Blockchain initiative drives Dubai’s fintech development

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The Dubai Land Department (DLD) has become the world’s first government agency to adopt blockchain technology for all of its transactions, with the development part of the emirate’s plans to strengthen its position as an international leader in financial technology (fintech) and information.

Launched in early October at Dubai’s GITEX Technology Week, the initiative will see blockchain systems used to create a secure database to store all real estate contracts and lease registrations in the emirate.

A tenant database will also be created, allowing occupants to pay for property-related bills electronically without cheques or papers, while also removing the need to physically visit government agencies when paying for goods and services.

The DLD has developed the initiative in cooperation with a number of government entities and private companies, including the Dubai Electricity and Water Authority, wasl Asset Management Group, Emirates NBD, IKEA and other property-related entities.

As a result, customers of all stakeholders involved will have access to the database, providing investors with up-to-date market data, further improving the accuracy of information, the credibility of investment transactions and the transparency of activity on the market.

Blockchain growth to improve efficiency

This initiative comes amid an increase in fintech development in Dubai, with the emirate launching its own blockchain strategy at the end of last year that aims to move all government transactions to the online database by 2020.     

While initially associated with the digital currency Bitcoin, blockchain-encrypted databases have been increasingly utilised by businesses and government institutions globally in recent years.     

The technology allows for digital information to be distributed – but not copied – across a constantly updated and publicly accessible network, meaning that information can be easily verified. However, given that no centralised version of the information exists, hackers are unable to corrupt the data, improving the security of financial transactions undertaken on the platform.

This development in blockchain technology use, a key feature of the emirate’s Dubai Smart City project, is part of a shift away from traditional administration and towards the digitalisation of service provision, with the programme aiming to reduce government business costs, boost fintech security and promote economic opportunities through the creation of new private sector enterprises.

The authorities hope to save Dh5.5bn ($1.5bn) annually in document processing costs by shifting to blockchain technology, including cutting paper transactions by 100m per year and slashing 25m work hours associated with the handling of paper documents.      

Dubai’s entrepreneurs to benefit from supportive environment

On top of increased efficiency and environmental savings, Dubai’s commitment to blockchain expansion is also expected to offer local entrepreneurs the opportunity to launch new apps and products both domestically and abroad.

The emirate’s Blockchain Strategy forecasts that the benefits of an enhanced environment will lead to the creation of new industries, facilitating the expansion of thousands of new business opportunities in the private sphere. In particular, growth is expected in areas such as fintech and banking, health care, transportation, urban planning, smart energy, digital commerce and tourism.

This expansion could make Dubai more competitive when attracting and training business talent, with local stakeholders confident the technology will shape commercial dealings in the emirate in the medium term.

“Blockchain will have a considerable impact on how business is done within the region and will be a very positive development,” Taha Khalifa, Intel’s regional director for the MENA region, told OBG.   

Public sector leading the way for blockchain growth

To realise these goals, the authorities have taken an active role in promoting the technology, a step they hope will lead to greater market participation.

“The public sector is really acting as the leader at the moment,” Lina Hediah, executive director of blockchain software developer ConsenSys, told OBG.  “Once it is rolled out by the government, more private sector applications will also be developed.”

However, in order to maintain such leadership and facilitate blockchain’s take-up by the private sector, more needs to be done to build the skills of those using the technology, Hediah told OBG.

“It is important to develop the broader ecosystem as well, particularly on the talent side; we need to create workshops to train blockchain developers,” she said.   

Efforts to improve the environment include the establishment of incubators and training programmes supported by both state and private entities.

One such development is the Dubai International Finance Centre’s Fintech Hive initiative, which provides early- and growth-stage firms with a 12-week programme to help with business development, while also providing exposure to international financial institutions. Of the 11 finalists in the inaugural Fintech Hive programme, unveiled in August, two projects focus on blockchain developments.     

The development of the sector in Dubai has also led the UAE to consider updating the existing regulatory framework surrounding blockchain technology, with the hope it will provide greater transparency over transactions and activity on the platform.   

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