Sergio Barbosa, CEO, FutureBank
Co-founder and CIO of enterprise software development house, Global Kinetic, Sergio directly heads its open banking platform, FutureBank. A skilled software engineer, innovative product developer, and keen business strategist, he has participated in several notable fintech milestones, including building the southern hemisphere’s first digital-only bank all the way back in 2002.
I’ve wanted to blog about Dubai for a while now, and not only because the Cape winter has me thinking of those +40°C temperatures almost longingly. I was recently in the United Arab Emirates (UAE) for Seamless Middle East 2022.
We have experience in the region. We’ve been working with a Saudi Arabian bank for a while and are actively exploring opportunities with several other financial institutions, as well as potential fintech partners in the wider GCC. Banks there are highly competitive, deeply engaged with the latest technology, and faced with several of the same challenges that their peers struggle with in other regions. Our conversations with them are always animated, with legacy core systems a frequent topic.
Global Kinetic’s banking platform, FutureBank, has resonated faster there than in some of our other markets, where the promise of open banking was perhaps not grasped so fast. As CEO of FutureBank, I’m bullish about doing business in Dubai and its environs.
But, really, who wouldn’t be? The UAE’s economy continues to mature at pace, with tech innovation and business increasingly superseding tourism and real estate, much less oil, as the country's primary focus for future development. Sheik Hamdan bin Mohammed, the Crown Prince of Dubai, recently referred to the emirate as “the city of entrepreneurs”, giving some insight into the sources of wealth he and others envisage will be drivers of future success. (The UAE’s nearest fintech rival, Israel, is often called “the start-up nation”.)
The UAE’s fintech takeoff wasn’t an organic phenomenon. The sovereign wealth funds of Dubai and its brother emirate Abu Dhabi have each invested hundreds of millions of dollars in fintech over the last few years, vying – at least, according to some people I’ve spoken to – to expand their already dominant positions in the Middle East, Africa, and South Asia and, perhaps, eventually take the Asian crown from Singapore.
Both emirates established hugely successful finance-focused special economic zones back in 2017, the Dubai International Finance Centre (DIFC) and the Abu Dhabi Global Market (ADGM), which are in part tasked with accelerating growth of the regional fintech sector. A couple of months ago, Dubai launched a +R1729.81-million fund – the Venture Capital Fund for Start-ups – to support new projects and “promote the economic growth of the emirate and consolidate its position as a global center for [fintech] and innovation in investment capital”.
Abu Dhabi recently set up a similar fund in partnership with Jordan and its global investment-focused tech ecosystem, Hub71, has welcomed over a hundred startups from 25 countries, active in 18 industries including fintech, so far. Its sovereign wealth fund, the Abu Dhabi Investment Authority, announced on 1 June that it had made an investment in the fintech Acrisure, boosting its value to a whopping R397.86 billion.
Most important elements in generating a competitive fintech environment
Twice a year, Long Finance and Financial Centre Futures survey stakeholders on the most important ingredients for fintech hub success. Access to finance, ICT infrastructure, and an ecosystem of innovation came up tops in their most recent report.
Source: The Global Financial Centres Index 31; March 2022
Venture capital is pouring in following the heavy government investment in the ecosystem, but funding is only part of the reason why Dubai and Abu Dhabi are doing so well in fintech. The UAE’s free economic zones provide the benefit of business-friendly regulatory regimes, as well as highly attractive tax and foreign exchange rules. Does zero tax on business income or profits sound good to you? What about full foreign ownership and free repatriation of all capital and profits? You might also enjoy the complete waiver on personal income tax and low capital gains taxes.
There’s also excellent digital infrastructure and a strong focus on emerging technologies (Dubai wants to be the first “blockchain-powered city”); awesome tech community collaboration and innovation programs (the DIFC Innovation Hub has nearly 600 innovation and tech companies, ranging from start-ups to unicorns); valuable support from traditional financial institutions like the Abu Dhabi Islamic Bank and Mashreq; large pools of international talent, owing to the quality of life, which beats many of the emirates’ rivals. The Dubai Chamber of Digital Economy, founded a year ago, proposes policies aimed at nurturing the digital economy and helps to plan and direct efforts to attract businesses, investment, and talent.
The Central Bank of the UAE also has a FinTech Office, established in 2020. Its “strategic ambition journey” gives December 2023 as the point by which it hopes Dubai is a top-five global fintech hub. That doesn’t seem to me like ambition out of touch with reality. Not when you’ve lined things up the way Dubai and Abu Dhabi have. You can feel the excitement in Dubai when it comes to fintech, and there is no doubt a similar vibe in Abu Dhabi.
If you’re considering the next phase of your own strategic ambition journey, choosing between these two cities for regional headquarters could be hard. But perhaps not as hard as you’d think. They’re just 140 km removed, less than an hour-and-a-half’s drive apart – a taxi ride will cost you about 280 dirhams (roughly R1314.66 or 1200 rand). And soon, they could be linked by hyperloop, which would cut travel time to just 12 minutes, sucking you through an overland tube at around 1,000 km/h. It’s the perfect mode of transport for cities with more gold taps than stop signs (totally made that up), sharing a mindset so determinedly focused on the future that you’d be stupid not to go along for the ride.