Out-Law News | 25 Nov 2019 | 2:23 pm | 2 min. read
The United Arab Emirates (UAE) Central Bank (CB) has announced that it is to launch a focused FinTech Office to support financial innovation within the country and position the CB as the coordinating authority for fintech activities.
In a recent speech (11 page / 404KB PDF) the CB’s governor, Mubarak Rashid Al Mansouri, said the office would set prudential and market conduct regulatory requirements for the fintech sector, and make sure the CB was an enabler and facilitator of fintech activities in the UAE.
The CB has also drawn up a strategy and road map to build the UAE’s fintech ecosystem, with the road map consisting of five key pillars: to research and apply fintech solutions to the needs of the banking sector; to develop a interface between market participants and the bank’s regulatory functions; to exchange of ideas and the facilitation of joint projects between stakeholders and authorities; to meet the growing needs of the sector; and to build a partnership model with key cross-border regulatory authorities and stakeholders.
Although the office is expected to launch in the coming months, the CB has already begun coordinating fintech stakeholders and reviewing sandbox testing licences for different regulated sectors across the country.
Financial services expert Marie Chowdhry of Pinsent Masons, the law firm behind Out-Law, welcomed the news.
“Creating a single framework and licensing program to enable fintech firms to operate across 'onshore' UAE – outside of the two key financial centres – has the potential to create a thriving fintech ecosystem in the mainland. However, this approach of combining activities into a single office, also does not come without some challenges,” Chowdhry said.
“More engagement with fintech stakeholders is required to ensure this predominantly start-up community fully understands the rules within which the Central Bank will allow them to operate," she said. "In addition, streamlining the regulatory hurdles and requirements, whilst directing such firms to a single office could create efficiencies, but only if those in charge at the Central Bank have the necessary skillset and expertise, as well as seniority to sign-off some of the more innovative firms we are seeing being developed across the UAE,"
The news comes as fintech activity in the Middle East is soaring. The Dubai International Financial Centre (DIFC) recently announced that it had registered over 100 fintech firms, a three-fold growth in the number registered in the jurisdiction since the end of 2018.
Regulators across the region have been busy implementing a number of new initiatives related to fintech. In October, the UAE Securities and Commodities Authority published draft regulations governing cryptoassets, setting standards for a range of market participants.
The CB also recently announced that banks and other financial institutions operating in onshore UAE could use a new digital identity app as an online validation gateway for ‘know your client’ purposes.
Meanwhile, the Abu Dhabi Global Market has created a digital banking framework and opened applications from firms looking to establish a digital banking business, and Bahrain is implementing open banking regulations which underpin the use of technology.
22 Oct 2019
25 Sep 2019