Qatar Central Bank to launch platform to support Fintech
(10/10/2018 6:56:00 AM)
Qatar Central Bank (QCB) Governor H E Sheikh Abdulla bin Saoud Al Thani announced yesterday that QCB will be launching a banking service platform before the year-end to support and promote the fast growing financial technology (Fintech).
This initiative is part of the objective to transform Qatar as a knowledge-based society and enable the country to emerge as a regional hub for such innovative technology and services, including Fintech.
Speaking at Carnegie Mellon University in Qatar (CMU-Q) Dean lecture series yesterday, the central bank Governor said: “There are big opportunities in Fintech… Today we are moving into an era where the banking sector (including the Shariah-compliant baking and financing services) is going to change— be its related to offering loans or doing other businesses.”
The QCB Governor added: “I think we are moving very quickly in this regard, and you will hear something before the end of this year.” He noted that the Fintech is going to create big opportunities which can help achieve QCB’s goals to set up in the financial sector strategy. There is momentum building in Qatar with regard to the payment system and other businesses such as remittance, digital payments, money management, lending, and other services, which has created a very good environment for the support and promotion of Fintech to become a good platform in Qatar.
The QCB Governor, who is also the chairman of the country’s financial markets regulatory authority, said that there is a US-based company which will be creating a platform by the end of this year. It will start with a Sukuk market to finance micro, small and medium-sized businesses, which will also support and promote entrepreneurship.
Sheikh Abdulla said that the new platform will also generate income and accelerate the growth momentum in the market. Addressing a question whether the Qatari banks are ready to address the Fintech challenges and does QCB have a plan to promote this and encourage Qatari banks to deal more with Fintech, he replied in affirmative adding that central bank has been studying this for quite some time.
“There are so many types of models in this world. If you look at the US, the UK and many other developed economies, they have different models of financial technology in operation. So we will take the initiative of creating a sandbox in the central bank. But also to create the ‘sandbox’ we need to first develop the right regulatory framework. Because we would like to have the most secure work and providing business for the market and to those who are really going to join this sandbox.”
A sandbox is defined as a security mechanism for separating running programmes, usually in an effort to mitigate system failures or software vulnerabilities from spreading any types of risks involved.
At the same time QCB is also letting the banking sector, for a while now, to create a lot of these financial instruments and financial technology.
“In addition, on the other hand, we have seen also an incubator in Qatar for the entrepreneurs who come for leading universities. These entrepreneurs are creating a base for a lot of financial technology. But the banking sector and the market should also create that platform for disbursing loans and other services for their clients,” noted the QCB Governor.
Commenting on supporting SMEs he said that when it comes to collateralisation of such businesses, it’s very difficult for banks to provide loans, especially the SMEs in the Fintech sector. So there is a need to reform in a certain way of financing them.
Citing the example of QDB, of which he is also the chairman, said that QDB is also studying ways to provide loans to such SMEs. In addition QDB is also creating an incubator for such entrepreneurs who can also work there and will also be provided some seed funding by the state-backed development agency.
During his lecture, the QCB Governor also provided a detailed outlook of the global economy and its impact on the banking and financial market, with special focus on the Mena region.