Bahrain's central bank kicks off initiatives to foster fintech growth

Rules for crowdfunding platforms and cloud computing are in the pipeline.

As Bahrain steps up its fintech game in the region, its central bank issued a white paper on Regulatory Sandbox for FinTech.

In his keynote speech at the Arab Financial Services 1st Middle East and Africa FinTech Forum, Central Bank of Bahrain Governor Rasheed Mohammed Al Maraj said the Regulatory Sandbox can help companies test their fintech solutions in Bahrain.

"At the Central Bank of Bahrain (CBB) we understand the disruptive nature of fintech to business models and jobs but we have made a conscious decision to adopt it. The pace of innovation is not reversible, so the only choice we have is how well we prepare ourselves for the disruption," the governor said.

Bahrain Economic Development Board Chief Executive Khalid Al Rumaihi said the white paper consultation is a big step in putting in place the ecosystem that will turn the country’s ambition of creating a fintech hub into a reality.

“We’re very excited to see how fintech companies innovate and grow as part of this initiative and we’re looking forward to feedback from the industry about the white paper,” he said.

The central bank governor also announced that by the end of April, the central bank will be issuing the draft rules for consultation on crowdfunding platforms for both conventional and sharia compliant services. More so, new directives on cloud computing are in the pipeline.

"These new initiatives are continuation of our efforts to provide the right mix of policies and products to develop and enhance the quality and competitiveness of services in the financial sector," the governor said.

In the past years, the CBB has taken a number of initiatives geared towards proactive adoption of new technology, including the introduction of a new license of Payment Service Provision and allowing Payment Service Providers to issue prepaid cards to allow the unbankable segment access to affordable payment services including remittances.

There was also the introduction of Electronic Funds Transfer System commercially known as fawri and fawri+ as mandatory for all retail banks. However, the governor noted that while the CBB is embracing innovation and new technology, they are not complacent in assessing the risks posed by such technologies.

"We believe that a nuanced and sensible approach rather than blind following of every trending technology is the ideal way to regulating in these uncertain times. We have always been accessible to the industry and given the nature of fintech it becomes even more critical to consult the market participants before introducing new rules. I encourage market players to take the initiative and enlighten us if they have strong views on any fintech related area," he explained.