On Top


Sharjah is modernizing its banking sector in the hopes of establishing itself as the top destination for fintech investment and disruptive financial technologies in the GCC.

In recent years, banks have focused on meeting regulation standards rather than innovating to meet the evolving needs of customers. The disruption of fintech has forced them to rethink their strategy. But while fintech firms were initially seen as competitors, they are now considered potential partners, and their disruptive approach is used as a revitalization tool for a more collaborative environment.

Customer habits are evolving quickly, and young people use the internet more frequently and use money differently; fintech addresses an important need to adjust to changing markets and global challenges. In the UAE, only 30% of transactions are cashless, and the rise of mobile money can promote financial inclusion. As digital services are more widely used, fintech can enhance services and grow market share, representing a potential goldmine.

Fintech might represent a threat if the UAE’s economy, very dependent on banks, does not accommodate the inevitable transition. But the UAE has an advantage: the close proximity of banks makes it easier for fintech startups and banks to work together. In addition, banks feel less threatened by fintech because they realize their comparative advantage: an already strong customer base, access to more data, and a familiarity with the institutional framework that fintech newcomers simply do not have. Thus, an osmotic relationship where one brings to the table what the other lacks is a low-risk, high-reward way to prepare for the coming explosion of online services.

The UAE has been at the forefront of the regional movement toward integrating fintech and traditional banking. In November 2016, the Mohammed bin Rashid Innovation Fund—an initiative of HH Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, and Ruler of Dubai—launched operations. Its fund, worth USD800 million, aims to spur innovation throughout the UAE, particularly within the finance sector, and is represented by the Ministry of Finance.

The Emirate of Sharjah is taking clear steps to modernize the banking sector. The Sharjah Investment and Development Authority (Shurooq) underlined the importance and opportunities of fintech at the Euromoney Emirates Conference 2017, held in Sharjah and organized by Sharjah FDI Office. Sharjah is quickly becoming one of the most progressive markets in the GCC, making it a more attractive investment destination; while this is true in most fields, particular attention has been paid to fintech.

According to Shurooq CEO HE Marwan bin Jassim Al Sarkal, Sharjah is embracing the disruptive economy and claiming a role as the epicenter of the fourth industrial revolution, in which the Internet of Things is at the core of development. New regulations from the Securities and Commodities Authority (SCA) are prioritizing new technologies that are introduced to the financial markets, and the Acting CEO of SCA, HE Dr. Obaid Saif Hamad Al Zaabi, said the SCA’s regulatory approach would make Sharjah an excellent investment destination, benefiting both the market and the investor. Elaborating more, the financial support, “will cater to specific business needs in a competitive market, enabling knowledge, innovation, and skill to fully flourish.”

In other Emirates, Dubai recently created an Innovation Testing License, aimed at lowering bureaucratic requirements for fintech services in the Dubai International Financial Center free zone. Abu Dhabi took the same road, creating the RegLab for similar purposes. Emirates NBD, one of the top banks in the UAE, recently started working with ICICI Bank, the first Indian bank to use blockchain technology, with the goal of easing global remittances and trade finance operations.

Investment in fintech in the Middle East is set to grow by 270% this year, reaching USD50 million. While this represents less than 0.1% of worldwide fintech investment, more and more money is directed toward SMEs and start-ups. Sharjah’s approach to fintech could make further investment in SMEs and start-ups more prominent and more successful, capturing the anticipated growth of the fintech industry in the Middle East.