The Central Bank of the UAE (CBUAE) has launched a FinTech Office since the second half of 2020, which aims to work with all major stakeholders to build a mature FinTech ecosystem in the UAE and position the nation as a foremost FinTech hub regionally and globally. The roadmap for accomplishing the mission is set out below.
Established to contribute to the UAE’s FinTech and advanced innovation agenda, the CBUAE FinTech Office will also serve as a single point of contact and a centre of excellence for all FinTech-related matters.
The FinTech Office is mandated to execute the UAE’s FinTech strategy, which is centered on innovation and collaboration. The FinTech Office is working hand-in-hand with industry and regulatory authorities to embrace innovation and digital transformation whilst promoting a culture of robust risk management. This commitment is backed by two-pillars: (i) effective and balanced regulations; and (ii) robust digital infrastructures. These two pillars form a solid foundation for five core building blocks or strategic focus areas to allow continued development and innovation of FinTech in the UAE. The five core building blocks comprise: (i) research and application; (ii) regulatory interface; (iii) coordination and liaison; (iv) talent development; and (v) cross-border collaboration.
Since February 2021, the CBUAE has worked with its global central banking partners on the mBridge project to deliver a proof-of-concept product on the use of central bank digital currency (CBDC) for international fund transfers based on distributed ledger technology (DLT – also known as “blockchain”). The project aims to create more efficient and innovative CBDC infrastructure to reduce obstacles to cross-border payments, including high costs, lack of transparency, low efficiency and other operational complexities.
The project has now identified a number of business cases based on historical transactions to test the recently-developed mBridge Trial Platform. In addition, a roadmap for the mBridge project’s target achievements in 2022 has been established, using an iterative and agile process to develop a minimally-viable product that could support the full process of international trade settlement and other uses.
Following an industry consultation in June 2021, the CBUAE, SCA, DFSA and FSRA have published joint Guidelines to set out principles and best practices for financial institutions when adopting enabling technologies to develop and offer innovative products and services.
The enabling technologies include:
- Application Programming Interfaces;
- Big Data Analytics and Artificial Intelligence;
- Cloud Computing; and
- Distributed Ledger Technology (DLT – also known as “blockchain”).
The objective of these Guidelines is to promote the safe and sound adoption of these enabling technologies by financial institutions across the UAE, managing the risks arising from their adoption proactively and appropriately.
The Regulators have considered international standards, industry best practice and valuable feedback from market participants during this industry consultation.
The joint Guidelines will apply to all financial institutions that are licensed and supervised by any of the Regulators and that utilise enabling technologies, irrespective of the financial activities conducted.
The Central Bank of the UAE (CBUAE), the Securities and Commodities Authority (SCA), the Dubai Financial Services Authority (DFSA), and the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market have jointly launched a consultation on the Guidelines for Financial Institutions Adopting Enabling Technologies.
The Guidelines set out cross-sectoral principles and best practices for financial institutions when adopting enabling technologies for the development or offering of innovative products and services. The enabling technologies include: Application Programming Interfaces; Big Data Analytics and Artificial Intelligence; Biometrics; Cloud Computing; and Distributed Ledger Technology.
Comments on the Guidelines can be sent to the email address: “email@example.com” no later than 30th June 2021.
Further details of the five core building blocks or strategic focus areas are set out below.
- Regulatory Interface: An interface between market participants and regulators within CBUAE (e.g. Regulatory Sandbox, Innovation Hub, Reg. Dialogues and Industry Survey)
- Talent Development: A facilitator to nurture talents to meet the growing needs of the FinTech sector (e.g. Talent Development Programme/Career Accelerator Scheme)
- National / Cross-border Collaboration: A collaborator to build a partnership model with onshore and cross-border key stakeholders (e.g. GFIN, cooperative agreements, cross-border projects and international committees)
- Coordination & Liaison: A coordination platform for the exchange of ideas regarding innovative Fintech initiatives among key stakeholders (e.g. Committees to allow major stakeholders to meet and discuss, solution/needs driven events and accelerator)
- Research and Application: An initiator of industry research in potential application and risks of FinTech solutions (e.g. Cybersecurity, DLT trade finance, e-payment, AI, KYC)
Diagram of five strategic focus areas
A video focusing on the set up of the FinTech Office, its mission and key initiatives is attached below.
CBUAE Fintech office is working with industry stakeholders and other regulatory authorities in the UAE, the CBUAE FinTech Office is envisioned to facilitate the continuous advancement of an equally progressive and secure FinTech sector across the UAE, aid in the attraction of international and regional FinTech companies, and provide a platform for all market participants to collaborate and innovate.
A number of the Fintech office initiatives have been completed or are underway, including, amongst others:
- E-KYC: Establish the fundamentals for a nationwide eKYC platform that allows financial institutions in the UAE to perform KYC checks and approve customer applications electronically
- Digital Payment: Develop a research paper on the medium and long-term strategic plan for building a successful digital payments ecosystem in the UAE, considering all relevant trends in the field of payments, including cryptocurrency
- Common FinTech Regulatory Framework: Develop a balanced and robust common regulatory framework for FinTech covering the onshore market and financial free zones
- Regulatory Co-sandboxing: Develop regulations to implement a co-sandboxing arrangement and provide harmonised regulatory requirements and procedures for any entities looking to launch a FinTech solution in both onshore and financial free zones
- FinTech related policy: Identify gaps and overlaps and provide solutions to CBUAE officers to support development of harmonized FinTech regulations