A new major report has states that Bahrain and the Saudi Arabian capital Riyadh have been named among the world’s top FinTech ecosystems to watch.
Saudi banks are taking a more cautious approach while developing Financial technology (FinTech) initiatives among themselves, encouraging technology companies and startups to focus on process innovations, rather than opening new markets. The Government’s initial efforts are mainly directed towards regulatory and legal initiatives. Customers are interested in straightforward and convenient new products, and thus waiting for new value propositions.
Similarly, Bahrain has the most comprehensive fintech strategy in the Arab world and is an exemplary model that is bearing fruit. Two years ago through an approach that unified the kingdom’s Economic Development Board and the central bank Bahrain began putting in place the building blocks for a vibrant fintech ecosystem.
It started with the launch of the region’s first regulatory sandbox whereby ideas could be tested, refined, and licensed within a controlled environment until they were ready for market. The central bank has since set out rules and frameworks that govern things such as crowdfunding, cryptoassets, robo-advice, open banking and insurance aggregation, as well as creating the FinTech and Innovation unit to smooth the process for start-ups.
Research organization Startup Genome analyzed dozens of countries across the globe based on factors including funding, exits, talent and focus as well as ecosystem players including policymakers and founders.
Bahrain and Riyadh were the only two GCC locations named in the report as FinTech ecosystems to watch alongside 11 other emerging destinations including Japanese capital Tokyo, Melbourne in Australia and Germany’s Frankfurt. In the wider Middle East region, Cairo was also included in the list.
Key benefits highlighted included wage subsidy programs from Bahrain’s Labour Fund (Tamkeen), a liberal 0% corporate and personal tax regime as well as the government’s $11.3 billion COVID-19 stimulus package to support businesses during the global pandemic.
Riyadh’s focus on the rapidly growing e-commerce sector, fueled by a digitally savvy population and a strong logistics sector, resulted in the Saudi Arabian capital being listed as a FinTech ecosystem to watch.
The report authors wrote: “Bahrain ranks first in the MENA region and second globally in terms of Islamic finance regulation according to the Global Islamic Finance Report thanks to its standards on crowdfunding and open banking.”
They added: “The Bahraini government has reduced capital startup requirements from $50,000 to $100 for some businesses and introduced a regulatory ‘sandbox’ for Fintech.”
In a separate ranking as part of the same Startup Genome report, Bahrain, Riyadh, Abu Dhabi and Dubai were all listed as top FinTech ecosystems in the Middle East.
Dr. Ebrahim Janahi, the chief executive of Labour Fund Tamkeen, said: “Bahrain has within a short period of time established itself as an innovative FinTech hub, building on its track record as a financial center, and adopting enabling regulations. Bahrain is committed to nurturing new talent for this innovative sector.”
“Our ranking as one of the top FinTech ecosystems to watch is testament to Team Bahrain’s years of hard work building an environment that empowers firms of all sizes to rapidly bring new ideas to market,” Dalal Buhejji, director business development financial services at Bahrain Economic Development Board said.
“Our financial services sector is one of the most established in the Gulf region, and we have capitalized on that expertise to enable a shift towards digitalization something that has been of particular interest among traditional financial institutions during the global pandemic.”
The report indicate that, Bahrain’s Labour Fund Tamkeen remains a major source of government funding, including financial grants and subsidies. Tamkeen is part of a Bahrain-wide support structure for start-ups that includes Startup Bahrain, a community led initiative, local angel networks like Tenmou, accelerators like Flat6Labs and BRINC, VCs like Middle East Venture Partners and 500 Start-ups, and local $100m Fund of Funds Al Waha.
