iQoncept - Fotolia
The Central Bank of Bahrain (CBB) has announced regulations that will enable the creation of an environment where financial technology (fintech) firms can test out their products and services.
Through the bank’s regulatory sandbox, fintech companies from around the world will be invited to expand into Gulf Cooperation Council countries. Participating firms will be given nine months to test their wares, with a three-month extension possible.
To qualify, companies need to demonstrate all the usual attractions of fintech, such as innovation and customer benefit, and must also commit to deploying their products or services in Bahrain when the testing is complete.
“The regulatory sandbox will enable industry players to apply innovative fintech products while maintaining the overall safety and soundness of the financial system,” said Khalid Hamad, executive director of banking supervision at the CBB.
Rasheed Mohammed Al Maraj, governor of the bank, said technological advances had brought about an era of unprecedented change.
“We are witnessing how technology is defining financial services and CBB remains at the forefront of these developments to enable the industry to advance similarly,” he said.
“These new initiatives are a continuation of the CBB’s efforts to provide the right mix of policies and products to develop and enhance the quality and competitiveness of services in the financial sector.”
Fintech investment in the Middle East is set to grow by 270% this year, according to a report from Wamda Research Lab (WRL).
The region is still in the early stages of fintech compared with more advanced economies, but the foundations are being laid.
The WRL and Payfort report found that fintech companies in the region expect to raise $50m this year, compared with $18m last year, but pointed out that the region’s fintech firms had raised only $100m over the past 10 years.
Beyond fintech, the Bahrain government is trying to create an IT industry with global ambitions that could increase options for CIOs in the wider Middle East region.
It wants to create further economic and employment opportunities in Bahrain, where about 12,000 of the 1.3 million population are employed in the IT sector.
The country claims to offer the Middle East region access to IT suppliers and a highly skilled population at a lower cost than in other GCC countries.