Banking and financial regulators must change the “regimented ways” in which the FinTech industry is being governed to allow growth in the sector, the governor of the Central Bank of Bahrain has said.
Regulators should upgrade their frameworks and rulebooks not only to facilitate the expansion of the FinTech industry but also to maintain proper oversight of the sector, Rasheed Al Maraj told delegates at the Dubai FinTech Summit on Tuesday.
The Bahrain central bank started looking at FinTech industry regulations back in 2017 and since then “we have evolved our regulatory framework and evolved our rulebook”, Mr Al Maraj said.
The CBB sees its role as “an enabler”, however, as much as it would like to be “flexible, progressive and forward looking”, the regulator wants to maintain comprehensive oversight: “the usual concerns for any regulators, which are good corporate governance, proper risk management, compliance and protecting the consumers”, Mr Al Maraj said.
“I hope that the industry will understand, regardless of how welcoming we are, that at the back of our mind are these values.”
To gain credibility, the wider industry should adhere to these values locally, regionally and internationally, he added.
The FinTech sector has grown rapidly in the past few years, especially during the pandemic, when consumers turned to online financial services and payment solutions.
The global FinTech market is expected to grow at a compound annual rate of 11.9 per cent between 2022 and 2027 to more than $266.9 billion by 2027, according to a report by Expert Market Research.
FinTech start-ups led in both funding and number of deals in the Middle East, Africa, Pakistan and Turkey region last year, according to data platform Magnitt. The sector’s funding reached $2.25 billion across 351 deals in 2022.
Development of the FinTech sector is among central planks of economic diversification agenda of the governments in the six-member economic GCC bloc.
Regional central banks and financial centres, including Dubai International Financial Centre and Abu Dhabi Global Market in the UAE, are running their separate FinTech programmes and also continuously evolving their regulatory frameworks governing digital assets and the FinTech sector to mitigate risks and protect consumers.
Mr Al Maraj said there are diverse views among regulators globally in terms of how to regulate the industry and virtual assets.
However, the industry can help the regulators by following the basics, including corporate governance, the role of boards, the role of managements and following good business practices to avoid problems that the crypto industry has faced in the recent past, the governor said.
“I hope that the industry and those who are involved in this will rise up to to appreciate that proper conduct, proper good governance and compliance will help them maintain their business,” he added.
