Tasnim Nazeer sat down with David Parker, Executive Director, Financial Services Business Development, Bahrain Economic Development Board, who talked about the ardent efforts undertaken by Bahrain to set the Gulf kingdom as a Fintech hub, as well as a haven for entrepreneurial ventures and startups.
TN: Recently, there has been significant developments in the GCC to create sustainable Fintech products. How is Bahrain aiming to position itself as a regional Fintech hub?
DP: Bahrain, as an established financial hub in the GCC over the last 40 years, is well positioned to be a leading regional Fintech hub. However, we recognize that certain regulatory requirements can make it more challenging for firms to experiment and adapt to a fast-changing environment.
To mitigate this, the Central Bank of Bahrain launched a regulatory sandbox earlier this year to help enable innovation while also maintaining financial stability and protecting consumers.
The regulatory sandbox is part of our wider efforts to create and sustain a startup ecosystem, with “Startup Bahrain” being developed to act as the primary brand for startups (including Fintech).
A number of accelerators and incubators have also launched operations recently, including the region’s first cloud accelerator, operated by C5 and powered by Amazon Web Services (AWS), which will drive growth and enable the adoption of cloud technology.
We have also seen an increased investment in seminars and workshops, including large scale international events which cover Fintech, such as the Euromoney GCC Financial Forum, as well as the introduction of a Payment Service Provider license by the CBB which has helped to spur new solutions in the payments sector.
TN: How can Bahrain leverage existing Fintech developments globally and create the right ecosystem for start-ups?
DP: Bahrain has a wealth of experience in working with partners to build out the ecosystem we aim to create. When determining the structure of the regulatory sandbox, we were in close consultation with the industry and have also learnt from the experience of other successful Fintech hubs, such as Singapore and London.
Earlier this year, we signed an agreement with the Singapore Fintech Consortium, a Fintech incubator and ecosystem builder, and asset management and advisory firm Trucial Investment Partners to support the continued development of our Fintech ecosystem in Bahrain.
The partnership with Singapore Fintech and Trucial Investment Partners aims to initiate, nurture and sustain Bahrain’s Fintech ecosystem, using the guidance and expertise of the SFC.
While the current agreement is mainly focused on regulatory advice and support, we are currently looking at ways to expand this relationship so that it focuses on areas of promotion, investments and product development.
TN: Over the last few years there have been significant changes in the technology sector in Bahrain. How has the advancement and evolution of technology impacted entrepreneurs wishing to tap into the sector?
DP: As with all markets, the GCC has had to adapt to rapid developments in technology at the pace with which they occur, which is no easy task.
Technological advancements are impacting all established sectors -for example, Fintech is changing the way we operate in financial services and the ‘Internet of Things’ is shaping our manufacturing industries.
With its open and forward-thinking approach, Bahrain has proven to be an ideal testing ground for the introduction of new technologies to the region and has a proven openness to innovation.
In fact, a survey by Ernst & Young found that 70% of young Bahrainis were interested in the idea of starting their own business, twice as much as anywhere else in the Gulf.
TN: How can Bahrain aid in supporting entrepreneurs and venture capital investors with Fintech development and investments?
DP: Earlier this year, the Central Bank of Bahrain issued directives on crowdfunding for both Shariah compliant and non-Shariah compliant platforms, launched a national e-wallet and we expect to see a number of further developments in the coming months such as a venture capital fund-of-funds to help support the startup sector.
In general, the Government of Bahrain is focused on ensuring there is an ease of doing business for international investors who seek to access the GCC market.
This includes a number of incentives and measures, which successfully attract foreign investment; such as a highly competitive taxation system, a skilled local workforce, 100% foreign ownership in most sectors, competitive prices for office spaces, and unrivalled access to Saudi Arabia.
Bahrain was recently named by the World Bank in its “2017 Doing Business Report” as one of 10 countries improving globally across three or more areas, a great achievement. It also ranked second overall in the MENA region.
TN: The global Fintech market in Q1 2017 saw a total investment of $3.2 billion across 260 deals, according to the Q1 2017 edition of The Pulse of Fintech, KPMG International’s quarterly report on Fintech investment. What does the future hold of the Fintech sector in Bahrain?
DP: There are many financial institutions embracing innovation, startups that are developing successfully in a thriving environment. Innovative financial solutions are being developed and Bahrain has provided a global landscape for Islamic finance industry.
There are 103 Fintech ventures globally that are currently being monitored now as this is a particular space where Bahrain could develop a compelling composition. Bahrain was a pioneer in Islamic finance and it still ranks as a leading financial center in the Middle East.
Giving that we are a centre for Islamic finance we have developed as Fintech hub that caters for this sector.
TN: As a speaker at the IFN Forum Europe 2017, what are your views in the way that Fintech is changing the face of Islamic capital raising and investing?
DP: The Fintech sector sees investments in the evolving blockchain technology.
Many of these new technologies that impact in a conventional finance industry have a really important role to play when we talk about the Fintech industry and Islamic finance is one way of providing an ethical way to shape the market.
Islamic finance is set to grow and spearhead the way forward in Bahrain and this is a sector we a really focusing on.