Dubai the ‘natural next market’ for India’s B2B fintechs
Two years ago, all of Safexpay’s revenues came from its home market of India.
Today, while India, Asia’s third-largest economy, still constitutes the bulk – 80% – of the Indian B2B fintech firm’s business, the other 20% now comes from contracts in the United Arab Emirates (UAE) and wider Gulf region.
Ravi Gupta, founder and CEO of Safexpay, said the company has recorded close to 400% year-on-year growth in its international business since it ventured into Dubai.
“A miscalculation Indian fintechs make about expanding to Dubai is that the population is too small,” Gupta said.
“But we look at Dubai as an opportunity because it’s a testbed for populations from across the globe. It’s also a misconception the government does not favor non-local players. On the contrary, Dubai welcomes innovation. We can leverage our innovations built in India here with faster adoption and use the city as a springboard to expand fast.”
Mumbai-founded Safexpay provides financial institutions with white label payment gateways, neo-banking solutions, QR Code administration software and Payout API.
Safexpay has earmarked about $10 million for regional expansion, Gupta said.
The fintech will be venturing into Saudi Arabia, the Arab region's largest economy, Qatar, the world’s richest country per capita, and the oil-rich Sultanate of Oman, this year.
Safexpay is also eyeing other regional markets as it establishes its international headquarters in Dubai where it plans to present global launches for new products including payment through facial recognition.
The global fintech sector is predicted to be valued at $305 billion globally by 2025, according to Research and Markets.
Closer to home, a 2022 report by Dubai International Financial Centre (DIFC), a special economic zone and among the fastest-growing financial centers in the Middle East, Africa and South Asia (MEASA), forecasts the region’s industry will double in value from $135.9 billion in 2021 to $266.9 billion in 2027.
Fintech became the fastest growing sector in DIFC last year, and according to a 2023 Mordor Intelligence report more than 20% of the world’s fintech businesses are based in Dubai.
“Dubai has proven time and again to be the most opportune hub and launchpad for businesses in the Gulf that look to explore the African continent as well to expand out of India,” Gaurav Dhar, a board member of the MENA Fintech Association and CEO of Dubai-based Marshal Fintech Partners, said.
“Looking at demographic, innovation-friendly regulatory frameworks and the diverse nature of global businesses and residents that operate and live in Dubai, fintechs from India will find themselves most at home to test their technology, house employees and grow their talent pool, prior to moving to any other geography in the Gulf or Africa.”
Dhar added that Dubai is at the forefront of business setup infrastructure, providing security of both structure and transparency.
The UAE’s long-term Golden Visa residency is also a key attraction for founders from emerging economies.
Dhar said data sets and revenue characteristics for fintechs serving India’s businesses and consumers on a large scale are in “prime position” to fill regional market gaps, particularly in the consumer lending and small business lending space that is taking off in the region.
However, buy-now-pay-later (BNPL), and payments for point of sale and e-commerce technology, are a “crowded space”, he cautioned.
“There’s room to play but at a mature level,” he said, warning that the might of technology and capital alone cannot trump existing players.
“Margin erosions and a race to the bottom are not long-term progressive strategies in these areas. Certain billion-dollar startups have made entries into this market, retreated, and come back post such learnings.”
India’s imminent Rupee-Dirham trade deal with the UAE also introduces exciting prospects, Dhar noted.
“Levers such as this have vast implications for businesses and consumers,” he said.
“It allows for a streamlined movement of local currency from one of the largest markets in the world while minimising loss of value on either side.”
The Middle East is the fastest-growing real-time payments market globally and transactions are expected to grow from $675 million in 2022 to $2.6 billion by 2027, according to a 2023 study by NASDAQ-listed payments technology provider ACI Worldwide.
Kanchan Kumar, co-founder and CEO of Truly Financial, a US-based ‘challenger institution’ for startups, also sees “significant” opportunity for his neobank to support global expansion of fintechs from both the Gulf and India.
Backed by UAE-based investors including Dhar, Truly Financial was among the online-only global banks to cash in on the collapse of Silicon Valley Bank (SVB) that had been the lender of choice for startups and venture capitalists worldwide.
Before the SVB fallout, 10% of Truly’s customer base was from India.
The number has since doubled.
Meanwhile, Truly counted only a “handful” of customers from the UAE prior to SVB’s failure but now makes up 5% of depositors.
“With Dubai’s status as a large trading hub and a hub for small businesses, we see opportunity for Indian fintechs with banking, payment and Escrow solutions,” Kumar said.
“Truly Financial can provide them with the banking infrastructure that is required to build.”
Kumar called Dubai the “natural next market” for B2B fintechs in India, particularly for small business solution providers.
“Dubai mimics the Indian B2B market and you might find a similar customer base,” he said.
“We have already seen that with software-as-a-service (SaaS) companies. However, if you’re building fintech for the Indian consumer, the Dubai market is different and it may not work.”
Last year, the Federation of Indian Chambers of Commerce & Industry (FICCI) and DIFC launched an ‘India-UAE Start-Up Corridor’ to help both startup ecosystems expand and scale.
It will target more than 50 validated startups in India and the UAE with a vision to grow 10 into unicorns by 2025.
The initiative builds on the recently signed Comprehensive Economic Partnership Agreement between the nations, which aims to increase trade by 120% to $100 billion in five years.
DIFC is currently home to more than 100 Indian financial firms including ICICI Bank, State Bank of India, Bank of Baroda, HDFC Bank, IL & FS, Phillip Capital and Aditya Birla Sun Life Asset Management, alongside insurers like The New India Assurance.
India’s fintech unicorn Yubi also opened its regional headquarters of its risk-mitigation platform unit ‘spocto’ in DIFC in 2022.
More than 30% of Dubai’s startup community is currently represented by Indians.
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