Bahrain plans to reclaim its status as the region’s finance hub by enabling collaboration between financial services companies, financial technology (fintech) startups, technology companies and the public sector, including the regulator, the Central Bank of Bahrain.

This strategy will allow Bahrain to play a leading role in the development of fintech as it did in the development of Islamic banking in the 1990s , according to David Parker, executive director for financial services at Bahrain Economic Development Board.

“The [Gulf finance] industry needed to make great strides to be fit for purpose for the 21^st century digital agenda,” Parker tells MEED. “I have no doubt technology disruption will reach the Gulf, which will require an accelerated adoption of fintech.”

Parker adds that Bahrain has taken concrete steps to relieve regulatory pressure facing fintech companies.

In 2017, the Central Bank of Bahrain introduced a regulatory sandbox that allows fintechs to test their products and services with clients across the state.

Bahrain also became the first and only country in the region to approve a law allowing small and medium sized businesses in Bahrain and across the region to raise conventional or sharia-compliant financing through crowdfunding.

Fintech refers to a wide range of emerging financial services applications including payments processing to investment advisory, which  are commonly delivered through smartphones and developeded using technologies such blockchain, artificial intelligence and big data.

In addition to allowing the region’s huge swathe of unbanked population to conduct financial transactions, fintechs promise real-time and more cost-effective solutions that are seen as directly threats to the profitability of traditional financial services companies.