Bahrain is to try and inject some much-needed momentum into its financial services industry—which is increasingly overshadowed by near-neighbour Dubai—by putting a new focus on fintech and related services.
The plans are still at a fairly early stage, but a number of state bodies are involved in looking for ways to develop the island kingdom’s fintech sector, including the Central Bank of Bahrain (CBB).
Speaking at a fintech seminar in Manama on December 3, Whalid Hamad, executive director banking supervision at the CBB, said the central bank was actively considering introducing regulations on fintech. “We invite technology companies to set up their offices in Bahrain and use it as a base to serve the entire GCC and Middle East region,” he added.
It’s efforts are being augmented by a range of initiatives by the Economic Development Board (EDB), the country’s inward investment agency.
David Parker, executive director for financial services and business development at the EDB, says it is working with banks in Bahrain to try and link them with entrepreneurs and start-ups involved in fintech initiatives. It is also keen to set up an accelerator to offer mentoring and access to finance for those involved in this sector (although it will not provide any funding itself).
“The GCC at large is a bit of a late adopter with fintech,” Parker acknowledges, but adds “We’re looking to turn Bahrain into a testbed.”
Specific areas of interest include Islamic finance – an industry in which Bahrain has a strong global position – as well as crowdfunding, payments services, blockchain and robo-advisors.
Parker says the EDB is in talks with around six banks to support its initiative, although at this stage it is not clear what role they might play.
Until the rise of the Dubai International Financial Centre, Bahrain was the Gulf region’s preeminent financial hub and, although its position has waned, it remains home to a sizeable financial services sector – particularly in the Islamic finance space – and retains a local workforce with plenty of experience. The hope within the country is that it can leverage these attributes, along with its position as a low-cost business centre, to develop a range of new services.
The local economy is slowing, with growth forecast to drop from 2.8% this year to 2% in the next two years, according to the EDB’s projections, but the financial sector is one that is at least showing some signs of life, according to recent indicators from the property market.
Rents are not growing in most areas of the country, which is a reflection of “weaker underlying fundamentals” according to Harry Goodson-Wickes, the local head of real estate agency Cluttons. “Economic fragility and the ongoing impact of the low oil price environment have curtailed job creation levels and dampened overall sentiment,” he adds. “The few exceptions where we have seen growth include the Financial Harbour for the office market.”
