Dubai Emerges as Global Finance Hub

Quick - what are the centers of world finance?

New York, right? Hong Kong. London. We all know the capital cities of the financial world. The list has been the same for decades.

Established in 2007, Z/Yen’s Global Financial Centres Index is published twice a year. It summarizes the competitive offerings of cities that are major global financial centers, ranking them according to more than 133 factors. September’s ranking, the 26th since the GFCI began, was based on an evaluation of 114 candidate cities.

Dubai placed 25th in the inaugural GFCI in 2007. It has progressed steadily, rising 17 places in 12 years. It placed 12th in the March 2019 rankings before rising to the number eight spot in September.

Dubai’s rise in the ranks has parallelled the development of the DIFC, the only financial hub in the Middle East, Africa, and South Asia region to place in the GFCI top 10. The ranking recognizes DIFC’s strengths within each of the index’s five major evaluation areas: business environment, human capital, infrastructure, financial sector development, and reputation.

Dubai officials are quick to credit the DIFC project for the city’s rapid rise. “The city’s steady ascent in rankings has been driven by DIFC’s remarkable success in building an ecosystem that fosters financial industry growth,” says Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, deputy ruler of Dubai and president of DIFC. “DIFC is one of the key initiatives at the forefront of Dubai’s new phase of growth and its efforts to create a business and investment environment that rivals the world’s best.”

Continues Al Maktoum: “In line with the vision of vice president and prime minister of the UAE and ruler of Dubai Sheikh Mohammed bin Rashid Al Maktoum, Dubai will further increase its commitment to supporting the financial industry and making the city a leading player in shaping the future of the global financial landscape. Our sights are set firmly on the goal of becoming the number one-ranked global financial center. We will also continue to work closely with the industry to help them deliver value and find new opportunities for growth.”

Business Environment

The UAE has invested in DIFC’s business environment, the top factor influencing global competition for financial centers, and enhanced its legal and regulatory framework to fuel growth. DIFC has provided stability for regional and global organizations that conduct operations from the center.

DIFC’s English-language legal and regulatory framework remains the most sophisticated and business-friendly Common Law jurisdiction in the region, intentionally aligned with international best practices.

In May 2019, the DIFC’s independent regulator, the Dubai Financial Services Authority, joined other financial regulators across the Emirates in announcing the UAE passporting system, a regulatory mechanism for the promotion and supervision of investment funds that encourages firms based in other countries to enter the local market.

In June, DIFC unveiled a new insolvency law to facilitate a more efficient and effective bankruptcy restructuring system for stakeholders operating in the center. The center has also enacted regulations to make structuring and financing faster, more flexible, and more cost-effective. Other new laws address key issues such as paternity leave, sick pay, and end-of-service settlements for the DIFC workforce, protecting and balancing the needs and interests of employers and employees. It also launched a workplace savings plan to support a transition from defined-benefit pension plans to a defined contribution scheme that includes a voluntary savings component for employees.

Human Capital

With more than 24,000 professionals working in over 2,200 companies, the DIFC is the largest and most diverse pool of industry talent in the region. Investing in the development of the regional workforce continues to be an important factor supporting growth. That’s where DIFC Academy comes in. The continuing professional development program offers world-class financial and legal education programs through strategic partnerships with 26 leading educational institutions and government entities. To date, DIFC has seen more than 5,500 graduates successfully undertake executive education courses and programs in finance, business, and law.

Infrastructure

Accessibility, transport, and infrastructure have proved to be a great strength of DIFC and Dubai generally, allowing the center to expand and diversify. Dubai’s connectivity within the MEASA region allows organizations within DIFC to address business opportunities throughout the region.

DIFC added more than 250 new companies to its roster in the first half of 2019, bringing the number of active registered firms to 2,289 - a 14% year-over-year increase. More than 671 finance-related firms are on that list, an increase of 11 percent from the same period last year.

In January 2019, the DIFC reaffirmed Dubai's mission to become a major economic force in the Middle East by unveiling the latest phase of an ambitious expansion project that will see the center triple in size.

Financial Sector Development

As the leading global financial center in the MEASA region, DIFC is at the forefront of financial sector advancement. The index highlights the center’s strong presence of international institutions, government backing, and diversity of financial sector offerings. DIFC’s wealth and asset management market, $424 billion in 2018, is equivalent to approximately 30% of the Cooperation Council for the Arab States of the Gulf’s combined GDP. Key factors supporting the center’s competitive capacity include the DIFC’s focus on boosting financial sector development, investing in innovation, strengthening the already robust fintech ecosystem, and developing partnerships with international accelerators.

DIFC is home to more than 100 regional and international fintech firms. The center has witnessed a significant increase in the number of fintech startups applying to participate in its accelerator programs. The third cohort of the DIFC FinTech Hive accelerator program received 425 applications from startups - a 42% increase over 2018.

Subsidized licensing options and access to a dedicated $100 million FinTech Fund managed by Middle East Venture Partners and Wamda Capital, alongside access to partners and mentorship, have created a formidable environment that helps fintech firms grow, expand, and thrive, positioning Dubai to be the fintech hub for the region.

Reputation

Dubai was ranked as the seventh-place fintech location globally for economic potential by fDi Markets and the Financial Times, and as a top 10 fintech hub by Financial Times Group’s The Banker. The DIFC FinTech Hive has been recognized as a top 25 financial innovation lab by Global Finance.

DIFC continues to be recognized as an appealing place to conduct business, with a comprehensive lifestyle offering more than 400 restaurants and retail offerings, three five-star hotels, seven elite art galleries, and more than 100 days of unique arts, culture, and wellness activities per year, making it the destination where business meets lifestyle.