How Dubai is embracing fintech to become a smart city
We explore how the city of Dubai is leveraging fintech in order to become a truly smart city, and with that, potentially the fintech capital of the world.
The Middle East is the embodiment of the speed at which humans evolve, taking dusty expanses of land and building smart cities that overtake nations which have stood centuries longer. Cities such as Abu Dhabi are an exciting monument to the technological revolution taking place, and planned new urban sprawls like Masdar in Abu Dhabi and Neom in Saudi Arabia prove that the UAE doesn’t plan to slow down any time soon.
Since 2015, the number of fintechs in the UAE is expected to grow by as much as 230%, from 559 companies. By 2022, the fintech market is estimated to reach a value of $2.5bn across the broader MENA region, according to Accenture. To understand these projections, we take a closer look at the city of Dubai, which closely leverages financial technology with smart city initiatives.
Smart Dubai is an institution championing smart city initiatives across the region in a bid to make Dubai “the happiest city on earth”, a vision set out by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice-President & Prime Minister of the UAE. The initiative seeks to harness AI, data and blockchain in order to drive Dubai’s economy and achieve the ultimate goal of making it entirely paperless. Banks are notorious for paper waste and in order to digitally transform these services incumbents will either need to develop in-house solutions, or obtain assistance from fintechs. Government-owned bank, Emirates NBD, is driving this change by undertaking one of the largest digital transformations in the region. In addition to this, it also launched digital banks Liv and E-20, which are driving fintech capital.
As a part of Dubai’s Smart City initiative, it will support startups in three components: Global Blockchain Challenge, the Dubai Smart City Accelerator and Dubai Future Accelerators. These will seek to nurture blockchain, AI, ML, IoT and connectivity in order to drive a smarter government, transportation and retail sectors. The Dubai Smart City Accelerator is powered by Startupbootcamp, a European company that supports early-stage tech companies and plays a supplementary role to supporting fintechs.
The Dubai International Financial Centre (DIFC)
The DIFC is the region's largest financial ecosystem, comprising over 24,000 professionals across 2,200 companies. The institution drives the future of finance, which will continuously play into the technological advancements that take Dubai closer to becoming a paperless, smart city. The key way it nurtures fintech growth in the region is through The FinTech Hive, which runs an annual accelerator programme that provides mentoring, funding opportunities and marketing exposure to fintech, insurtech, regtech or Islamic fintechs. It received 425 applications for the programme, a 42% increase from its 2018 event. As of September 2019 the centre has registered over 100 fintech firms. Arif Amiri, Chief Executive Officer of DIFC Authority said: "We aim to continue this momentum and growth through our evolving regulatory environment and the quality of collaborators we bring into the DIFC, as our vision of driving the future of finance becomes a reality.”
The DIFC also recently announced the launch of a new onboarding platform designed to meet Dubai’s Smart City needs. Alya Al Zarouni, Executive Vice President of Operations, DIFC Authority, said: “Adopting the latest technology and innovation reflects our culture, values and commitment to the Smart Dubai 2021 strategy and we fully believe the new digital onboarding journey will deliver client satisfaction supported by value add tools at every step.”
Dubai is continuing to gain a notable amount of attention from international banking and fintech firms. A number of companies have signed onto the DIFC, including UK-based architect of digital banking and payment solutions company, Bankable, and global mobile payment technology company QFPay, which provides backend solutions to Alipay and Wepay.
For more information on all topics for FinTech, please take a look at the latest edition of FinTech magazine.
FIVE things fintechs must do to keep investors onboard
New investors flocked to the stock market during the COVID-19 pandemic. Thirty-eight percent of investors said they had never had a brokerage or similar account before opening one in 2020.
Low or no-fee trading options have helped accelerate the trend – nearly half of new investors said they accessed their account primarily through a mobile app. As FinTechs, how do we create the trust needed to keep new investors in the market and create a fruitful customer experience for them?
The financial industry does a disservice to individual investors if we merely offer tools that focus on making money quickly, an approach that usually backfires. Instead, the surge of interest presents an enormous opportunity for those who want to help more consumers use financial technology to educate them on responsible spending, saving, and investing in order to achieve financial wellness current fintech tools have welcomed individual investors in the door.
Now, it’s time to focus on education and improving their experience going forward. There are several ways those of us in fintech can step up to shape the future of retail investing so that it works better for everyone, starting with the following areas.
Equal access to financial wellness education
Financial health should be available to everyone — but today, not everyone has the educational resources to achieve it. One study shows that only 3.9% of students from low-income schools were required to take a personal finance class. What they aren’t learning in school or from family members, fintech companies can provide on their platforms.
The companies should move from solely offering financial services to a more responsible model of education, advice, and prescriptive choices to help consumers develop better habits and make wiser financial decisions. Not only can they empower consumers and bridge historical wealth divides, but they can also stimulate growth by opening up new consumer segments.
Just as we’ve come to expect that our fitness routines are tailored to our individual bodies, we’re also ready for finance tools that go beyond one-size-fits-all solutions. But only six percent of financial institutions say they’re using the kind of technology that allows them to deliver a deeply personalized experience. Fintech tools need to reflect that financial success looks different for each of us.
For one consumer, it may mean providing guidance on how to pay off student loans early; for another, it may mean prescriptive actions that enable them to stick to a budget for the first time; for a third, it could look like prioritizing environmental, social and governance (ESG) investments, so that her portfolio aligns with her political beliefs.
Now, we are seeing financial technology beginning to meet the demands of personalized finance in a substantial and meaningful way.
The rise of AI-Powered Advice
Big-picture advice and predictive guidance used to be a feature of high-end financial advisory firms — a perk only available to those who could afford it. But thanks to rapid advancements in data analytics and artificial intelligence (AI), that kind of holistic advice is now more accessible than ever. AI-driven robo-advisors can parse many different streams of financial information, delivering customized answers to key questions: Is it time to buy a home, or is it smarter to keep renting? Can I afford to take out another student loan?
Intelligent connectivity powered by AI can anticipate consumers’ needs and next steps, making proactive suggestions that guide them along the path to financial wellbeing. Fintech companies can also help consumers identify when their financial picture becomes too complex for a robo-advisor, and help them find a human financial advisor to meet their needs.
Focus on financial mental health
New investors are quickly finding that the market can be overwhelming. That’s not surprising, financial anxiety is common and studies show that financial stress can have an impact on mental health for some.
It’s not enough for fintech companies to give retail investors access; they also must provide the guidance and support that help consumers manage their financial well-being. Educational tools can ensure that consumers are well informed about their options.
Predictive analytics can anticipate consumers’ questions, serving them key information and insights before they ask. Features that emphasize a comprehensive notion of financial well-being, rather than short-term wins and losses, can also help ensure that consumers are keeping their eyes on the bigger picture.
Gamification for good
The surge of gamification apps has done an impressive job making investing as engaging as playing a video game or joining a social media platform.
Much of the current use of gamification emphasizes short-term thinking, but there’s also an opportunity to help consumers think more broadly about their overall financial picture. One example is peer benchmarking, a feature that enables help consumers to see how their financial habits compare to those of friends and fellow consumers.
Gamification can also be used to incentivize making smaller, smarter choices — for example, rewarding saving over making an impulse buy.
The future of fintech is about more than just broadening access to the markets. It’s about making sure more individuals have access to the tools that can help improve their financial well-being—in the ways that suit their own circumstances and needs. The potential to act within their own set of individual priorities, with their long-term financial wellness in mind is much more empowering to a consumer than simply relying on short-term, high-risk investments.