Exploring Economic and Technological Determinants of FinTech Startups’ Success and Growth in the United Arab Emirates

Abstract

In the last few years, the United Arab Emirates (UAE) has emerged as a regional hub serving as an incubator of the FinTech ecosystem, where regulators began implementing policies to encourage the growth of Fintech ventures in 2017. However, detailed empirical evidence concerning the impact of various FinTech-level and ecosystem-specific factors as determinants of FinTech success and survival is yet to be discussed. This paper investigates the underlying factors influencing the success of UAE-based FinTech ventures. Several factors are included in the analysis, controlling for the hedonics of the FinTech, including the business model, availability of and access to finance, and business ecosystem framework. Data are pooled using a semi-structured questionnaire conducted with 32 FinTech founders. A qualitative analysis with an ordered logistic regression model was performed. The findings suggest that the availability of resources, in particular through venture capital, is vital to the success and survival of FinTechs as microbusinesses. However, financial barriers, the regulatory environment, and legal issues have a detrimental impact on facilitating the creation and growth of FinTech ventures. Furthermore, the business model dimensions “product/service offering” and “value proposition” tend to influence the success of these ventures. The empirical model’s findings will serve as a data-driven tool to help guide finance policymakers in their decisions on how to promote this new sector.

The Influence of Local Economic Conditions on Start-Ups and Local Open Innovation System

“…The results confirm the importance of human and financial resources in the creation of start-ups described in the references [8,12,18,40,43,46]. In Polish cities, resource conditions have the strongest impact on the development of this form of entrepreneurship.…”

“…Previous research and considerations show that, in the development of start-ups, the dominant role is played by resource conditions, which are the foundation of their functioning [40,41]. These conditions concern primarily human resources, both of a strategic and operational nature [42].…”

Fintech in Dubai: Development and Ecosystem

“…The attraction of specialized talents and professionals are examples of a supporting policy that will impact the landscape of financial services in Dubai and the UAE. These proactive government actions will benefit Dubai and the UAE, as well as their investment and financial environments as highlighted by Zarrouk, El Ghak, & Bakhouche (2021).…”

“…VCs are paying great attention to fintech startups in Dubai, as these firms provide innovative fintech solutions that add substantial value to any sector. At the same time, VCs, with their deep pockets, can support these startups, as most of the latter cannot survive without large funding (Zarrouk, El Ghak, & Bakhouche, 2021). Fintech is often a volume game.…”

“…The previous section also pointed out that regulators in Dubai aim to create a favorable regulatory environment for fintech as Dubai continues to see rapid change in its fintech ecosystem. Zarrouk, El Ghak, & Bakhouche (2021) highlight the importance of the regulatory environment in favoring or hindering the creation and growth of fintech ventures. These authors point out that the UAE, including Dubai, has a favorable regulatory framework that embraces the creation of innovation and implements policies to encourage growth in the fintech sector.…”