The UAE is steadily growing as a home to fintech startups creating a transformation in various areas of the region’s finance sector.

Even if the unraveling of red tape is a prerequisite that has yet to be completely addressed, the future is promising for both B2C and B2B businesses.

"When startups enter a regulated industry they need the investment and the patience to see their idea through," said Chad Fox, a Dubai-based startup lawyer and founder of legal advice service, Disruptive.Legal.

“This may be more than double that of a non-regulated business. The emergence of ADGM (Abu Dhabi Global Market) and now DIFC (Dubai International Financial Centre) as free zones with an understanding of fintech is essential for these startups to get off the ground," Fox told Wamda.

"The best advice for these entrepreneurs is to have a conversation with the regulator early and treat them as the most important stakeholder in their business, because without their support their business isn't possible."

Fox, who served as a judge at a Startup Weekend Fintech Abu Dhabi in December, said being patient and performing due diligence early on were two traits that fintech startup founders should have. 

So, what are some fintech challenges and opportunities for the GCC, considering its countries’ fragmented regulations?

Glass half full

Pure Private Equity managing partner Jennifer Warren, who cofounded the niche investment company in the UAE after years in finance, said the early stage of fintech regulation in the GCC was a positive, if founders learn how to leverage it.

“Ultimately, fragmented markets such as the GCC create opportunities. This setting can also create a lot of small competition from other small competitors (like early stage startups), which means you really have to find ways to differentiate. It’s easier to differentiate than it is than it is to try to compete in more developed markets where you have to really be a big game-changer to compete against big players who have a huge piece of the market share,” she told Wamda.

“You see a lot of success stories in Asia, Africa and the Middle East when it comes to mobile payments, for example. Would these companies be able to compete in regions that have a stronger R&D and marketing in more developed regions?”

However, the key to sustainability for any early-stage fintech startup in the GCC is one that rings a familiar bell for founders in other sectors: raising money.

“From a consumer perspective there are a lot of gaps in the market, which means that a small player can come in. But the challenge, like anywhere, is getting the funding.”

Move fast

As someone who leads a team that ‘disrupts’ the traditional finance landscape in the GCC, Monami Tech CEO Ammar Afif said fragmented regulations in the GCC made operating in the region costly. But he added that this was a learning curve that could be mastered through well-implemented technology.

"The GCC region presents both challenges and opportunities. Being in a fragmented market with different customs, way of doing business and different legal and financial requirements in each region requires a varied approach which increases costs to do business in the region,” said Afif.

“From a macro-environment, where the (current reality is that the) GCC is facing headwinds due to oil prices, companies need to adopt technology to reduce costs, increase efficiency and be more innovative. Technology that is agile, does not require someone to make a large investment and can be shown to deliver a quick ROI to customers will succeed."

Feature image via Flickr/Tech in Asia.