UAE's Fintech Market Rises 92% amidst Global Slowdown

UAE’s Fintech Market Rises 92% amidst Global Slowdown

Time Stamp: January 10, 2024 5:23 AM
UAE's Fintech Market Rises 92% amidst Global Slowdown PlatoBlockchain Data Intelligence. Vertical Search. Ai.

Global
investments in financial technology companies saw a significant decline in
2023, falling 48% to $51.2 billion from the previous year’s $99 billion,
according to data from Innovate Finance.

While
funding decreased in major fintech hubs like the UK and the USA, the United
Arab Emirates (UAE) demonstrated a contrasting trend, with fintech funding
nearly doubling in the past year.

Global fintech cautiously entered 2023 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.

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 TOP10 outpaced European counterparts in investment.

Source: Innovate Finance

Innovate
Finance’s study, corroborates information published earlier this week by
Finance Magnates. The US experienced a drop of 36% in fintech funding,
totaling $18.2 billion, while the UK’s funding plummeted 63% to $4.2
billion.

Source: Tracxn

The total
number of fintech fundraising deals also decreased sharply, dropping 61% to
3,973 in the last year. Despite this downturn, the US maintained its position
as the leading destination for fintech investment in 2023, with the UK securing
the second spot globally. The UK’s fintech funding still surpassed the combined
total of the next 28 European countries.

The overall
downturn in fintech startups in leading economies mirrors the negative trend
from the previous year. Early in 2023, Finance Magnates reported a reduction of 30% in global fintech funding for 2022, bringing it down to $95 billion.

However,
not all regions are experiencing this downturn in funding. Innovative
Finance noted that the Asian and Middle Eastern regions are becoming particularly
active.

UAE Defies Trend with 92%
Jump

Despite the
global fintech funding slowdown, the United Arab Emirates was a standout
performer. The UAE saw fintech investment skyrocket 92% in 2023 thanks to the growing adoption of digital banking and
fintech tools in the region. This was the first time the UAE made the top 10
list of most well-funded fintech hubs.

Economies of the Middle East, 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 for at least a year to become a crypto and financial hub, offering more business-friendly regulations to companies entering this market than other major jurisdictions.

India took
third place globally with $2.5 billion invested in its fintech sector in 2023.
Singapore and China rounded out the top five countries by fintech funding last
year with $2.2 billion and $1.8 billion raised, respectively.

The entire ranking can be found below:

  • United States: 1,530 deals, $24.2 billion
  • United Kingdom: 409 deals, $5.1 billion
  • India: 187 deals, $2.5 billion
  • Singapore: 176 deals, $2.2 billion
  • China: 76 deals, $1.8 billion
  • United Arab Emirates: 54 deals, $1.3 billion
  • France: 97 deals, $1.2 billion
  • Germany: 86 deals, $1.1 million
  • Hong Kong: 41 deals, $912 million
  • Canada: 92 deals, $884 million

The
cautious outlook suggests fintech funding headwinds could persist into 2024,
but pockets of resilience and steady early-stage investment provide some
optimism for the industry.

Global
investments in financial technology companies saw a significant decline in
2023, falling 48% to $51.2 billion from the previous year’s $99 billion,
according to data from Innovate Finance.

While
funding decreased in major fintech hubs like the UK and the USA, the United
Arab Emirates (UAE) demonstrated a contrasting trend, with fintech funding
nearly doubling in the past year.

Global fintech cautiously entered 2023 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.

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 TOP10 outpaced European counterparts in investment.

Source: Innovate Finance

Innovate
Finance’s study, corroborates information published earlier this week by
Finance Magnates. The US experienced a drop of 36% in fintech funding,
totaling $18.2 billion, while the UK’s funding plummeted 63% to $4.2
billion.

Source: Tracxn

The total
number of fintech fundraising deals also decreased sharply, dropping 61% to
3,973 in the last year. Despite this downturn, the US maintained its position
as the leading destination for fintech investment in 2023, with the UK securing
the second spot globally. The UK’s fintech funding still surpassed the combined
total of the next 28 European countries.

The overall
downturn in fintech startups in leading economies mirrors the negative trend
from the previous year. Early in 2023, Finance Magnates reported a reduction of 30% in global fintech funding for 2022, bringing it down to $95 billion.

However,
not all regions are experiencing this downturn in funding. Innovative
Finance noted that the Asian and Middle Eastern regions are becoming particularly
active.

UAE Defies Trend with 92%
Jump

Despite the
global fintech funding slowdown, the United Arab Emirates was a standout
performer. The UAE saw fintech investment skyrocket 92% in 2023 thanks to the growing adoption of digital banking and
fintech tools in the region. This was the first time the UAE made the top 10
list of most well-funded fintech hubs.

Economies of the Middle East, 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 for at least a year to become a crypto and financial hub, offering more business-friendly regulations to companies entering this market than other major jurisdictions.

India took
third place globally with $2.5 billion invested in its fintech sector in 2023.
Singapore and China rounded out the top five countries by fintech funding last
year with $2.2 billion and $1.8 billion raised, respectively.

The entire ranking can be found below:

  • United States: 1,530 deals, $24.2 billion
  • United Kingdom: 409 deals, $5.1 billion
  • India: 187 deals, $2.5 billion
  • Singapore: 176 deals, $2.2 billion
  • China: 76 deals, $1.8 billion
  • United Arab Emirates: 54 deals, $1.3 billion
  • France: 97 deals, $1.2 billion
  • Germany: 86 deals, $1.1 million
  • Hong Kong: 41 deals, $912 million
  • Canada: 92 deals, $884 million

The
cautious outlook suggests fintech funding headwinds could persist into 2024,
but pockets of resilience and steady early-stage investment provide some
optimism for the industry.

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