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FinTech Hive: Accelerating innovation

Publish date: 05 April 2019
Author: Fintech Hive

Raja Al Mazrouei, executive vice president of FinTech Hive at DIFC, explains how the accelerator is helping banks and fintechs to collaborate for mutual benefit.

Increasing demand for faster, smarter financial solutions and a rapidly growing population, of which two-thirds is currently unbanked, is causing exponential growth in the Middle East, Africa and South Asia region’s fintech market.

“The region’s fintech market is expected to increase threefold, from $6 billion last year to $20 billion by 2022,” says Raja Al Mazrouei, executive vice president of Fintech Hive, the region’s leading fintech accelerator at the Dubai International Finance Centre (DIFC). “Banks recognize that fintech start-ups are shaping their practices, and they’re keen to invest in innovative ideas and solutions.”

DIFC continues to explore opportunities that are helping to develop the regional financial services landscape, including fintech-focused initiatives, such as Fintech Hive, which was established in 2017.

“Fintech Hive connects cutting-edge technology firms from around the world with key regional financial institutions,” says Al Mazrouei. “DIFC also offers dedicated commercial licenses for fintech, regtech and insurtech firms, an interactive and collaborative workspace, access to the region’s largest financial community and a dedicated fintech fund to accelerate the development of financial technology. We have recently signed several partnerships with worldrenowned entities to help accelerate the growth of fintech firms, incentivize knowledge-sharing and boost the venture capital ecosystem in the region.”

Al Mazrouei is upbeat about the region’s banking industry.

“There is a sense of optimism for the banking sector as we enter 2019, fueled in significant part by the transformation that has been taking place within the industry, especially digitally,” he says. “New technology and regulation are making financial services more accessible and more flexible, driving growth and innovation. Equally, we have seen improvements in economic fundamentals globally, which brings more confidence.”

However, many financial institutions have only begun their transformation journey.

“Fintech Hive’s growing network of partners clearly illustrates an increasing appetite among financial institutions, insurance and reinsurance companies to adopt fintech and insurtech solutions,” says Al Mazrouei.

As the financial landscape evolves in the next few years, Al Mazrouei also expects a shift in the region’s legal and regulatory framework.

“The numerous laws and regulations being reworked and introduced in the United Arab Emirates will solidify and strengthen its position in the global arena,” she says.

“The introduction of bankruptcy laws, which are on par with developed nations, would drive up entrepreneurship by reducing risks associated with starting and running a business. Additionally, the introduction of long-term residency will boost innovation levels as the country is better able to retain talent.”

DIFC is also continuously enhancing its legal and regulatory infrastructure to enable an environment that fosters greater innovation.

“Initiatives include the Innovation Testing License, introduced by the DIFC’s independent regulator, the Dubai Financial Services Authority (DFSA), which allows qualifying start-ups to apply for a financial services license without having to go through the stringent approval process that would normally apply to regulated firms,” says Al Mazrouei.

Fintech innovations could resolve some major issues for banks, and collaborating with large corporations can help them overcome obstacles such as funding, visibility, customer education and trust. To get the best from the relationship, Al Mazrouei says both banks and fintechs need to understand each other’s strengths and weaknesses.

“Large corporations must provide fintech start-ups with access to information, worldrecognized practices, and must introduce them to the regulatory framework that helps them produce feasible, practical solutions,” says Al Mazrouei. “Providing access to their customer database and securing funding will also help start-ups develop their products faster and safer.

“In contrast, the start-ups must understand the specific requirements of the banks and offer niche, specialized solutions that address their problems. DIFC has witnessed significant success in this domain. In 2018 alone, Fintech Hive saw more than 80 mentorship pairings established between executives from leading financial organizations and entrepreneurs. This has resulted in 20 proof of concepts, of which four were executed during the program.” 

If you want to know more about retail banking in the Middle East, please download the 2019 Efma Middle East review