UAE's Fintech Market Rises 92% amidst Global Funding Slowdown

by Damian Chmiel
  • Fintech investments globally drop to $51.2 billion in 2023.
  • The Middle East and Asia buck this trend, maintaining positive dynamics.
dubai-uae-skyline

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.

Fintech Funding Plunges Globally

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
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
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.

Fintech Funding Plunges Globally

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
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
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.

About the Author: Damian Chmiel
Damian Chmiel
  • 1379 Articles
  • 28 Followers
About the Author: Damian Chmiel
Damian's adventure with financial markets began at the Cracow University of Economics, where he obtained his MA in finance and accounting. Starting from the retail trader perspective, he collaborated with brokerage houses and financial portals in Poland as an independent editor and content manager. His adventure with Finance Magnates began in 2016, where he is working as a business intelligence analyst.
  • 1379 Articles
  • 28 Followers

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