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    Bahrain to see $100 million fund for fintech push

    Synopsis

    The fund, which will be announced shortly, will be raised by the private sector and would be a major step in the direction of developing the funding ecosystem.

    Bahrain to see $100 million fund for fintech push
    Fintech start ups are hungry for funds throughout their life for growth and scale.
    MANAMA: Bahrain, the fastest growing economy in the Gulf region, will soon see the launch a new $100 million fund dedicated to its budding fintech sector, a senior government official said.

    The fund, which will be announced shortly, will be raised by the private sector and would be a major step in the direction of developing the funding ecosystem for the high growth sector in the island country. Fintech start ups are hungry for funds throughout their life for growth and scale.
    The new fund will be in addition to an already announced $100 million fund of funds by Bahrain Development Bank, which will invest across different sectors. Fintech is likely to get its proportional allocation from this fund as well.
    Apart from this, a couple of small venture capital funds cater to the funding needs of entrepreneurs.

    The Economic Development Board (EDB) of Bahrain has been taking several steps over the last couple of years with a vision to transform the financial powerhouse of the Gulf region into a leader in digital economy.

    Earlier this year, EDB floated Bahrain Fintech Bay, a plug and play hub for start ups in the sector, in partnership with Singapore based Fintech Consortium. Housed in EDB, the Fintech Bay has top financial institutions, government bidies and tech companies as supporting partners.
    It provides a co-working space with access to incubation, venture acceleration and educational /training programmes to support scalable fintech initiatives.

    Khalid Saad, chief executive officer of Bahrain Fintech Bay said the initiative has seen significant interest from companies within the region and also established players from abroad. Swiss block chain based start up and even a Chinese player are among those who have shown interest in the Fintech Bay.

    Saad feels having a dedicated fund would add to the technical, infrastructure and regulatory support the ecosystem already offers its members.

    At present, Angivest Venture, a Bahraini investment group and Temou, a business angels company, are among start up funding providers in the Bahraini market. Government agencies such as Bahrain Development Bank and Tamkeen also provide financial and tech support to startups.

    Bahrain wants to leverage its strength as the financial capital of the gulf region led by a strong regulatory regime to slingshot the fledgling fintech sector in the region. Over 400 financial institutions, both conventional and Sharia banking sectors present immense potential as digital banking takes centre stage driven by 3 million strong smart phone subscriber base. Payment solutions, insure tech, Cloud based data analytics, financial inclusion projects and Blockchain based solutions are high on radar.

    Khalid Al Rumaihi, chief executive officer, EDB wrote in forweord to a recent report on Fintech ecosystem, "For decades, Bahrain has embraced changes in technology. With our firm commitment across government and private sector to.further increase dynamism, creativity and innovation, the kingdom will continue to strengthen its position as a Fintech leader, regionally and globally."

    The central bank of Bahrain, which regulates the banking and financial services industry, has set up a separate division to focus on fintech regulation and innovation looks at it as a strategic sector.
    Last September, it also introduced equity based crowd funding regulations.

    A regulatory sandbox is also functional to look at developing a light touch regulatory framework in emerging areas such as AI, crypto currency etc through a consultative process.

    Over the past few months, the country has put in place a data privacy frame work, a new bankruptcy law in addition to adopting a cloud first policy.

    Ecommerce giant Amazon's cloud computing arm AWS is setting up a data centre, its first in the MENA region. The centre is likely to spur demand for 10,000 data solution architects across the region over next five years.

    Saad expects each of these developments to help create a conducive atmosphere for the growth of the sector. "We want to be a place to be for not only local entrepreneurs to plug and play, but also for an European or an Indian company which is looking at the region," he said.
    He is "completely open"to collaboration with countries like India and is already in talks with a couple of Indian companies.

    Saad sees developments in other regional centres such as Dubai and Abudhabi as complementary rather than being competitive.

    Table : Financial inclusion in Bahrain
    Service penetration (% of population)
    Debit cards 99.4
    Credit cards 19.7
    Current accounts 17.5
    Savings accounts 63.2
    E banking 43.7
    Source: Bahrain Fintech Ecosystem report


    Note: The writer was in Bahrain for Tech Week 2018 at the invitation of EDB


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