Fintech promotes financial inclusion in Bahrain

31 January 2024
Bahrain hosts much of the most innovative fintech activity, including wider access to financial services, says the Central Bank of Bahrain's Yasmeen Al Sharaf

FinTech innovation is promoting not only financial development, but also financial inclusion across the GCC.

With the region’s oldest and most established financial services sector, Bahrain has taken a leading role in this drive, especially as the country's financial services sector has recently overtaken oil and gas to become the largest contributor to its economy. 

Financial inclusion does not just empower individuals – it is also good for economic development, with more people able to save, access credit and invest in productive activities, such as founding small and medium enterprises (SMEs). 

This is helping GCC countries shift away from financial sectors dominated by large, traditional banks to a sector with an affordable, accessible range of services from startups and financial innovators.  

In the coming years, Bahrain and other GCC economies will continue democratising their financial services sectors, including by offering a range of value-added services to empower individuals and SMEs to make better-informed financial decisions. 

The state of financial inclusion 

The World Bank defines financial inclusion as a process by which “individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit, and insurance – [and are] delivered in a responsible and sustainable way”. 

Access to financial services in the GCC varies between demographic groups. A significant gender disparity remains – the percentage of credit card holders among women is around one-third of that among men – and young people and low-income workers are less likely to use financial services.

Migrant workers, in particular, face many access barriers. They may not have the required ID, credit history, salary level or local language proficiency to unlock basic financial services. As a result, many resort to using expensive physical exchange houses, which erode their remittances.  

FinTech in the GCC 

Recent years have seen an uptick in fintech activity in the region, and especially in the GCC.

Between 2018 and 2022, the number of fintech hubs in the GCC rose from just one to four, including the Abu Dhabi Global Market, Bahrain Fintech Bay, Fintech Saudi and the Fintech Hive at Dubai International Financial Centre. 

Fintech startups disrupt traditional, rigid financial systems and open up banking and financial services to all segments of the population. 

In Bahrain, bank account penetration is approaching 100% (compared with a global average of 76%) in part driven by fintech innovation.

The Ila digital bank is promoting financial inclusion with a range of products to suit the different needs and preferences of customers – for instance, it allows an account to be opened in minutes with just a national ID card scan, a selfie and a few questions answered.

Also in Bahrain, the digital lending platform Flooss is making it easier to access credit by adopting Tarabut’s Income Verification product. This eliminates the need to submit salary certificates manually. 

Digital banking for all 

These innovations remove many barriers to access for low-income workers, including the migrant workers on which industries like construction depend in the GCC. In fact, some fintech companies are targeting products and services to this very demographic. 

Dubai-based fintech company Now Money offers services developed for low-income workers, such as migrant women in domestic service. Its customers gain access to a product suite that covers affordable money transfer options, a Visa card, expense management and educational resources on fraud prevention. 

BFC Payments, meanwhile, has recently launched a new payment solution, BFC Pay, targeting unbanked and underbanked populations in Bahrain. BFC Pay streamlines payment to those without access to traditional financial services, allowing employers to pay workers directly and securely. 

Supporting tech for financial inclusion 

Across the globe, governments and regulators are playing a growing role in encouraging fintech innovation.  

This is particularly true across the GCC, with many initiatives already bearing fruit. Government-backed incubators and accelerators have surged in the past decade, alongside regulatory sandboxes and financial free zones. For instance, the Central Bank of Bahrain created the region’s first fintech regulatory sandbox, which has given rise to startups.

Meanwhile, the central banks of the GCC have established an innovative cross-border payment scheme, the GCC Real Time Gross Settlement System, which allows for frictionless money transfers between the six countries.  

These government schemes, recognising the importance of fintech for achieving financial inclusion, are often focused explicitly on working towards this goal.  

The UAE – where 90 per cent of the population are foreign nationals, mostly on low incomes – has taken a leading role in widening access to financial services with tech-driven initiatives. For example, the UAE Central Bank recently launched the Financial Infrastructure Transformation program, which includes issuing a central bank digital currency and is designed to advance financial inclusion. 

The future of financial inclusion 

With the GCC home to much of the most exciting fintech activity, it is important to ensure this activity continues to widen access to financial services.

Fintech startups should collaborate with governments, regulators, communities and other stakeholders to work towards this common goal. Doing so can help them bring tailored products and services to market that meet the needs of unbanked and underbanked groups.


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