Revolut's UAE launch: A stepping stone to regional fintech expansion?

What you need to know

• Revolut has received in-principle approval in the UAE for two key licences: Stored Value Facilities and Retail Payment Services (Category II).
• The UAE’s large expatriate population and status as a global remittance hub make it an attractive market for Revolut’s low-cost, multi-currency accounts and transfer services.
• The country’s high rate of digital adoption, with nearly 90% of residents using digital banking, creates a receptive environment for Revolut’s offerings.
• The UAE’s regulatory environment is supportive of fintech innovation, and Revolut’s appointment of a regional CEO demonstrates its commitment to local collaboration.
• Revolut’s entry into the UAE is widely viewed as a launchpad for further expansion into the wider GCC, including potential moves into Saudi Arabia.
• The company faces challenges such as diverse regulatory regimes, cultural differences, and strong competition from both established and emerging fintech players in the region.

What you need to do

• Evaluate how Revolut’s multi-currency accounts and low-cost remittance services could benefit your personal or business financial needs, especially if you are part of the expatriate community.
• Stay informed about the regulatory requirements for using digital banking services in the UAE, including any compliance or verification steps.
• Compare Revolut’s offerings with those of existing digital banks and fintech providers in the UAE, such as Wio Bank, Liv, and Zand.
• If you are a business or high-frequency remittance user, assess the potential cost savings and operational efficiencies from using Revolut’s platform.
• Consider the implications of Revolut’s potential expansion into other GCC countries if you have cross-border financial interests in the region.
• Be aware of the need for Sharia-compliant products in certain markets, and check whether Revolut’s services align with your specific requirements.

Revolut, the UK-based financial technology company that offers a digital banking app, has received an in-principle approval last month from the Central Bank of the UAE (CBUAE) for two licenses: the Stored Value Facilities and Retail Payment Services (Category II). This is a significant step toward Revolut launching its suite of services for retail customers in the UAE and could also be the first step of a much bigger step with regards to a wider strategic push into the wider GCC region. Backed by Mubadala, the sovereign wealth fund acquired a stake in the company during a share sale in August 2024, Revolut's entry could reshape retail banking in one of the world's most dynamic and growing economies.

Why the UAE is the right for Revolut's entry

The UAE provides an ideal opportunity for Revolut's regional ambitions, when we look at the market advantages:

• Global remittance hub: The UAE has large number of expatriates, around 88% of the population, and therefore generates substantial remittance flows which has exceeded $50 billion in 2019. One of Revolut's core offerings is low-cost, multi-currency accounts and transfers which would be competition to the traditional exchange houses and banks.
• Digital adoption: The UAE has a young, tech-smart population and therefore a high rate of digital adoption, with almost 90% of residents already using some form of digital banking. Therefore, there is an environment ready for Revolut’s products and services.
• Regulatory environment: The CBUAE has created a supportive and forward-thinking regulatory environment to encourage fintech and digital innovation. Revolut's appointment of Ambareen Musa as CEO for Revolut in the GCC reinforces its commitment to collaborating with local regulators and building a regional strategy.

Potential for wider GCC expansion

Revolut's entry in the UAE is widely being seen as a launchpad for expansion across the wider GCC. The company is reported to already looking at opportunities neighbouring Saudi Arabia, having previously announced plans back in 2019, to expand into 24 new markets, including Saudi Arabia, through a partnership with Visa. Expanding beyond the UAE will require a strategy to overcome specific challenges each new market:

• Diverse regulations: While the UAE offers a clear regulatory path, other GCC nations have separate regulatory and licencing regimes. The success will depend on a deep understanding of each local market needs and requirements.
• Market differences: Cultural and religious nuances, including the requirement and/or demand for Sharia-compliant products, will need to be considered. In certain jurisdictions, Revolut may need to tailor its services to compete effectively with local retail banks.
• Competition: The GCC fintech market has grown rapidly since the pandemic and is becoming very competitive. There are established players, such as Wio Bank, Liv, and Zand, alongside newer entrants. Revolut's encompassing "all-in-one" app provides a powerful competitive proposition by integrating multiple services into an application.

A long-term vision

Revolut's long-term ambition is clear: to be one of the top three financial apps in every market it enters. Its UAE launch, which is backed up by a strategic senior hire and a track record in global expansion, is a crucial step towards this goal in the GCC and wider Middle East. While the challenges remain, Revolut's approach of focusing on regulatory compliance, leveraging local expertise, and adjusting its products to regional needs positions it well to capture market share and accelerate the digital transformation of financial services across the GCC. Ultimately, the winner in this evolving landscape will be the consumer, who stands to benefit from increased competition, lower costs, and more innovative financial tools.

Authors: Clint Dempsey, Partner and Pronnoy Sengupta, Associate.

For tailored advice on Middle East financial services and fintech regulation, please feel free to contact Clint Dempsey or Pronnoy Sengupta.