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How to start a financial technology company in Dubai?

Start a financial technology company in Dubai
February 2, 2024

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The UAE is transforming into one of the economic hubs of the world. Because of the dynamic business environment and commitment to the technical innovation of Dubai and Abu Dhabi. Many companies want to start a financial technology company in Dubai to serve the entrepreneurs and people.

Launching a FinTech firm in Dubai can prove an exciting journey for new business owners.However, it is crucial to carefully navigate the specific requirements. Anyways, forming a financial services business in Dubai can turn out an exciting venture.

Overall, financial technology is a dynamic and disruptive force in the international economic landscape. It offers innovative solutions and has the potential to make financial services more affordable, simpler, and user-friendly for everyone. Therefore, the FinTech companies are revolutionizing the way we manage money, while making the experience efficient, and convenient.

Defining the financial technology (FinTech)

What is financial technology (FinTech)?

In a nutshell, financial technology (FinTech) is the application of new technology to improve the financial services. Moreover, it aims to automate the delivery and use of financial products for companies, business owners, and consumers. The core concept is to use technology to make financial processes readily accessible, faster, easier to perform, and more secure.

FinTech is a portmanteau or a made-up term from the combination of two words “financial” and “technology”. It is a rapidly evolving industry that impacts both businesses and users in numerous ways. Artificial intelligence, blockchain, cloud computing, and big data are known as the “ABCD” (four key areas) of FinTech (financial technology).

Initially, the backend systems of financial institutions like banks were the only ones using FinTech. Over time, it underwent expansion into various sectors like retail banking, investment management, fundraising, and education. Presently, we interact with fintech regularly through mobile banking, money transfers, and online investment management.

Usage of fintech with examples

Which are the uses of financial technology with examples?

These are global examples of the use cases of FinTech for inspiration to start a financial technology company in Dubai.

  • Mobile banking and payment apps: Google Pay, Apple Pay, Venmo, Zelle, DubaiPay
  • Investment platforms and robo-advisors: Acorns, Robinhood, Wealthfront, Sarwa
  • Peer-to-peer lending platforms: Prosper, Lending Club, Beehive
  • Blockchain-based applications: Cryptocurrency exchanges, NFTs, Cross-border micro-payments
  • Insurance startups: Lemonade, Oscar Health, Yallacompare
  • Personal finance and budgeting tools: Mint, YNAB, WallY
  • RegTech: Tools for regulatory compliance in finance
  • Cryptocurrency trading (in crypto or alt coins like Bitcoin, Ethereum, BNB, Litecoin, Polkadot, XRP,  etc.)

Advantages of financial technology companies

What are the benefits that fintech companies provide?

Here are some rewards that you can offer as you start a financial technology company in Dubai.

  • Financial inclusion: Provides access to financial services for under-served populations
  • User convenience: 24/7 access to financial services from anywhere with a smartphone
  • Efficiency: Faster transactions, automated processes, and streamlined paperwork
  • Low operating budgets: FinTech reduces operational budgets for companies in the industry
  • Cost savings: Lower fees and more competitive rates in comparison to traditional financial institutions
  • Customer personalization: Customized financial solutions based on individual needs and goals
  • 100% foreign ownership: Mainland Dubai and free zones allow full foreign ownership
  • Tax reduction: The competitive tax regime of Dubai enables you to maximize profits
  • Digital-first infrastructure: Dubai is adopting emerging technologies including blockchain
  • Top tech talent: Get access to skillful professionals in the fintech sector
  • Government support: Initiatives like the UAE Blockchain Strategy 2021 and Dubai Smart City are fueling fintech growth

Challenges for financial technologies companies

Do you know the challenges that fintech companies face?

Given below are some challenges that you have to solve, as you start a financial technology company in Dubai.

  • Regulatory uncertainty: Evolving regulations can impact how FinTech companies operate
  • Security and privacy concerns: Protecting sensitive financial data from cyberattacks and information breaches
  • Financial literacy: Ensuring consumers understand the risks and rewards of financial products by banks and investment institutions
  • People embrace: Broadening the customer-base to the general public

Considerations before starting a fintech company

Which things you need to think while forming a fintech company in Dubai?

These are the things that you have to consider before you start a financial technology company in Dubai.

Now, we briefly look upon these considerations.

Identify business activity

Decide the specific fintech activities that your company wants to conduct. After all, the financial technology industry is very broad. So, single out a specific problem or gap that you can address with your solution.

Niche down to pinpoint the financial services that your company intends to provide to the users. For example, payment processing, lending, wealth management, digital wallets, crowdfunding, etc. Also, it determines the kind of trade license that your fintech company requires.

Select the legal structure of your financial technology company in Dubai. Therefore, consider important factors like flexibility, control, and regulatory requirements. Your decision about business jurisdiction must depend on your business goals to pick the right fit from these options.

  • Mainland company: Also known as onshore company, it operates within the mainland of Dubai, and allows full access to the UAE market
  • Free zone company: It is easy to set up and offers greater flexibility but operates within a specific free trade zone. Popular options include Dubai International Financial Centre (DIFC), Dubai Multi Commodities Centre (DMCC), and Dubai Technology Entrepreneur Campus (Dtec). Also, you can settle for the Meydan Free Zone, Abu Dhabi Global Market (ADGM), etc.
  • Offshore company: Any universal fintech company can open an offshore branch in Dubai to avail several incentives. For instance, low administration costs, no minimum share capital requirements, ownership/control, data confidentiality, tax reduction, etc.

Reserve company name

Pick a unique and relevant company name, then check its availability with the authority. Any mainland company should register its business name with the Department of Economic Development (DED). Whereas, a free zone company must reserve its company name with the regulatory authority of its jurisdiction.

Select trade name

Come up with an appropriate trade name for your fintech company. Besides, make sure that the trading name aligns with your business activities and company goals. Pick a compliant name that follows the UAE naming guidelines.

Pick your funding path

Secure your funding from bootstrapping, angel investors, venture capitalists, or other appropriate sources. Also, the amount you need depends on your fintech business model. Nevertheless, keep room for growth plans to drive your future evolution.

Secure necessary capital to effectively run your financial technology company. Also, the minimum base capital requirement depends on the chosen license and regulatory body. However, it begins from USD $10,000 for smaller fintech activities and processes.

Procedure for beginning a FinTech company in Dubai

What is process for registering a FinTech company in Dubai?

Each regulatory body in Dubai has its own application procedure and requirements. Nonetheless, there are similarities in the registration process of DED and free zone authorities. Here is the step-by-step process to start a financial technology company in Dubai.

Next, we take a brief look on this procedure.

Draft the necessary legal documents like the Memorandum of Association (MOA) and Articles of Association (AOA). Prepare supporting documents like business plans, financial projections, and shareholder information. Submit these documents with your passport and visa to DED or the relevant free zone authority.

Acquire initial regulatory permits

Ensure to seek prior regulatory permissions for your business activities in the financial sector. Also, you may need NOC from the Dubai Financial Services Authority (DFSA). Similarly, you may require approval from the Central Bank of the UAE (CBUAE) for payment processing or e-wallets.

Get a trade license

Obtain a trade license for your fintech company from the relevant regulatory authority. However, the specific license for the fintech industry depends on your business activities. Common options include the DFSA Fintech License, ADGM Fintech License, and CBUAE Payment Service Provider (PSP) License.

Also, think about taking the Innovation Testing License (ITL) to test your financial product before full licensing. Pay the fees for application processing, company registration, licensing, and other permits. Once, you get approval from the regulatory authority, receive your license, and start business operations.

Open a corporate bank account

Set up a business banking account in Dubai to smoothly run your operations. Therefore, find a reputable bank familiar with fintech companies and their specific needs in the UAE. Likewise, manage your company finances and accounting with a bank that complies with worldwide regulatory requirements.

Arrange your office

Establish a physical presence for your financial company by setting up an office space. So, find a workplace in a suitable location, keeping in view your business model and user requirements. Furthermore, you may consider a co-working facility, or a virtual office, depending on your preferences and budget.

Comply with regulations and reporting

Understand the evolving regulatory requirements in the fintech industry, as staying up-to-date is crucial. Also, maintain regulatory compliance by continuously adhering to the set rules and update your licenses on time. Thus, keep active regulatory reporting with the relevant authorities about your financial activities and operations.

Conclusion

Globally, businesses are transforming to better serve the people. Therefore, you can start financial technology company in Dubai to streamline their operations. Because, by streamlining their daily tasks, businesses can facilitate their customers more.

Embrace the evolution by hopping on the fintech bandwagon. After all, professional business consultants in the UAE can make your journey very smooth. The consultants at KWS Middle East are available to help you all the way.

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