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The inaugural Bahrain FinTech Ecosystem Report 2018 has been released this week with the aim to further solidify Bahrain’s position as a FinTech hub and shed more light on the ecosystem.
The report, which will be published annually by Bahrain FinTech Bay (BFB), is set to serve as a reference point for educating people about developments and underpin the kingdom’s credentials as a hub for the expanding financial technology sector.
Khalid Al Rumaihi, CEO of the Economic Development Board (EDB) and chairman of the executive board of BFB, said: “Technology-led innovation has fuelled a wave of disruption across the global economy and, here in Bahrain, FinTech has been a significant driving force behind this transformation.”
Charting Bahrain’s emergence as a FinTech hub, he said, the report explores the drivers behind the sector’s growth to date. “Critically, it also maps the path forward and the key initiatives that will underpin sustained progress in the future,” he added. “For decades, Bahrain has embraced the changes brought by technology. With our firm commitment across the government and private sector to further increase dynamism, creativity and innovation. We are confident that the kingdom will continue to strengthen its position as a FinTech leader, regionally and globally.”
With a dedicated FinTech unit, the Central Bank of Bahrain is shaping a pro-innovation regulatory framework, including the region’s only onshore Regulatory Sandbox, established last year, which provides a test bed for FinTech start-ups.
Khalid points out that in today’s complex, fast-changing business environment, entrepreneurs are increasingly recognised as a major force behind innovation. Bahrain’s newly announced $100 million VC Fund of Funds will open up new funding avenues, further strengthening an ecosystem which already benefits from multiple accelerators and tailored start-up support by entities like Tamkeen and the Bahrain Development Bank.
Empowering an ‘ambitious young population’ is vital, Khalid believes. “Future-proofing skill sets through formal education, high value career opportunities and continuous learning will pave the way forward locally and globally,” he explained. “Our young population is quick to grasp these opportunities.”
Amazon Web Services (AWS) predicts that 10,000 data solution architects will be needed across the region in the next five years and around 2,500 young Bahrainis have already signed up for AWS Educate training programmes.
In Bahrain, 87 per cent of professionals are interested in collaborating or have already collaborated with FinTech firms and he believes the launch of Bahrain FinTech Bay, the largest such hub in the MENA region, will help facilitate and accelerate further partnerships.
Numerous advisors, founders, investors and industry experts have given the report’s project team access to their knowledge, networks and time because they support the vision and want to move the FinTech ecosystem forward.
Data sources for the report include publicly accessible information and the BFB annual survey, which looks into the sector in Bahrain from a domestic and global perception.
More than 800 respondents from Bahrain and abroad participated in the survey, which targetted both professionals and students. Key subjects included collaboration with FinTech firms, the role of stakeholders in the FinTech ecosystem, the disruptive nature of the FinTech industry, and Bahrain’s role as a FinTech hub in the MENA region.
The study has found that the FinTech industry appeals to a wide range of customers due to its competitive products and services that are user-friendly, transparent, efficient and automated.
FinTech solutions directly connect consumers to financial services from banking to buying a coffee from a retail outlet with a digital wallet, as highlighted in recent weeks in FinTech Focus.
As a result, the rise of FinTech continues to disrupt multiple industries and one section of the report explores artificial intelligence, big data analytics, crowd-funding, crypto-currencies, InsurTech, RegTech, payments, transfers and remittances.
Globally, FinTech appears to have secured its staying power during 2017 with 1,824 FinTech investment deals attracting $14.2 billion of venture capital investment. Within the MENA region, the FinTech ecosystem is growing with the number of start-ups expected to reach 250 by 2020.
Bahrain’s established financial services industry, its role as a leading Islamic finance centre and the national drive for financial inclusion are supporting the growth of the sector. Presently, Bahrain hosts around 400 domestic, regional and international financial institutions.
There is keenness within the financial sector to explore collaboration with FinTech companies and adopt new innovative solutions, the report summaries. This is coupled with the national initiative to drive financial inclusion through digital means.
Key factors supporting the FinTech ecosystem include Bahrain’s human capital, a highly progressive and liberalised ICT infrastructure, an increased push top drive entrepreneurship and increased demand for funding.
Khalid Saad, CEO of Bahrain FinTech Bay, said the report ends with a view on the future and how Bahrain’s FinTech ecosystem can move forward. “Such growth will be driven by regulatory enhancement, talent development, wider adoption of cloud and blockchain, increased investments and interaction between traditional financial institutions and FinTechs,” he said. “Bahrain will continue to take the necessary steps to create the ideal and open environment from which FinTechs can thrive.
“Bahrain FinTech Bay through its various initiatives focusing on raising awareness, talent development and venture acceleration aims to play an effective role in further positioning Bahrain as a FinTech hub.”