Bahraini authorities foster digital innovation

 

Bahrain has long remained an attractive place for testing business concepts, with easy scalability in neighbouring markets. The country aims to become a centre of innovation and technological disruption in finance. New regulatory processes from the Central Bank of Bahrain (CBB) allow financial technology (fintech) companies to trial new ideas and systems for limited periods of time without the need to acquire CBB licences for their activities. The CBB hopes it will play a key role in supporting start-ups and nurturing an ecosystem that will make Bahrain a fintech hub.

SANDBOX: With $24.7bn invested globally in fintech solutions in 2016 the CBB believes it can help stimulate sector investment and innovation within the GCC and announced a regulatory sandbox in June 2017. “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,” Rasheed Mohammed Al Maraj, governor of the CBB, said during the announcement. Those wishing to use the framework will have to demonstrate that their product or service is innovative or beneficial to customers and will be ready for testing over a nine month period, as well as giving assurances of serious plans to deploy their fintech solutions throughout the region if they are successful.

The Economic Development Board (EDB) is supporting the CBB’s sandbox initiative. “In order to grow the fintech industry we know we need to create an ecosystem in which entrepreneurs can innovate and test their ideas – and the introduction of sandbox regulations is one of the key steps towards ensuring that environment,” said Khalid Al Rumaihi, CEO of the EDB, at the sandbox announcement in June 2017. “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,” Al Rumaihi added.

In 2017 the EDB announced new partnerships with FinTech Consortium, a business incubator and ecosystem builder, alongside multinational asset management and advisory firm Trucial Investment Partners. The three entities will work together to lay the foundations of a fintech centre in Bahrain, while also helping companies in the kingdom to explore opportunities in countries within the intergovernmental ASEAN.

START-UP SYSTEM: Bahrain provides many benefits for local and international business, such as 100% foreign ownership of firms and competitive running costs, advanced technological infrastructure – with 164% broadband and mobile penetration reported in the third quarter of 2017 – and high human capital with 8000 workers in the ICT industry.

The EDB noted that 48% of all Bahraini graduates have studied either business administration or ICT, while 70% of young Bahrainis surveyed by EY expressed an interest in starting their own business. EDB reported that the number of start-ups grew at a compound annual growth rate of 46.2% between 2015 and 2017, with new ventures being launched in software development, e-commerce, cybersecurity, health and fintech. These companies are able to access office space in a number of incubators and accelerators, and can also tap funding and venture capital.

Bahrainis wishing to develop a business can access training and financial support from Tamkeen, the government agency established to promote opportunities for citizens in the private sector, as well as soft loans from the Bahrain Development Bank. Tenmou, an angel investment network, and investment firm C5 Accelerator both offer accelerator support and funding in Bahrain. Underpinning these sources of advice, mentoring, funding and support is StartUp Bahrain, a community initiative designed to bring together innovators, investors, entrepreneurs and experts from corporate and government sectors. The collaboration aims to promote entrepreneurship in the kingdom.

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The Report: Bahrain 2018

ICT chapter from The Report: Bahrain 2018

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