pace of VC growth in the region. In addition, Plug and Play ADGM Tech Center and other accelerator programs help early-stage companies get off the ground and connect with corporate clients on open innovation challenges.
This broad vision for the ecosystem stretches beyond national borders. “We’re supporting not just our country, but MENA and the North African region as well,” Teng says, noting “the number of young adults joining the economy in the broader region will surpass the number joining in China, which demonstrates the robustness of demographic growth.” All of these young people will require fintech resources, presenting exciting opportunities for investors and innovators.
Abu Dhabi isn’t just reaching out to the world. It’s also keen to attract the world to its ecosystem. “As with any small country you need to bring in international expertise and talent,” Teng explains. “We’re proud of our best in class diversity.” Abu Dhabi’s annual Fintech Festival, co-hosted with the Central Bank of the United Arab Emirates this year, attracts 7,500 participants from over 100 countries, for instance. This international pool of talent allows local startups to understand and connect with global markets. Meanwhile, educational institutions like the Mohamed Bin Zayed University of Artificial University and ADGM Academy offer courses on cutting-edge topics like blockchain and artificial intelligence to develop the local workforce and tech competencies adjacent to Fintech.
Further innovation to connect Abu Dhabi’s burgeoning fintech ecosystem to the world is in the works. Together with the Australian and US government, ADGM is working to develop cross-border “compliance tokens” coded with the rules and regulations of each jurisdiction to ensure compliance across borders and enlarge market access through technology. While the project is still in the proof-of-concept stage, several international regulators have expressed interest.
Against this backdrop of ongoing innovation, Covid-19 struck this year. As it did across the world, the pandemic presented Adu Dhabi with acute challenges. But it also created long-term opportunities, according to Teng.
“Covid accelerated digital deployment and adoption. Changes we thought would take 3-4 years were compressed into 3-6 months,” he notes. “Covid also highlighted gaps in our infrastructure. We’re seeing a new willingness to collaborate and adopt new technology.”
In particular the pandemic highlighted the importance of sustainability, not just for supply chains, but also for general prosperity, food supplies and energy. Abu Dhabi’s ecosystem is set to play a key role in building solutions for these challenges, including blockchain for carbon trading, sustainable supply chain tracking, and green certification to name but a few examples.
With a sturdy foundation of regulatory innovation, an entire ecosystem approach in place and Covid accelerating the timeline for action, Abu Dhabi seems ideally placed to continue in its current trajectory towards becoming a world-class fintech ecosystem and overall prosperous tech and startup ecosystem.
With a sturdy foundation of regulatory innovation, an entire ecosystem approach in place and Covid accelerating the timeline for action, Abu Dhabi seems ideally placed to continue in its current trajectory towards becoming a world-class fintech ecosystem and overall prosperous tech and startup ecosystem.