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18 April 2024

DIFC achieves record-breaking growth in 2022, driven by FinTech and innovation

Published
By Emirates247

- Maktoum bin Mohammed: DIFC’s exceptional performance in 2022 demonstrates Dubai’s role as a major driver of innovation, entrepreneurship and next-generation technologies in the region’s financial sector

Dubai International Financial Centre (DIFC), the leading international financial hub in the Middle East, Africa and South Asia (MEASA) region continued to grow at a record-breaking pace in 2022 with the number of active registered companies rising 20 per cent from 3,644 in 2021 to 4,377 in 2022. New companies registered in DIFC in 2022 surpassed the annual milestone of 1,000 for the first time in the Centre’s history with 2022 seeing a total of 1,084 new firms.

The unprecedented growth, which supports the objectives of the Dubai Economic Agenda D33, further validates the vision of Vice President and Prime Minister of the UAE and Ruler of Dubai His Highness Sheikh Mohammed bin Rashid Al Maktoum to make Dubai one of the world’s leading commercial and investment destinations. The remarkable performance was driven by strategic plans aimed at advancing the scale and depth of value-generating innovation created by the DIFC community.

In 2022, DIFC’s combined revenue exceeded AED1 billion for the first time. The Centre recorded a revenue increase of 18 per cent year on year to reach AED1.06 billion from AED 897million in 2021. Operating profit for 2022 increased 19 per cent to AED679 million from AED573 million in 2021. Total assets crossed AED15.3 billion, reflecting DIFC’s strong financial position.

His Highness Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai; Deputy Prime Minister and Minister of Finance of the UAE; and President of the Dubai International Financial Centre, said: “DIFC’s exceptional performance in 2022 demonstrates Dubai’s growing role as a major driver of innovation, entrepreneurship and next-generation technologies in the region’s financial sector. The Centre’s performance, which has been guided by the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, to transform Dubai into one of the world’s biggest global financial hubs, reflects its ability to keep pace with global economic shifts and the rapid evolution of the world’s financial landscape, and provide a platform for financial companies to tap new opportunities. DIFC’s growth significantly contributes to the goal of the Dubai Economic Agenda D33 to transform Dubai into one of the world’s top three cities for business.”

“The Dubai International Financial Centre’s 2022 results also reflect the growing demand for a supportive ecosystem from global businesses looking to scale into emerging economies with high-growth financial services markets. With financial technology becoming a vital growth catalyst across sectors, the UAE’s ambitious initiatives to drive the future of finance will create immense opportunities and new economic growth not only in our region but also across the globe,” His Highness added.

In 2022, the Centre also recorded its best ever performance in additional net commercial space leased with 809,000 sq. ft. leased in 2022, compared to 349,000 sq. ft. in 2021.

Total banking assets booked in DIFC were stable at $199 billion.  An additional $166 billion of lending was also arranged by DIFC firms, up 54 per cent. As a global hub for emerging market Wealth and Asset Management, DIFC portfolio managers invested $164 billion in 2022 compared to $151 billion in 2021. Venture Capital raised increased to $1.2 billion, up by 78 per cent. Gross Written Premiums for the insurance sector reached $2.1 billion, rising from $1.8 billion in 2021.

DIFC is home to 17 of the world’s top 20 banks, 25 of the world’s top 30 systemically important global banks, five of the top 10 insurance companies, five of the top 10 asset managers and many leading global legal and consulting firms. The Centre leads MEASA in contributing to global industry development by being home to the largest clusters of banking and capital markets, FinTech, insurance, wealth and asset management and professional services companies in the region. Strong growth has continued across business sectors, including banking, capital markets, wealth and asset management and professional services.

DIFC-based FinTech and Innovation companies attracted over $615 million in 2022. FinTech and Innovation became the fastest growing sector in DIFC with 291 new clients. A total of 686 Fintech and Innovation firms, ranging from start-ups to global unicorns, are now based in DIFC.

A total of 1,369 financial and innovation related entities are now active and operating within DIFC, up 22 per cent from 2021, while 291 new FinTech and innovation firms joined in 2022 taking the total to 686, an increase of 36 per cent.

The number of Dubai Financial Services Authority (DFSA)-regulated financial entities grew to 590 with 89 regulated financial service firms authorised in 2022, up from 51 in 2021.

Notable firms joining DIFC in 2022 included ADIB, BIC-BRED, Continental Group International, FinTech unicorn Darwinbox, Jefferies, Habib Bank AG Zurich, Lord Abbett, 1291, Prevensure, Proton, Sculptor Capital Management Hong Kong Limited, 3S Money, United Bank of Africa Group and Volante.

His Excellency Essa Kazim, Governor of DIFC, commented: “Dubai’s economy continues to grow and DIFC is proud to be a noteworthy contributor to the emirate's GDP and a key creator of employment. The UAE's globally recognised management of the pandemic, strategic investment and business-friendly structural reforms, long-term residency schemes, and innovation-friendly regulatory framework have helped draw entrepreneurial talent from every corner of the world. Our focus in 2023 will be to accelerate the future economy by building upon our already strong position as a preferred gateway for businesses looking to expand into and grow within the massive Middle East, Africa and South Asia (MEASA) market and attracting more investment into the UAE's financial sector.”

Arif Amiri, Chief Executive Officer of DIFC Authority, said: “Remaining focused on delivering our 2030 Strategy has meant DIFC has had another exceptional year. In line with our vision to drive the future of finance, DIFC's comprehensive FinTech and innovation proposition has created unparalleled opportunities and success for start-ups, global players and unicorns. Our client growth continues to be strong across all sectors. However, we continue to be excited by the high numbers of financial firms and FinTech and innovation clients who are using DIFC as a platform to grow faster than the market. We are confident that DIFC’s approach will continue to elevate Dubai's reputation as a hub for technology and innovation, and further strengthen our position as a global centre for financial services.”

A competitive, differentiated global financial centre

DIFC is proving to be a catalyst for the UAE’s next generation of FDI. Dubai surpassed major financial cities, such as London, Singapore, New York and Paris, in attracting FDI in 2021. DIFC ranked first as a free zone globally in attracting foreign direct investment (FDI) every year between 2017 and 2021, reaffirming the DIFC's status as a global financial hub and supporting Dubai in attracting 58 FDI projects in the sector, worth AED926.2 million.

Supporting sustained economic growth and further differentiating the emirate as a global hub for financial institutions, FinTech businesses and innovation companies, DIFC continues to attract firms from around the world including high levels of interest from hedge funds seeking new places to establish. Firms within DIFC manage $445 billion worth of assets, highlighting Dubai’s reputation as a safe and secure investment destination as well as a preferred global financial centre. DFSA and DIFC’s globally recognised levels of transparency and governance have helped attract some of the world’s most renowned financial companies, such as Goldman Sachs, Morgan Stanley and BlackRock.

Empowering the future of finance

In the first quarter of 2022, DIFC co-hosted the largest Dubai World Insurance Congress with Global Reinsurance, which welcomed 800 delegates from 51 countries, demonstrating the city’s emergence as a leading venue for global knowledge exchange in the financial industry.

Reflecting the UAE government's commitment to supporting family businesses and the contribution they make to the economy, DIFC announced the formation of the first DIFC Family Wealth Centre. The Centre is expected to attract family businesses and UHNWIs from the region and across the world to establish a presence in Dubai.

DIFC’s ability to attract hedge-funds has attracted international attention. Its tailored proposition, including subsidised license fees and quick set-up, has resulted in several hedge funds joining DIFC in 2022, with more in the pipeline.

DFSA expanded its digital assets regimes for DIFC clients to include recognised cryptocurrencies.  These regulations will carefully support supervised innovation in a measured, responsible and transparent manner.

Reflecting its ability to attract the best financial talent in the region, DIFC recorded its fastest rate of employment growth with employee numbers rising to 36,083, a 22 per cent increase year-on-year. This demonstrates DIFC’s growing profile as a global talent hub for both finance and FinTech. With a high-skilled workforce, representing over 160 nationalities, the DIFC community makes the highest per-capita contribution to GDP across all economic sectors in Dubai.

 

A global home for FinTech and Innovation

To help accelerate the adoption of next-generation technology solutions in the industry, DIFC hosted FinTech Week to discuss the future drivers of growth in financial services spanning 10 key themes. These included Web 3.0, metaverse, NFTs, crypto, blockchain, payments, embedded finance, open banking, RegTech, and ESG. More than 1,000 trailblazing FinTech innovators, leading investment firms, banks, policymakers, and service providers attended the event.

Building on the success of FinTech Week, DIFC will also host the Dubai FinTech Summit in 2023. Announced by His Highness Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai, Deputy Prime Minister and Minister of Finance of the UAE, and President of DIFC, the global event will bring together more than 5,000 experts, thought leaders, policymakers and decision-makers in Dubai to discuss how they can shape a new wave of innovation, enterprise and growth for the international financial industry.

To attract the best minds and companies from around the globe to Dubai and help those already based in the Centre to grow quicker, DIFC introduced the world’s first Venture Studio Launchpad focused on ubiquitous finance and digital asset technologies. By providing all the necessary support to develop, test and launch new start-ups, scale-ups and corporate ventures, the Launchpad will help change the way companies are built.

Having introduced the Venture Studio Launchpad, DIFC also announced a partnership with the Global Start-up Network to increase the relevance of studios to start-ups.

DIFC hosted its annual flagship FinTech Hive Investor Day in the metaverse for the first time, inviting avatars of global investors to meet and interact with accelerator graduates of DIFC FinTech Hive, the first and largest financial technology accelerator in the MEASA region.

Additionally, the DIFC Innovation Hub hosted Open Finance Week, creating further opportunities for the industry to engage and share their expertise with each other. This follows the launch of the region’s first Open Finance Lab to promote the development and growth of the UAE financial technology sector by educating and engaging banks, regulators and the industry.

 

A future focused financial centre

DIFC maintained its position as the leading financial centre in the region in the Global Financial Centre Index rankings and achieved its highest increase in its global ranking in the green financial centre index. In 2022, DIFC partnered with the Global Ethical Finance Initiative (GEFI) to launch the first industry led programme ahead of the United Nations Framework Convention on Climate Change’s 28th Conference of the Parties (COP28) to be held in Expo City Dubai. The Path to COP28 will drive change across the world’s financial industry relating to delivering Net Zero; unlocking Islamic Finance; financing nature and biodiversity; and financing sustainable development goals. As host financial centre for the Path to COP28 programme, DIFC is supporting a series of report launches, roundtables, training programmes and community engagements in the run-up to the event.

The Dubai Sustainable Finance Working Group (DSFWG), powered by DIFC and Dubai Financial Market (DFM), has introduced a self-assessment tool for measuring the maturity of Environmental, Social and Governance (ESG) policies and practices in companies. This is aligned with DIFC’s national commitment and its vision and strategy for sustainability as well as the UAE and Dubai’s strategic initiatives and the UN Sustainable Development Goals.

DIFC continues to provide access to best-in-class learning for undergraduates, postgraduates and executives through the DIFC Academy. A total of 3,600 learners and graduates completed programmes offered out of the Academy in 2022.

More than a financial centre

In 2022, DIFC continued to develop its position as one of Dubai’s leading lifestyle destinations. Footfall within Gate Avenue increased to 10.34 million, a year-on-year increase of 71 per cent.

A wide range of lifestyle focused activations took place in DIFC throughout the year including the well-established Dubai Watch Week, Dubai 30x30 Fitness Challenge and Bloomberg Square Mile. New activations in the past year included Prototypes for Humanity – a collection of the world’s best inventions that will benefit humankind and a premium fan zone organised during the FIFA World Cup 2022.