Bahrain’s Banking Sector and Fintech Development: Regulatory Changes Promoting Innovation

The banking sector in Bahrain is undergoing significant changes to promote innovation and financial inclusion. This article highlights the key developments in the banking sector, fintech growth, and regulatory changes.

Banking Sector Progress

Non-Performing Loans (NPLs): The Kingdom has made notable progress in reducing NPLs from 5.8% in June 2018 to 5.5% in December.
Deposits: Total deposits stood at BD17.9 billion ($47.4 billion) in December 2018, with domestic deposits accounting for 67.7%.
Loan-to-Deposit Ratio: The ratio fell from 73.2% in mid-2018 to 72.6% by the end of the year.

Fintech Growth and Development

Bahrain is actively promoting fintech growth through a three-pronged approach:

Expanding Innovative Financial Solutions

Developing new financial products and services
Enhancing customer experience through digital platforms

Developing National Talent in Finance and Banking

Training and educating Bahrainis in finance and banking
Attracting international talent to support fintech growth

Implementing Supportive Policies

Regulatory sandbox for testing new ideas, platforms, and products
Open banking implementation with compliance by June 2019

Regulatory Changes

The Central Bank has introduced regulations to promote fintech growth:

Crowdfunding Regulations

Allowing SMEs in Bahrain and the region to raise money using licensed crowdfunding platforms
Sharia-compliant and conventional equity and crowdfunding activities regulated

By implementing these changes, Bahrain aims to become a hub for fintech innovation and financial inclusion in the region.