Bahrain’s online and digital banking segment is developing rapidly, bolstered by the kingdom’s aim to become a regional financial technology (fintech) hub. Throughout 2018 banks launched digital banking services tailored to the needs of Bahrainis. In March 2018 Bank ABC announced plans to launch neobank, a fully digital bank set to be operational in 2019. Shortly after, Gulf International Bank (GIB), a Saudi-owned wholesale bank that acquired a retail banking license in 2017, launched its own sharia-compliant digital bank, the first of its kind in Bahrain. The new bank, meem Bahrain, offers customers accounts with a debit card that can be linked to foreign currency-denominated accounts and multi-platform support services, and meem Bahrain has plans to launch other products such as term deposits and credit cards. GIB operates a digital bank of the same name in Saudi Arabia, where it was launched in 2015.
Local institutions are also pioneering new electronic initiatives. In September 2018 Islamic banking institution Ithmar Bank with partner Eazy Financial Services announced plans to launch the first biometric payment network in the GCC in Bahrain. The system will allow customers to use their fingerprints rather than bank cards to access their accounts at ATMs.
Virtual Wallets
Virtual wallets have furthered the trend towards digitalisation in the kingdom. Four such systems have been launched since mid-2017, starting with BenefitPay, a joint venture between National Bank of Bahrain and Bahrain’s Electronic Network for Financial Transactions. This was followed in November 2017 by the launch of MaxWallet by Bahraini credit card issuer CrediMax. Unlike other such wallets, MaxWallet is linked to a credit card and, as of September 2018, to debit cards issued by local bank BBK, rather than requiring customers to preload their accounts. Two more wallets, VivaCash and bwallet, operated by local telecom providers Viva and Batelco, respectively, were launched in early 2018. Yousif Ali Mirza, CEO of CrediMax, said that registration for its MaxWallet service was slow at first but once customers recognised the value in such services, more and more signed up. “It takes a lot of effort to inform customers and progress was initially slow, but it has picked up,” he told OBG. “Furthermore, we have a new strategy for 2019 that will enable more merchants to allow customers to pay using a quick response (QR) code,” he said. Meanwhile, Khalid Hamad, director of banking supervision at the Central Bank of Bahrain (CBB), told OBG that the regulator was working on a requirement for the interoperability of all such systems based on a standard that would allow them all to communicate with each other. “Some of the systems are already working together on their own initiative, but we would like to see all of them become fully interoperable as soon as possible,” he said.
Regulatory Oversight
Regulatory authorities are working to ensure adequate oversight of the digital banking and payments segment. “In banking, anything new brings an associated challenge, and that is definitely the case with digitalisation,” said Hamad. “As a regulator, we need to be proactive in putting the right rules and regulatory tools in place and in ensuring that the regulatory framework remains up-to-date with the constant stream of technological changes.”
Ali Mirza said that the central bank had been supportive of the digital wallet segment. “The CBB is keeping up with all the changes in the segment and has been supportive,” he said. “When we ask to add services to the wallet, it is usually supportive.”
As part of a drive towards digitisation, the CBB is also working to move some regulatory and compliance processes into the digital realm, including by putting an electronic know-your-customer (KYC) platform into operation. “We are in discussions with the government to have a single E-KYC platform in place based around one database that all banks can access, so they do not have to redo the KYC process for customers already in the banking system,” Hamad told OBG, noting this would make doing business substantially easier for banks.
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