Dubai International Financial Centre (DIFC), an international business hub in the Middle East, Africa and South Asia (MEASA) region, has invested in four fintech start-up companies as part of its $100m fund, created in 2019.
The start-ups who applied for funding were evaluated by the DIFC FinTech Fund and more applications are being evaluated and further investments will be made by the fund soon.
The four companies are FlexxPay, a cloud-based B2B fintech employee benefits platform allowing instant access to earned income; Go Rise, a unique start-up building a holistic and seamless financial services platform; Now Money, which provides payroll services to Gulf-based companies; and “Sarwa, a robo-advisory wealth management firm.
“The DIFC FinTech Fund accelerates the development of impactful FinTech firms, taking them a step further toward capitalising on the strong growth opportunities available in the region. Through investing and providing the region’s most comprehensive platform, we can drive innovation across MEASA’s financial services sector,” Arif Amiri, Chief Executive Officer at DIFC Authority, said.
Home to the largest financial ecosystem in the region, the DIFC has succeeded in attracting some of the world's leading financial institutions since 2004.
The DIFC fintech ecosystem has achieved a three-fold growth since the end of 2018.
Even though delivery and transport received the highest amount of funding (19%) in 2019, fintech retained its top spot as the most active industry by the number of deals (13%), according to startup data platform MAGNiTT.
The UAE maintained its dominance as the highest recipient of venture funding (60% of all deals) last year but Egypt has surpassed all countries in terms of the number of deals (25% of all deals).
Covid19 fuels fintech adoption
Nigel Green, founder and chief executive of deVere Group, an independent financial advisory organisation, said that coronavirus is also going to further disrupt the wider banking sector and the traditional banks will fall even further behind in market share and customer experience due to the pandemic.
He said that the usage of financial apps is up by 72% since mid-March and it will act as another catalyst for people to seek fintech alternatives to access, manage, use, save and invest their money across the world.
“The pandemic has accelerated those trends that were already shaping business. These include greater inclusion of tech into our everyday lives. It has also underscored by the increasing use of fintech apps which allow users immediate, on-the-go, 24/7 access to, use, and management of their money,” he said.
Banks and other traditional financial services providers were, in most cases, spectacularly caught off guard by the 2008-2009 financial crash. As they found their way into a new world with a new regulatory landscape and new customer expectations, Green said that business and tech developments were way down their to-do list. They were in “survival mode”.
“This is when agile, tech-driven challenger banks and fintech firms swooped in to fill the void left between what traditional financial services companies, especially the traditional banks, were offering and what customers were expecting, especially in terms of customer experience.”
The fintech firms, which offer mobile banking, savings and investment apps, and peer-to-peer lending, amongst other services, he said now have a decade of development, experience and expertise over many traditional banks.
“It is likely that ‘bricks and mortar’ banks will fall even further behind in market share and customer experience as more people are now embracing fintech due to Covid-19-triggered social distancing, isolation and lockdowns,” he said.
Moreover, he said that the apps are growing in popularity due to their convenience, increased security, and as people become ever-more tech-savvy.