CBB creates Sandbox for fintech startups

Manama : Bahrain’s competitiveness as a fintech hub has taken a boost after Central Bank of Bahrain (CBB) announced the creation of a regulatory Sandbox that will allow startups and fintech firms to test and experiment their banking ideas and solutions.

The framework, which the CBB describes as a virtual space for companies to test their technology based innovative solutions, has been made available for both existing CBB licensees and other firms both local and foreign. 

According to the CBB, the Regulatory Sandbox will aid in fast-tracking the adoption of useful technologies that will benefit the customers as well as the financial industry. It helps FinTech companies to test their solutions without first going through the licensing process which can be lengthy and costly.

The eligibility criteria for inclusion in the Sandbox are that the interested party must bring in innovation, customer benefit and technical testing in addition to having the intention and the ability to deploy the service in Bahrain after the Sandbox period ends. Detailing the application process, CBB explained, “First the applicant must fill out the application template available on the CBB website and submit it to the CBB along with all the required documents. Within 15 days the CBB will evaluate and assess the application to decide about the approval. If admitted, the applicant has 9 months to test the solution. During this period the applicant must submit a fortnightly progress report to the CBB. After 9 months the applicant must either apply for the license (if the test was successful), exit the Sandbox (if the test was unsuccessful) or apply for a maximum of 3-month extension.”

“Financial Technology (FinTech) is a rising trend globally and the Sandbox is a calculated way for the regulator to cope with the pace of technological change. Bahrain has long been a regional financial hub; it is natural to position itself as the FinTech hub of the region, including Shari’ah compliant Fintech solutions. CBB is launching the Sandbox in order to promote effective competition, embrace cutting-edge technology, encourage financial inclusion and improve customer experience,” CBB stated

Rasheed Mohammed Al Maraj, Governor of the CBB, said, “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. We are living in an era of unprecedented changes mainly brought about by technological advancement, where we are witnessing how technology is defining financial services and CBB remains at the forefront of these developments to enable the industry to advance similarly.”