FinTech an ‘essential’ global financial tool: local bankers

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Modern tech used to provide innovative financial services, solutions

KUWAIT CITY, Oct 13, (KUNA): The latest mating of modern technology and the financial sector has resulted in the increasing number of technological-based services currently competing with traditional institutes such as banks and other bodies. The number of companies and financial services has grown steadily following the global financial crisis in 2008.

This development had led to the introduction of innovative solutions such as “FinTech”, an amalgam of financing and technology. FinTech includes the use of modern technology to provide innovative financial services and solutions similar to traditional outfits like banks and insurance companies. Last September, Kuwait has taken a new step in this area after the Central Bank of Kuwait (CBK) announced the establishment of the electronic payment instruction memo, a step which came to fulfill the law 20/2014.

The law defined the responsibility of electronic-based companies and their work in Kuwait as well as the legal and regulatory framework for the start of this industry to transform the country into a global financial and economic center. CBK instructions set a practical scope and mechanisms of control and supervision for electronic payment companies, which were divided into two parts: the first includes the operators of the activity “electronic payment” and “agents” such Fin- Tech companies. In this context, bankers stressed that the development of infrastructure and legislation of the FinTech industry was essential to keep up with the global financing industry.

Preparation In separate interviews with KUNA, the bankers said that Kuwait has began preparation of cadres and operational structures of FinTech companies under the supervision and monitoring of the state. For his part, the Executive Director of Information Technology and Banking Sector at CBK, Anwar Al-Ghaith told KUNA that FinTech companies were registered with the central bank as agents because they did not have the technological infrastructure and will use the traditional methods utilized by local banks, telecom companies, and other services.

CBK’s last electronic payment instructions issued by the end of last September defined the activity of “operators” as any financial institution classified as a joint stock company that has been registered with the central bank to do all or a few aspects of electronic payment, settlement systems, or any other businesses, he added. Meanwhile, Vice-Chairman and Chief Executive Officer of Boubyan Bank, Adel Al-Majed said that specialized studies indicated that one out of three people use smart phones in electronic payment methods in 2007 compared to one out of seven in 2015.

Al-Majed pointed out that the electronic payments worldwide reached $450 billion last year and he expected that the number will reach USD one trillion next year. Al-Majed said that the sector was still in need of the human element no matter how technology develops. Acting Director of Training at the Institute of Banking Studies, Desmond Nelson, said that the institute was capable of keeping abreast of all current developments in the financial sector and was prepared to train new graduates on any developments in this field. Nelson pointed out that there was a revolution affecting the industry in different countries as a result of FinTech, stressing that Kuwaiti youth were capable of utilizing this technology for the benefit of their country

By Fawaz Karami

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