Central Bank of Kuwait to Test a First-of-its Kind Product for open banking within the Regulatory Sandbox.
Keen to enable the new fintech and support the open banking to help bring about innovative business models in the field of financial services, the Central Bank of Kuwait (CBK) has given the green light to test a first-of-its kind product by launching thereof in the local market within the Regulatory Sandbox and applying the same to banking transactions of volunteer customers to fully assess and evaluate the product before the final launch in the market.
Commenting on the new product, His Excellency the CBK Governor, Basel Al-Haroon, stated that the CBK spares no effort to support the advanced fintech, adding that the new open banking product that has been initially launched in the market within the Regulatory Sandbox is the first of its kind in the State of Kuwait. The product operates within an open banking model and provides the users with analytical services for transactions processed on their bank accounts with different banks, along with e-payment services.
Central Bank of Kuwait Focused on Fintech
Al-Haroon shed the light on the importance of fintech to CBK, which can be defined as new technologies that relate to the financial industry, and aim to improve the financial activities including launch of advanced products, services and business models in the financial services industry. To this end, the CBK has launched the Regulatory Sandbox in 2018 and updated the same in 2019 to broaden the scope of accepted products and services. The Regulatory Sandbox is a safe space that allows for experimentation with innovative products and services related to fintech without jeopardising the stability of the financial and banking system.
On other CBK efforts to support and regulate open banking, the Governor noted that the CBK specialists had conducted a wide-scope study concluding that there is a need for open banking Regulatory Framework and for Application Programming Interface (API) specifications. For this purpose, the CBK has formed “open banking Working Group,” which includes specialists from Kuwaiti banks. The CBK also formed the “CBK open banking Working Group” which comprises of CBK specialists and representatives of Kuwaiti banks.
In conclusion, the Governor praised the cooperation of Kuwaiti banks in supporting the development of open banking, stressing on CBK’s role as a motivator and its keenness to deploy the latest technology to enhance banking and financial services in the country.
Kuwait’s Fintech and Wider Digital Ecosystem
Economic development strategies have been implemented across much of the Middle East and Africa (MEA) and this also includes Kuwait. Kuwait Vision 2035 will aim to diversify Kuwait’s economy and also help the country be less-oil reliant, which for most of the previous century until today has boosted the country’s economic development and its other Gulf Cooperation Council (GCC) neighbours.
According to Hootsuite, in terms of percentage of the population aged 15 and over, nearly 80 per cent has an account with a financial institution, almost a quarter has a credit card, and over a third makes online purchases and/or pays online bills. Like in the rest of the world during the height of the 2020 pandemic, Kuwaitis also went digital and their activities there increased dramatically. For instance, online banking usage was at 84 per cent during the pandemic. And in terms of perceived readiness to digital transformation, 80 per cent in Kuwait felt the government and telecommunications providers felt they were ready to shift to online services.
In the Middle East and particularly in the Gulf region, as highlighted in The Fintech Times Fintech: Middle East and Africa 2021 Report, Kuwait has been a historical regional hub for the financial services industry. Even today, Kuwait’s financial system comprises four sectors: banking, insurance, other financial institutions and investment funds. There were over 100 financial institutions offering financial products and services in the country. Banking in Kuwait is dominated by retail business, with personal loans/financing comprising 40 per cent of total facilities.
Also, Kuwait has produced some of the regions most iconic tech companies, such as delivery app Talabat and e-commerce platform Boutiqaat.
Due to its historical financial services ecosystem in the region coupled with the high economic development of the country and support from the top – coupled with a young and tech savvy population, fintech has potential to grow in Kuwait.
Kuwait’s future looks to grow with digital transformation and sectors like fintech helping lead that charge.
Image and article originally from thefintechtimes.com. Read the original article here.