The Central Bank of Bahrain (CBB) has unveiled a two-pronged strategy aimed at nurturing innovation and fostering a robust ecosystem for fintech startups.
The first aspect of the strategy revolves around the CBB’s Regulatory Sandbox program, which was initiated in 2017 to provide a controlled environment for startups to test their innovative ideas with relaxed regulations. With 149 applications received since its inception and 14 greenlit in 2023 alone, the Sandbox has proven successful.
However, to address the challenges faced by graduates, the CBB’s Fintech & Innovation Unit has proposed the concept of a ‘Scale Box.’ This intermediary stage aims to offer Sandbox graduates the opportunity to continue operating under relaxed rules but with higher transaction limits. Additionally, pre-scheduled meetings with regulators would assist them in navigating the licensing process.
Although the concept was well-received, legal and licensing obstacles prompted the FIU to refine its proposal for the Scale Box.
The second prong of the strategy involves the creation of ‘FinTech Bahrain,’ an ambitious project designed to serve as a comprehensive hub for aspiring fintech companies. Combining elements of an incubator and a central access point, FinTech Bahrain aims to connect businesses with regulators, investors, and other stakeholders from both public and private sectors. This includes government agencies, educational institutions, and established financial players. The proposal for FinTech Bahrain has been submitted to the CBB’s senior management, signaling a potential future where Bahrain fosters not just individual fintech ventures, but a dynamic and interconnected ecosystem.
Meanwhile, the success stories of the Regulatory Sandbox continue to unfold, with 23 companies graduating as of December 2023. Notable names among the graduates include open banking platform Tarabut Gateway and cryptocurrency exchange Rain. Impressively, seven of these graduates have secured full operational licenses from the CBB, paving the way for their sustained growth in Bahrain’s evolving financial landscape.
