To be sure, the UAE’s fintech funding started from a lower baseline last year than many other more mature markets, and thus it was in a better position than most geographies to increase investment briskly. For instance, Singapore’s fintech funding in 2023 was significantly higher than the UAE’s at US$2.2 billion – even though that total was 68% lower than in 2022.

That said, the UAE is doing all the right things to increase its attractiveness as a fintech hub in an emerging region for digital finance. Auguring well for the Middle Eastern country are its deepening links with other key fintech markets. For instance, Economy Minister Abdulla bin Touq Al Marri recently told Bloomberg that the Gulf country is seeing rising interest from UK fintechs in pursuing a dual listing in the UAE. Talks between the two countries have accelerated since signed a memorandum of understanding in Oct. 2023 aimed at boosting bilateral cooperation in financial services.

The UAE is also stepping up its ties with key fintech markets in East and South Asia. Its central bank is collaborating with the International Bank of Settlements (IBS) Bank of Thailand, Hong Kong Monetary Authority and the People’s Bank of China on the mBridge wholesale CBDC project for cross-border payments. The four central banks aim to solve traditional correspondent banking travails with the purpose-developed permissioned distributed ledger technology (DLT) called the mBridge ledger, or mBL, that supports instant peer-to-peer and atomic cross-border payments and FX transactions using wholesale CBDCs.

Further, the UAE is cooperating closely with India on digital payments. During Prime Minister Narendra Modi’s July 2023 visit to the UAE, the Reserve Bank of India (RBI) and its Abu Dhabi-headquartered counterpart the Central Bank of the UAE signed two MoUs. The first of the two MoUs aims to establish a Local Currency Settlement System (LCSS) to promote the use of rupee and the dirham bilaterally. It will cover all current and permitted capital account transactions. The second of the two MoUs links India’s Unified Payments Interface (UPI) with its UAE-counterpart Instant Payment Platform (IPP) as well their respective card switches RuPay switch and UAESWITCH. These linkages are likely to address bottlenecks for Indian expats sending money home from the UAE, such as high transaction fees.

Meanwhile, on Feb. 13 the UAE-based fintech Kema announced that it had raised a $2 million pre-Seed round, led by Speedinvest with participation from the Dubai Future District Fund (DFDF). Kema aims to tap opportunities in the UAE’s US$1.5 trillion B2B payments market, where SMEs have historically been underserved. There is a lot of low-hanging fruit to be plucked in that market.