Finding Dubai's Next Unicorn
The UAE is poised to provide a global payment solution to solve the challenges of the future. This is where Dubai’s next unicorn is going to emerge.
By Xische Editorial, May 6, 2019
Uber’s surprise acquisition of Dubai-based ride-hailing platform Careem for more than $3bn earlier this year highlights the maturity of the UAE’s startup sector. When most people think about tech in the Middle East, the UAE is normally high on the list. But few are aware of just how deep the country’s tech ecosystem really is. They don’t realise that the UAE calls on the best talent from around the emerging world and has close connections with some of the most vibrant tech ecosystems on Earth such as those in India, China, and East Africa.
After Uber’s purchase of Careem, savvy investors are naturally on the hunt for the next UAE unicorn. While it might be difficult to predict the future, there’s one area of technology that could provide a clue: payments. For the past decade, there has been a quiet payments revolution taking place around the world. In emerging markets, thousands of new mobile money applications come to market every year. Apple is even about to release its first credit card designed to be used on its mobile platform, Apple Pay. With more people than ever using smartphones, mobile money is fast, safe, and simply makes sense.
The World Bank has set 2020 as the target date for universal financial access. This target is important for understanding how Dubai’s tech ecosystem is developing and where the next trends are taking form. For context, universal financial access is part of a larger discussion about financial inclusion, which the World Bank argues is a “building block for both poverty reduction and opportunity for economic growth to digital financial services for joining the new digital economy.” In layman's terms, this push for financial inclusion has a lot to do with getting people that previously relied on cash into digital bank accounts and thus part of the formal financial systems.
The explosion in smartphone usage is the primary enabler for transformation in financial services. Millions of people around the world now use their phone to open digital bank accounts. That means they can enjoy the safety and security of currency that is backed by formal institutions as opposed to depending on fiat money that can be easily stolen, lost, or destroyed. Moreover, these new banking customers are, well, new customers. They can apply for other financial products such as savings and investment accounts. They can remit money home more easily.
The World Bank explains the shift as “financial inclusion facilitates day-to-day living, and helps families and businesses plan for everything from long-term goals to unexpected emergencies. As account holders, people are more likely to use other financial services, such as savings, credit and insurance, start and expand businesses, invest in education or health, manage risk, and weather financial shocks, all of which can improve the overall quality of their lives.” The possibilities are endless and that is exactly why the payments space is exploding with tech startups.
Why can Dubai lead in this exciting new sector? At the nexus point of global markets, Dubai is poised to distill all the trends in the payments ecosystem and create a truly remarkable product. Think about it: If you are an entrepreneur keen on building a payments solution that operates in emerging markets, Dubai is a natural place to set up shop. Not only can you see which platforms are working in upcoming markets but you also have a perfect Petri dish in Dubai to test different versions.
The next great innovation in the payments sector is going to happen from the ground up. If you consider some of the most innovative startups from remittance platforms in South Africa to bespoke financial planners for lower income families in India, you will see that development is taking place geographically closer to Dubai than San Franscico. To be sure, Silicon Valley still has the capital to swoop in and gobble up great startups but it lacks the intimate and familiar connections with these geographics that Dubai has.
Underlying this shift is the rise in the global middle class. This new sector of customers are hungry for technology solutions and payments is first on the minds of many. As one of the hubs for the new global middle class in terms of aviation, tourism, and business the UAE is poised to provide solutions from its own technology sector to solve the challenges of the future. This is where Dubai’s next unicorn is going to emerge.