Islamic Finance

Q&A: Raja Al Mazrouei on how Dubai’s FinTech Hive supports Islamic fintech

At the end of June, FinTech Hive at the Dubai International Financial Centre (DIFC) closed applications for its second accelerator programme. Similar to its inaugural outing last year, this year’s cycle will partner financial institutions with start-ups to collaborate in a 12-week mentorship and networking programme. FinTech Hive at DIFC is the Middle East and North Africa's first fintech accelerator and it supports growth stage start-ups.

This year’s programme will again also include Islamic fintech, as Fintech Hive continues to work with the Dubai Islamic Economy Development Centre (DIEDC) to focus on reaching start-ups in the Shariah-compliant sectors.

Start-ups will have access to returning financial institutions Abu Dhabi Islamic Bank, Citigroup, Emirates Islamic, Emirates NBD, HSBC, Mashreq, Standard Chartered, UAE Exchange and Visa, as well as new partners First Abu Dhabi Bank, National Bank of Fujairah, Arab Bank and Noor Bank.

FinTech Hive’s Executive Vice President, Raja Al Mazrouei, gives us insight into how the programme supports Islamic fintech and how the DIFC is building Dubai’s fintech ecosystem amid the UAE’s changing economic environment.

Salaam Gateway: What types of innovators or start-ups is the 2018 accelerator for, in terms of solutions?

Raja Al Mazrouei: We expect 2018 to be an exciting year for Fintech Hive at DIFC. This year we have reaffirmed our commitment to the field by expanding the themes of FinTech Hive at DIFC to include insurance, Islamic finance, and regulatory technology services.

The 2018 cycle of FinTech Hive at DIFC, will be bringing both InsurTech and RegTech to the forefront of the programme’s agenda. InsurTech will focus on start-ups that specialize in finding technological solutions for insurance companies, while RegTech will focus on companies specialized in issues pertaining to regulation.

We’ve been seeing immense talent from all around the world. We have recently closed our applications for the first accelerator programme for 2018 and we will be giving an update on the finalists in due course.

Salaam Gateway: What’s in it for fintech innovators that are part of the 12-week accelerator programme, both financially and in terms of moving their ideas or businesses forward?

Raja Al Mazrouei: Through FinTech Hive at DIFC, the programme finalists will have access to leading regional financial institutions, as well as other partners including legal firms and branding entities to help bring their ideas to fruition.

Through the independent regulator, the Dubai Financial Services Authority (DFSA), the start-ups will be able to develop, test and tailor their solutions and get the ITL license, without being subject to the regulatory requirements that normally apply to financial firms. They will also be able to apply for the FinTech license to operate in the Centre and get access to DIFC's work hub.

In addition, FinTech Hive at DIFC will collaborate with Accenture’s FinTech Innovation Labs globally to further cement the accelerator’s position amongst the most reputable financial hubs in the world. The move will bring about countless opportunities for innovators in the region, by connecting them to the international FinTech ecosystem.

Salaam Gateway: What kind of track record does DIFC Fintech Hive have with regards to your accelerator programme? Who would you say are your most successful graduates who have gone on to make a difference in the world?

Raja Al Mazrouei: We launched FinTech Hive at DIFC to couple the innovative ideas of start-ups with the expertise of leading financial institutions, and to allow FinTech firms to grow and unlock their potential.

Looking at the outstanding fresh, creative solutions we saw by our finalists last year and the positive response we received from numerous stakeholders, I can say that the outcome was overwhelming. We are excited about tripling our commitment in 2018 as we introduce two new specialised programmes focused on RegTech and InsurTech.

From last year’s programme, 6 out of 12 startups have are already set up in the DIFC. In addition, total funding raised by these startups today amounts to US $10 million, mostly from Venture Capitals and funds.

We are proud to share that two of the programme’s 11 finalists in 2017 were the first companies to be granted an in-principle approval for its Innovation Testing Licence (ITL). They were Smart Crowd, a digital platform that allows the investor an opportunity to participate in real estate market with low capital requirement through fractional ownership, and Sarwa, Digital Wealth Limited (Sarwa), an automated investment advice service.

We were also very proud to see Norbloc, one of the participating start-ups in FinTech Hive at DIFC, completing a US$ 1.6 million seed round. This was a very exciting moment for Norbloc and a true testament to the success of this programme.

Most recently, the Centre welcomed five new start-ups and SMEs to its growing FinTech community, including Virtual i, the region’s first InsurTech firm, and Amani and Regulation Technology Solutions, DIFC’s first RegTech firms.

Salaam Gateway: There have been several announcements in recent weeks aimed at attracting more investors and professionals to Dubai and UAE, including an upcoming 10-year visa for certain groups of investors and professionals, and 100 percent ownership of mainland companies for foreigners from the current maximum 49 percent. The UAE economic environment is changing rapidly in these ways. How is DIFC Fintech Hive evolving with these planned changes in terms of retaining, and not just attracting fintech innovators?

Raja Al Mazrouei: To support its growing FinTech ecosystem, we at DIFC have launched a dedicated commercial license, specifically developed for FinTech, RegTech and InsurTech firms where they can easily operate from the Centre.

We have also recently unveiled the FinTech WorkHub, an interactive and collaborative workspace that provides FinTech firms, Venture Capital funds and other first-time regional start-ups with excellent state-of- the- art facilities and services at feasible fees.

This was accompanied by continuous evolution of our infrastructure and regulatory framework in order for us to enable Fintech SMEs to disrupt the way businesses operate today

DFSA joins again this year to provide regulatory guidance for financial institutions and start-ups. It has also expanded its ITL license in response to continued interest in FinTech and the digital economy. Six companies will form a new Cohort (Cohort 1) that will begin the ITL application process, which includes the development of a regulatory test plan describing the proposed business model, product or service.

Salaam Gateway: How do you see fintech, including Islamic fintech, within the mix of these changes? That is, do you see fintech either ‘merely’ responding to the changing landscape by providing supporting facilities, or do you see real signs that fintech is leading change in certain sectors and ways?

Raja Al Mazrouei: Globally, the fintech sector is in a very strong position, but Islamic FinTech is just beginning to catch up. The UAE is ranked third in an analysis of Islamic Fintech start-ups, according to a survey by Bloomberg Intelligence.

The countries comprising the region are among the fastest growing markets in the world, with the majority of the population being Muslim and an astounding 70 percent remain unbanked, lacking access to financial institutions and religious non-compliance cited as key obstacles. This is a great opportunity for us, as the leading financial centre in the region, to capitalize on these opportunities and pave the way for Fintech startups to set up and work alongside world renowned financial institutions.

As a top ten ranked international financial centre, DIFC is a true reflection of the success story of Dubai. The emirate is a global example of economic diversification and the financial services sector remains one of the most significant contributors to Dubai’s GDP. Today, the Centre is the leading financial hub in MEASA and is constantly exploring new opportunities to ensure the development of the regional financial services landscape. In 2017, we launched a number of initiatives to promote financial innovation, and in turn, financial inclusion in the broader MEASA region.

Maliya, a fintech company engaged in the development of a P2P lending and borrowing platform and a graduate from the first cohort of DIFC Fintech Hive has secured $1.3 million during its latest seed funding round, which was led by Ground1 Ventures, a private investment firm based out of UK.

FinTech Hive is also expanding its programme for 2018 to include insurance, Islamic finance, and regulatory technology services to cater to all customers and market demands. It will also feature the Dubai Islamic Economy Development Centre (DIEDC) as a strategic partner again this year. The DIEDC will focus on reaching start-ups in Islamic Finance, an important pillar for the region.

Salaam Gateway: Dubai is perceived as an expensive city to start a business and live in. How does DIFC Fintech Hive make it affordable and sustainable for innovators to potentially move to Dubai to further their fintech ideas and companies?

Raja Al Mazrouei: DIFC offers a dedicated commercial license with a cost-effective scheme, which allows startups from the world of the financial technology to benefit from the Centre’s world-class infrastructure and ecosystem at a fraction of the regular licensing cost. Firms holding this license will gain access to the DIFC Work Hub, a dedicated and collaborative co-working space.  The Work Hub offers excellent connectivity, high-speed wifi, state-of-the-art Audio/Visual and conferencing facilities

In addition, the Dubai Financial Services Authority (DFSA)(DIFC’s financial regulator) is continuously enhancing its regulatory framework to support innovative business models, products and services through the Innovation Testing License.

We have seen great interest from start-ups and now have over 50 companies in our FinTech ecosystem, which is a testament to the demand for such an initiatives by the Centre. 

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