Q: How do you see the fintech scene in Bahrain, especially as compared to regional competitors? What’s Bahrain got going for it?
A: In the past few years the industry has fundamentally changed here. In Bahrain, the big transformation came in the summer of 2017, when the regulatory sandbox was launched for the country. That was a statement by the Central Bank of Bahrain, which saw what had been happening globally, and has learned from these developments and looked at what the local market really needs.
That was a statement to say that we are open to innovations, we realise the world is changing and we want to start embracing these changes and we want to start attracting ‘the new kids on the block’ to start innovating.
At the same time, we are encouraging existing players to go into new areas that represent the new modus operandi of the landscape. The central bank is also looking at innovation and pursuing it in a very different way. That has resulted in a series of developments over the past two or three years when it comes to regulatory developments, and we are now working on things such as open banking; we’ve got a crypto-assets licence category; and we have the first fully licensed onshore crypto-assets company in FinTech Bay, as well as roboadvisory, crowd funding and a whole raft of things.
The key differentiator between Bahrain and the rest of the region is the fact that everything that is happening here is happening onshore. If you look at the developments within the United Arab Emirates, they are happening at the emirate level in free zones. What really distinguishes us here is the fact that we are small and nimble, we’ve got alignment between different stakeholders, whether on the government or private side, so this is an ideal test platform to start incubating and innovating and pushing new ideas.
Obviously, we collaborate a lot with other jurisdictions. People think that this could be a zero-sum game but we look at it from a different perspective; we are now starting to see that there is a flow between different jurisdictions. To put things in perspective, the sandbox now has 35 companies from 19 countries – only one out of the 35 existed before the creation of the sandbox – so 34 of the companies are completely new to the country and they are coming from all over the world.
The number of fintechs around the country has at least doubled [in recent years] and the number should hit 100 by the end of 2019.
Q: Is there room for multiple fintech hubs in the Middle East?
A: Yes. Look, for example, at Europe: [there are] a lot of technology hubs there. London is a big leader, but there are also hubs such as Dublin, Luxembourg, Berlin, Amsterdam and the Nordic cities. In south-east Asia there are multiple hubs, with Singapore being the leader. I believe there is absolutely room for it.
If you look at it from an investment perspective, this region accounts for 1% or less of total global investments in fintech, so we are still at a very early stage. There is still a lot of room to grow and I think there is space for every jurisdiction, [as each] has its own characteristics.
Q: So what is Bahrain’s niche?
A: If I answer it in an unbiased way, and I think from a regulatory perspective and in general, we are far ahead. In my opinion, the closest thing [to Bahrain] from a regulatory perspective is ADGM [Abu Dhabi Global Market, an international financial centre].
ADGM has unique circumstances as it is a free zone and so there are different ecosystems. The advantage that we have here is the fact that you can come here, you can get access to the ecosystem, you can test, you can interact with the regulator at a national level, with different banks, with public institutions in a very quick way and a very efficient manner. And that mix of ingredients is what makes this place unique.