Abu Dhabi is luring a rising number of financial technology firms from the Middle East and beyond to its shores through new funding, mentorship and regulatory schemes, as part of its strategy to grow the UAE's digital economy.
On Monday, the emirate’s financial centre Abu Dhabi Global Market unveiled a package of new initiatives including a testing framework, or ‘sandbox’, for digital products, and a partnership with Abu Dhabi’s Department of Economic Development to help nurture technology entrepreneurs.
“In the last three years, ADGM has been building a globally-connected platform to support financial intermediation and facilitate capital flows for all companies, including start-ups and SMEs,” ADGM chairman Ahmed Al Sayegh told delegates at the Fintech Abu Dhabi event on Monday.
Fintech is disrupting traditional financial services by deploying advanced technology to speed up transactions, cut costs and better serve customers. Banks and other institutions are looking to collaborate with emerging fintech operators to future-proof their businesses, or risk becoming obsolete as tech-enabled rivals provide cheaper, faster services.
Arabian Gulf financial centres have responded by launching programmes such as start-up accelerators to stimulate growth of fintech, in line with strategies to diversify their economies and increase the contribution of SMEs to national gross domestic product.
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The ADGM ‘digital sandbox’ will serve as a testing environment to ensure regulatory compliance for technology start-ups in Abu Dhabi, Mr Al Sayegh, who is also UAE Minister of State, told the event. Start-ups will be able trade within a controlled environment before securing a full operating licence once their business is proven. The sandbox is in addition to ADGM’s Fintech Innovation Centre Accelerator programme, launched last year.
“The sandbox will give institutions and start-ups the ability to share data, solutions and ideas to accelerate digital adoption,” Mr Al Sayegh said. In addition, Abu Dhabi aims to create a “vibrant international capital marketplace that attracts global financial institutions and serves the wider financial industry”.
Access to capital and new markets has historically been a challenge for small businesses, particular during a period of low economic growth since oil prices fell in 2014.
During the event, ADGM said it became a member of the ASEAN Financial Innovation Network – the South-East Asia region’s network to link fintechs with financial institutions who may wish to adopt their products and services – as part of efforts to drive cross-border investment between Abu Dhabi and Singapore.
ADGM also said it will work with Emirates Development Bank to improve the cost and ease of obtaining SME bank loans.
In June it agreed an initiative with Hong Kong and Singapore to build a blockchain-based trade financing platform to stimulate cross-border fintech trade. And, last week, ADGM's Financial Services Regulatory Authority launched a framework for ‘private financing platforms’, to help companies raise financing from professional and angel investors.
"We have done a lot of things on the conventional finance front and on fintech –we were the first financial centre to introduce a regulatory fintech framework last year," FRSA chief executive Richard Teng told The National at Fintech Abu Dhabi.
In the coming months, ADGM will work to encourage more venture capital firms to set up in Abu Dhabi. Demand has lifted substantially since ADGM launched its VC managers’ framework last May, Mr Teng added.
Japan’s SoftBank, one of the world’s largest technology investment groups, whose SoftBank Vision Fund has interests in ride-hailing firm Uber and others, recently set up an office in ADGM to service the region. Abu Dhabi’s sovereign wealth fund Mubadala Investment Company has committed $15bn to the SoftBank Vision Fund.
COMPANY%20PROFILE
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The design
The protective shell is covered in solar panels to make use of light and produce energy. This will drastically reduce energy loss.
More than 80 per cent of the energy consumed by the French pavilion will be produced by the sun.
The architecture will control light sources to provide a highly insulated and airtight building.
The forecourt is protected from the sun and the plants will refresh the inner spaces.
A micro water treatment plant will recycle used water to supply the irrigation for the plants and to flush the toilets. This will reduce the pavilion’s need for fresh water by 30 per cent.
Energy-saving equipment will be used for all lighting and projections.
Beyond its use for the expo, the pavilion will be easy to dismantle and reuse the material.
Some elements of the metal frame can be prefabricated in a factory.
From architects to sound technicians and construction companies, a group of experts from 10 companies have created the pavilion.
Work will begin in May; the first stone will be laid in Dubai in the second quarter of 2019.
Construction of the pavilion will take 17 months from May 2019 to September 2020.
COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
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Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
WISH
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UAE currency: the story behind the money in your pockets
Dubai Bling season three
Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed
Rating: 1/5
COMPANY%20PROFILE
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Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
The five pillars of Islam
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
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Juliet, Naked
Dir: Jesse Peretz
Starring: Chris O'Dowd, Rose Byrne, Ethan Hawke
Two stars
