Financial services in Bahrain to go digital

A COMPREHENSIVE digital transformation of the financial sector in Bahrain is in the pipeline with initiatives and programmes to be rolled out in the coming years.

There are currently 367 licensed financial institutions in Bahrain with 13,737 workforce contributing to 17.9 per cent of the country’s GDP with plans underway to further expand that to 20pc.

Plans include rolling out a Digital Dinar – which will complement paper money and not replace it, revealed Central Bank of Bahrain (CBB) Governor Rasheed Al Maraj who also highlighted that banking sector assets reached $211.7 billion in 2021.

“Our plans for a digital transformation is key to our future strategy for the next five years which comes hand-in-hand with rolling out many products in terms of payments and settlements,” he told the GDN on the sidelines of a Press conference at the Isa Cultural Hall yesterday to announce a strategy to develop the financial services sector.

“We are working with all the key players in the industry – BenefitPay, financial institutions and the banks – in order to make this transformation seamless and smooth in order to bring to customers facilities for their daily use that are competitive, efficient and with very little cost.

“The Digital Dinar will complement the paper money and it’s not a replacement and this will hopefully plug into this transformation plans.”

The GDN previously reported in May that instantaneous cross-border payments powered by state-of-the-art technology and digital currency will be piloted by CBB in collaboration with JP Morgan and Bank ABC.

The trial will see the transfer of funds from and to Bahrain in US dollars for payments from buyers to suppliers. This will lead to suppliers being paid faster and buyers originating payments in shorter periods of time without the need for holding funds in advance.

Also present at the conference were Economic Development Board chief executive Khalid Humaidan, Bahrain Bourse (BHB) chief executive Shaikh Khalifa bin Ebrahim Al Khalifa, and Bahrain Institute of Banking and Finance (BIBF) director general Dr Ahmed Al Shaikh.

“The strategy prioritises creating job opportunities, developing legislation and policies, improving the financial market, developing financial services and FinTech as well as the insurance sector,” added Mr Al Maraj.

“Plans are underway to increase financing to small and medium enterprises gradually to reach 20pc of the retail banks domestic financing portfolio by the end of 2025.

“Performance indicators of the success of the five-year strategy will also include a reduction in dealing with paper money by 25pc, preserving the steady growth of electronic financial transactions to ensure it doesn’t fall below 10pc as well as increasing the contribution of the financial sector to GDP to 20pc by the end of 2026.”

He also highlighted that by the end of 2024, 3,000 training opportunities in the various financial sector fields will be created annually.

Mr Al Maraj also warned against cyber-crime and dealing with crypto-currency and urged people to protect their personal information.

He also stressed the importance of raising awareness in society regarding fraudulent calls, text messages, links and emails.

Mr Al Maraj said the CBB’s strategy also includes establishing a cyber emergency response team in the financial sector, developing a system for immediate implementation of judicial orders issued by courts at Justice, Islamic Affairs and Endowments Ministry, updating the Bahrain Central Bank and Financial Institutions Law, restructuring the directives folder, connecting the Bahrain Bourse to the emerging markets index and linking clearance, settlement and central depository systems, regionally and internationally.

The CBB last month warned against the dangers of investing, contributing, dealing with or trading any amounts of money with any person(s) or company or institution or website including social media before ensuring they have obtained the required licences from CBB to engage in such activities.

Cryptocurrencies aren’t controlled by the CBB and haven’t been licensed yet.




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