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Reasons why Dubai might become the next FinTech landmark

Online payments giant Stripe, is expanding to Dubai in its first move into the Middle East, weeks after their latest funding round, pushing it to become one of the most valuable private fintech firms in the world. Stripe's expansion to Dubai is exciting because it opens up new opportunities for more global brands to cater to the Middle East and North African region. It will also help local brands that haven’t yet globalized in expanding and serving a wider, global market.

Why Stripe's Dubai expansion is a highly strategic market entry

The pandemic has fuelled the acceleration of eCommerce across the globe. And the UAE, (commonly referred to as Dubai), is no exception. This article covers:

  • How Stripe’s launch in Dubai can be the driver for further digitalization.
  • The UAE’s journey from being a tiny fishing village to a leading financial hub.
  • UAE’s FinTech and eCommerce developments.
  • Israel and UAE’s FinTech agreement.
Stripe is the highest valued fintech startup in the world
The highest-valued startups in the world. source: statista

Dubai’s Journey to Becoming a Leading Financial Hub

Just 55 years ago, the UAE was a tiny fishing village before the discovery of oil which has helped to build this urban state. Fast Forward to this day, the UAE is known to be one of the urban miracles to the modern world and one of the top financial centres in the world. Its listed alongside other financial hubs such as London, New York, Hong Kong and Singapore.

dubai's fishing activities before oil discovery
Fishing activities in the UAE prior to oil discovery.
Impressively, FinTech regulatory regimes only started emerging in the Gulf region in 2017. Since then, the region has become a hotbed for FinTech activity and regulatory development.

The Middle East and North Africa’s booming FinTech market is expected to be worth $2.5 billion by 2022. The UAE alone accounts for 46% of all FinTech startups in the region, which marks it as the largest MENA hub for the industry. But this is not so surprising considering the UAE's:

  • supportive government policies;
  • tech-savvy population that is interested in adopting FinTech innovations;
  • vision for a FinTech-rooted economy.

Dubai and Israel's FinTech agreement

More on that, Dubai’s International Financial Centre recently signed a landmark agreement with Israel’s FinTech-Aviv, with the objective to further support the UAE in facilitating economic growth from the technology and innovation sectors.

Altogether, the region has been witnessing a positive growth trend, and Stripe’s expansion seems like a highly strategic step towards facilitating digitalization in this thriving market. At the same time, Stripe is not the only payment giant to decide to expand into Dubai. Adyen for instance also announced launching in Dubai just over a few months ago.  

The eCommerce Market in the UAE

Although there are several online payment gateways operating in the UAE, and a steadily increasing popularity of ApplePay, cash on delivery remains one of the most popular payment methods locally. But like the rest of the world, the pandemic has had a profound impact on the way people perceive online payments.

ecommerce sales in the UAE
eCommerce sales in the UAE (usd bn). source: statista.

Prior to the COVID-19 pandemic, the value of e-commerce sales in the UAE was forecasted to reach $27 billion by 2022. However, new COVID-19 regulations have accelerated the growth of the industry, with online sales being the alternative to traditional shopping. 

"The pandemic has had a profound impact on the way people perceive online payments"

Cultural Issues Expanding to a Middle Eastern Country

Finally, if we look at the booming FinTech and eCommerce markets in the UAE, along with Adyen and Stripes strategic expansions, it becomes undeniable that Dubai and the MENA region are very promising markets. And while some might have doubts about the cultural fit, it is important to note that expats in the region account for around 80% of the population, and a survey revealed that 37% of those are European. That being said, the local tech talent pool has been steadily growing, which is why we don’t expect the cultural fit to be an issue here.

Considering how valued cash on delivery options are in the UAE, do you expect that to change with the expansion of payment providers in the region?

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