By Srishti Dixit, Founder & Managing Director, ONS FinServ Group
The Middle East has demonstrated that it can attract international managers, sophisticated capital and experienced financial professionals. The next question is whether its operating ecosystem can mature at the same pace. As fund structures become more sophisticated, the competitive advantage will increasingly come from the governance, technology, people and processes supporting the licence.
1. The DIFC now counts over 500 wealth and asset management firms and more than 100 hedge fund managers. What does this concentration signal about the Middle East’s transition from a regional capital-raising market to a primary global asset-management hub?
These figures signal a transition from market attraction to institutionalisation. DIFC ended 2025 with more than 500 wealth and asset-management companies, including 102 hedge funds. The DFSA separately reported 121 authorised fund-management firms, 276 funds, USD 176 billion in assets under management and USD 220 billion under advisory. Presence alone will therefore become less differentiating. Investors can now compare managers based on decision-making substance, governance, operational depth and reporting quality. The next phase will be measured not simply by how many firms establish themselves, but by how much capital, expertise and genuine investment activity is managed from the region.
2. When you say the next asset-management race will be won on infrastructure rather than licences, what does “infrastructure” actually mean for a fund manager?
Infrastructure is much broader than software. It is the combination of people, governance, processes, data and specialist providers that allows a fund to operate reliably. It includes regulatory substance, qualified officers, boards and committees, investor onboarding, fund accounting, valuation, cash controls, reporting, cybersecurity and business continuity. It also extends to the administrator, custodian, bank, auditor and legal and compliance advisers supporting the structure. A strong investment team can originate excellent opportunities, but fragmented data, unclear responsibilities or inconsistent valuations can quickly undermine investor confidence. A licence permits a manager to operate; infrastructure makes the manager scalable, resilient and institutionally investable.
3. Does this shift suggest that obtaining a regulatory licence is becoming easier, or has it simply moved from a competitive differentiator to baseline table stakes?
Absolutely not. Licensing remains the first and most important test of a serious applicant. The authorisation process examines the credibility of the business model, fitness and propriety of its leadership, capital adequacy, governance, qualified personnel, compliance arrangements and genuine operational substance. A progressive, risk-based framework should never be mistaken for a lower regulatory threshold. In fact, we foresee scrutiny deepening as strategies, technologies and investor bases become more complex. Our argument begins after this threshold has been met: when more credible firms are authorised, the licence establishes their right to enter the market, while the infrastructure built around it determines their ability to compete and grow responsibly.
4. Private market and hybrid strategies are demanding by nature for operational friction. Why will robust middle-and-back-office infrastructure become the true differentiator as these strategies scale in the Gulf?
Complexity does not disappear when regulation becomes more flexible; it moves into operations. CP 173 proposes a more risk-based framework capable of accommodating hybrid and multi-strategy funds. A vehicle combining private loans, equity and real assets may require different valuation methodologies, liquidity controls, cash-flow models and disclosures across its portfolio. Globally, the FSB estimates private credit at USD 1.5–2 trillion and has highlighted valuation opacity, leverage and gaps in loan-level data. Managers will therefore be distinguished by the independence of their valuation processes, quality of asset-level information and ability to report consistently. Operational capability is becoming part of the investment product itself.
5. How will AI, tokenisation and greater reliance on outsourced providers change the operating model—and where must human accountability remain?
The DFSA reported that 52% of DIFC firms used AI in 2025, up from 33% in 2024, while its Tokenisation Regulatory Sandbox attracted 96 expressions of interest. AI can improve document extraction, KYC triage, reconciliations, exception detection and reporting; tokenisation may transform how interests are issued and transferred. However, firms should automate processes, not accountability. Human judgement must remain behind valuations, investor approvals, sanctions decisions and material exceptions. Outsourcing can provide expertise and scale, but regulatory responsibility cannot be outsourced. The future model will combine machine-led speed with specialist challenge, supported by data lineage, provider oversight, tested continuity arrangements and clear board accountability.
6. What should managers, investors and service providers be doing now to prepare for the region’s next stage of growth?
Managers should design their operating model alongside the investment product—not after establishing the legal structure. They should map valuation, asset data, cash controls and the investor lifecycle before launch, and select providers for the fund they intend to become. Investors should bring operational due diligence forward, examining governance, conflicts, cybersecurity and business continuity as closely as performance. Service providers must evolve from transaction processors into connected infrastructure across managers, investors, banks, custodians, auditors and regulators. At ONS FinServ, we see the strongest foundations when these parties align before first close. The eventual winners will not merely launch quickly; they will scale without weakening control, transparency or investor trust.
