The Kingdom of Bahrain has created a virtual safe space for international fintech firms to experiment, develop and launch unique solutions, swinging itself to pole position in the race to become an Islamic fintech hub.
The Central Bank of Bahrain (CBB) is inviting fintech firms from within and beyond its borders to use the Kingdom as a test bed and launchpad into the Gulf region using its new set of regulations designed specifically to allow technopreneurs to experiment with new banking ideas and solutions. The sandbox is but one of the many initiatives Bahrain has implemented to bolster its position as a regional fintech hub as GCC nations race to do the same: Dubai recently created a new class of license allowing fintech firms to develop and test innovative concepts around the same time Abu Dhabi admitted the first batch of start-ups into its reglab sandbox.
In the sandbox, eligible CBB licensees (those with fintech initiatives) as well as foreign and local firms will have nine months to test their concepts without the burden of heavy regulations and licensing. They would be granted up to a further three months if needed.
“In order to be eligible, solutions need to demonstrate innovation, customer benefit, technical testing and an intention to be deployed in Bahrain after the sandbox period ends,” the country’s top banking regulator explained.
The regulatory sandbox is another component in the larger fintech ecosystem the country is building: the Bahrain Economic Development Board (EDB) this year engaged incubator Singapore Fintech Consortium and Dubai’s Trucial Investment Partners to build an enabling regulatory framework. The CBB had begun facilitating fintech adoption as far back as 2014 when it created two new license categories – payment services and card-processing services – marking the entry of non-banking companies into the banking services. To date, the CBB has granted 14 of these licenses.
“Bahrain has always been an attractive proposition for fintech – particularly due to our unique offering in areas such as Islamic finance and payments, and we are looking forward to welcoming more local, regional, and international fintech firms,” said Khalid Al Rumaihi, CEO of the EDB, who views the CBB’s sandbox as a crucial step in enhancing the fintech environment. Bahrain is one of the few jurisdictions in the world which has explicitly vocalized its goal of carving itself as a center for Islamic fintech innovation.