The UAE’s fintech sector bucked a global downward investment trend, ranking sixth globally and recording a 92 per cent jump in 2023 on the back of fintech-friendly regulations and growing adoption of digital banking and other tools in the region, according to data made available by Innovate Finance.
While global investments in financial technology companies saw a significant decline in 2023, falling 48 per cent to $51.2 billion from the previous year’s $99 billion, the UAE demonstrated a contrasting trend, with fintech funding nearly doubling in the past year.
Major fintech hubs like the UK and the US followed the global trends amid economic challenges, with concerns over inflation, tight monetary policies, and potential recession impacting spending and deals. Despite this, early stage fintech investment remained robust, garnering over $4 billion in seed funding, Innovate Finance said.
Worldwide, the fintech industry cautiously entered 2023. However, larger deals above $100 million slowed, indicating a shift in growth-stage valuations and capital issuance caution. The average deal size dropped to $12.9 million from $15.5 million in 2022, yet exceeded the 2012-2020 average of $10.3 million. Demonstrating its international influence, fintech saw a notable shift in investment trends: for the first time, Asian countries in the Top 10 outpaced European counterparts in investment. For the first time, the UAE has made it to the top 10 list of most well-funded fintech hubs in 2023, according to Innovate Finance.
The Middle East countries, particularly the UAE, are becoming increasingly attractive for companies in the financial sector, including cryptocurrency exchanges and FX/CFD brokers. The UAE has been striving to become a crypto and financial hub, offering more business-friendly regulations to companies entering this market than other major jurisdictions.
As per the ranking, the US came first with 1,530 deals valued at $24.2 billion, followed by the UK: 409 deals, $5.1 billion, India: 187 deals, $2.5 billion, Singapore: 176 deals, $2.2 billion, China: 76 deals, $1.8 billion, the UAE: 54 deals, $1.3 billion, France: 97 deals, $1.2 billion, Germany: 86 deals, $1.1 million, Hong Kong: 41 deals, $912 million, and Canada: 92 deals, $884 million.
Innovate Finance noted that the UK, the second-biggest hub for fintech investment in 2023, saw total funding for the country’s financial technology industry totalling $5.1 billion in 2023, down 63 per cent from $13.9 billion in 2022.
The UK received more investment in fintech than the next 28 European countries combined, according to Innovate Finance. London fintechs pulled in $4.5 billion last year, with the city continuing to dominate when it comes to fintech funding in Europe more broadly.
The value of the top five biggest deals globally in 2023 was over $9 billion, or about 18 per cent of total global investment in space.
Stripe pulled in the most amounts of cash raising $6.9 billion, according to the data, while Rapyd, Xpansiv, BharatPe, and Ledger won the second, third, fourth, and fifth-biggest investment deals, respectively.