While it’s a ‘take-your-pick’ scenario as far as tech licenses goes, trying to open a bank account brings you back to earth…
Ok. Am at it again. After the massive response to my take on DIFC Innovation Licenses (yes, all my staff read it), I’ve been asked (threatened) to shed some light on bank account options. Hmm…now how do I make this sound good, without making a few (all) enemies in the process?
Entrepreneurs in the UAE have never had it better.
From paying obscene licensing and office space fees as recently as two years ago, they have, due to no logical reason (Careem, Souq) been flooded with subsidized (cheap) tech license options from the unlikeliest of free zones (I didn’t say DIFC and ADGM). Add the instant license from DED to the mix, and hey and pesto – now even the neighborhood kid is an entrepreneur…actually no, kids can’t be shareholders yet (his dad is), and so is Suresh Wadkar from Citi (oh..Suresh, you did inform Citi, didn’t you?). Anyways, the fact of the matter is that it is easier, and much cheaper, to get started on that dream project of yours (provided, it’s not just some random dream you had and remember just bits of).
Bank accounts for that squeaky clean (yes, Corona virus had to figure here, for the SEO) new startup however, are a whole different ballgame.
Ever since the EU (and some acronyms like OECD and FATCA and MAKELIFETOUGH) decided to up the ante, and consequently the UAE Central Bank came out with its Economic Substance Regulations (is that too much legal yada yada? The last of it, I promise), banks have had it tough.
Rumours have it that the compliance guy at XYZ Bank (you didn’t think I was going to name it and risk censure, did you?) is paid twice as much as the RM, all thanks to the truckload of paperwork that he has to sieve through just to get the application sorted. Now before you compliance people come complaining, let it suffice to say that opening a bank account is tough. Very tough. One month tough. And God help you, if you are a startup who scraped the bottom of the barrel just to pay the license fees.
So what are the options really?
The word in the market is that RMs now look for a relationship (money, money) of anywhere between AED 150,000 to AED 300,000, so as to get that much needed clearance from the powers that be. While this is your money, in your bank account, exclusively at your disposal to use as you deem fit (sorry, I know I said no legal talk), it still is a dichotomy –
how do I manage to get access to this cash, when I barely cobbled together enough to pay for my company?
That’s the million-dollar (or 150k Dirham) question.
There is hope at the end of the tunnel though. Some banks are now trying to come up with solutions (when they are not busy trying to look cool for the millennials, who don’t really care anyway) that meet expectations midway – a low balance account with reduced services and monthly maintenance fees, and no chirpy RM to help you through the process.
Not a deal breaker. Given the fact that most startups tend to get things done themselves (something that makes us consultants very unhappy), they can live with (or Liv with it…get it? No? never mind) filling out online forms with ‘Bizzz’ sprinkled all over them (refer trying to look cool part above), as long as the work gets done.
So, grin and bear it. Until Revolut comes along (did I tell you that they are already registering interest?) and then, everyone gets disrupted (evil laugh).
Finding trouble opening a bank account for your startup?
Get in touch!
(common, a guy has to earn a living).