Thursday 11 March 2021
Dubai International Financial Center (DIFC), the leading international financial hub in the Middle East, Africa, and South Asia (MEASA) region has reported the best performance in its 16-year history.
Reaffirming Dubai’s growing reputation across the global finance industry, the number of new firms operating in DIFC grew 20%, taking the total to 2,919. A total of 915 financial companies are now active in DIFC, up 24% from 735 in 2019. The number of businesses in the FinTech and Innovation ecosystem more than doubled with 189 joining in 2020, taking the total to 303. This represents substantial progress on DIFC’s 2024 vision and strategy to drive the future of finance.
The wide range of new clients further contributes to the breadth and depth of DIFC. Business sectors across DIFC achieved exponential growth, including banking, capital markets, wealth and asset management, fintech, and professional services.
Dubai is resilient to challenges and has maintained its sustainable development trajectory in a tough global environment. DIFC’s performance also reflects the UAE’s and Dubai’s ability to partner with its business communities to facilitate continued growth despite the most challenging conditions seen in the international economy.
Notable financial services firms opening headquarters and regional offices in DIFC in 2020 included TATA Asset Management, Samba Financial Group, Caixabank, and AfricaRe. Fintechs included global and regional names such as Ebury, Ripple, Adyen, KoFax Me, and Tabby.
In 2020, total banking assets booked in DIFC increased 6% to USD 189 billion. An additional USD 64 billion of lending was also arranged by DIFC firms. DIFC based wealth and asset management companies invested USD 203.5 billion, up 106% from USD 99 billion in 2019, with the industry now worth USD 528.5 billion. Gross written premiums for the insurance sector reached USD 1.7 billion.
DIFC's operating profit was USD 125 million, broadly consistent with the prior year, despite global economic headwinds.
In 2020, DIFC introduced initiatives to support exponential growth. The number of fintech and innovation firms almost doubled in 2020 and has tripled in the last two years. The Center is now home to 303 businesses, which is more than 50% of those operating in the GCC. This has increased substantially following the introduction of tailored licensing solutions.
A major initiative launched in 2020 was the DIFC Innovation Hub, the region's only comprehensive technology ecosystem, providing education, training, and both incubator and accelerator programs. Firms in the DIFC Innovation Hub enjoy mentoring, networking, and access to VC funding, including the DIFC FinTech Fund.
DIFC introduced and updated laws and regulations to reflect global best practices and distinguish itself as the leading financial center in the MEASA region. The new Leasing Law provided further protection to property owners and tenants, aligning the Center's legal and regulatory framework with best practice and international standards. The new Data Protection Law brought the previous DIFC data protection regime in line with the EU's General Data Protection Regulation (GDPR) principles, a first for the region, reflecting the DIFC's commitment to data security, information protection, and cyber resilience.
In addition, DIFC issued an amendment to the Common Reporting Standard Law in August 2020, elevating reporting standards across firms based in the Center.
To support regulated firms based in DIFC, the Dubai Financial Services Authority (DFSA) adapted its approach as the COVID-19 pandemic evolved. It provided a comprehensive set of regulatory relief measures and held several outreach sessions with key stakeholders. The DFSA provided support relating to operational risk, business continuity, and cyber and financial crime risks, given that these may have been exacerbated during the pandemic.
The DFSA introduced the region’s first fully comprehensive money services regime and a bespoke regime for venture capital firms, both of which will facilitate the further development of the Center.
DIFC clients benefited from the independent courts in the Center, as did a number of firms who operate in other locations given their credibility and proven track record. In 2020, the volume of cases in the DIFC Court's main Court of First Instance (CFI) grew significantly. Cases brought before the CFI covered a range of sectors, including banking and finance, construction, and real estate, involving disputes related to breach of contract, insolvency, arbitration agreements, employment, and public international law. There was also a noticeable increase in the number of opt-in cases, with 50% of claims in the CFI originating from parties electing to use the DIFC Courts to resolve their disputes.
In 2020, the DIFC Courts also established its Arbitration Division, mandated to accommodate the rapidly increasing number of arbitration-related cases. Streamlining the arbitration-related cases under the new division has also led to increased efficiency of the process and speedy review of applications for interim measures and injunctive relief mechanisms.
DIFC also introduced the DIFC Master Health Insurance Scheme, which facilitates the purchase of cost-effective health insurance for registered companies operating from the DIFC.