The Abu Dhabi Global Market (ADGM), the capital's financial free zone, signed an agreement with Bahrain's inward investment agency, Bahrain Economic Development Board, to collaborate on growing the regional fintech industry.
Under the agreement, both parties pledged to exchange information on trends, services and products in the fast-growing fintech sector, and work to develop regional fintech initiatives such as accelerator and financing programmes.
“We see the Mena region as a continuous whole and look to leverage each other’s strengths to anchor a vibrant fintech ecosystem,” said Richard Teng, chief executive of the Financial Services Regulatory Authority at ADGM.
Fintech – the development of advanced technology to support financial services – has caught the attention of venture capitalists and other investors across the world, with billions pumped into fintech start-ups and other firms.
Total global fintech investment rose to US$8.2 billion in the third quarter of 2017, compared with $6.3bn in a year-earlier period, according to KPMG's Pulse of Fintech report. Mena countries such as the UAE and Bahrain want to increase their involvement in the sector as they diversify their economies.
“The fintech sector has witnessed approximately $50bn of investment globally, but the Mena region has received only about 1 per cent of that,” said David Parker, executive director, financial services, at EDB Bahrain.
“In Bahrain, we recognise there is great potential for growth in this sector and we are capitalising on this by creating the right ecosystem. This agreement [with ADGM] marks another inspiring moment in our regional development.”
Bahrain last year introduced a package of legal and regulatory reforms to support the fintech sector, including a fintech “regulatory sandbox” and support for conventional and Sharia-compliant crowdfunding. The country is also set to open one of the region’s largest fintech start-up hubs in the first quarter of this year.
Abu Dhabi, meanwhile, has introduced new fintech regulations and established other strategic partnerships with jurisdictions across Asia, Australia, Europe and North America, to bolster the industry.
"It is clear we both value the importance of collaboration in building a more connected network among our fellow regulators in Mena to cater to the rapid pace of fintech growth here," said Mr Teng.