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Fintech: On A Fintech Drive
How Bahrain is seeking to diversify its economy away from oil, and attract Indian and global fintech startups and entrepreneurs
Photo Credit : Shutterstock
It is a good time to start something in fintech in Bahrain,” says Vinod Nagar, VP, Marketing, PayTabs. “So our founder Abdulaziz Aljouf thought Bahrain more cost effective and we got really good support from the Bahraini authorities.”
Increasingly fintech firms are looking at Bahrain to expand their offerings in the Gulf and African regions, and PayTabs is among the new startups that offers payment solutions for e-commerce and small businesses in the region. In fact, PayTabs has chosen Bahrain as its operational hub. “We are serving in almost 17 markets with Bahrain as the hub that allows us to look at the entire region,” says Nagar.
With the global investment in fintech investment reaching $3.2 billion in 2016, Bahrain is also looking at positioning itself to attract the top fintech companies from across the globe particularly from countries such as India, among others.
To spur investments in the fintech domain, the Central Bank of Bahrain has launched the Bahrain regulatory sandbox that provides a virtual platform for fintech companies to test their financial prowess and technology-based solutions. The sandbox concept offers new fintech firms the opportunity for expansion and innovation in the financial services innovation.
The sandbox is a framework that allows the development of new fintech products in a calculated way where businesses can test their products, services, business models and delivery mechanisms so businesses can see what new fintech solutions can be developed. Tech startups are constantly disrupting the financial services model and Bahrain is looking at leading the innovation in the GCC (Gulf Co-operation Council) region.
In the past year, two fintech companies have been registered in the regulatory sandbox, assisted by the Bahrain Economic Development Board, which include Tramonex and NOW Money. In fact, the regulatory sandbox has been initiated to enable industry players to create innovative fintech products with an eye on safety of the financial system.
Over the next few quarters, Bahrain is expected to launch a venture capital fund-of-funds that will invest in fintech and other areas. In fact, Bahrain is also keen to fund new startups and encourage entrepreneurship in the country, which can be scaled and expanded to other countries in the region.
In this regard, the Bahrain Development Bank (BDB) runs a comprehensive programme called Rowad, which offers coaching, training and a mentoring programme. The bank has also initiated a seed-fuel programme to invest in startups. So far, the programme has invested in 10 startups and has invested about 20,000-25,000 Bahraini dinars (approx. Rs 33,72,400-Rs 42,15,500), seven of which have been done in the past year. Some of the businesses are in the media, arts, fashion and education sectors.
“We have an accelerator programme, which this year has entered the global accelerator programmes in the US,” says Areije Al Shakar, VP, Development Services, BDB. “The acceleration programme is built-in on the processes here to encourage local entrepreneurs, so we haven’t taken any copy-paste type of acceleration model.”
The BDB also has an incubation centre that looks at encouraging other entrepreneurs, including female entrepreneurs. Bahrain also has a Startup Bahrain programme for entrepreneurs. Additionally, BDB is also working to educate investors to invest in startups. The traditional mode of investment in Bahrain has been real estate. Says Al Shakar: “I am happy to say that we have now built a community of 150 investors that are not just in Bahrain, but outside the country.”