According to a report from Medici, nearly 168 million people in the MENA region (Middle East and Northern Africa) do not have a bank account. In this environment, opportunities for both traditional financial institutions and new entrants are numerous. In some instances, financial services companies have launched their own digital banking portals in order to reach out beyond their current customer bases. In other cases, these firms have teamed up with challenger banks and innovative fintechs to help bridge the gap between the banked and the unbanked.
One of the challenges to reaching more potential customers in the MENA region has been regulatory, which makes this week’s news from the Central Bank of Kuwait (CBK) all the more notable. The CBK issued a set of guidelines for digital banks as part of a campaign to improve financial stability, encourage innovation, and help the country respond to its economic needs.
In drawing up its guidelines, the CBK relied on a study of the regulatory approaches taken by 25 central banks and 40 digital bank business models. The CBK noted that there were three main models for digital banking: as a unit within a traditional bank, a partnership between a bank and a digitally-based institution in which the bank manages core banking operations while the partnering institution manages customer relations and other operations, and as a standalone digital bank.
“The guidelines come in five parts covering the definition of digital banks, their legal framework, and licensed activities, as well as phases and procedures for establishment of digital banks,” CBK Governor Dr. Mohammad Y. Al-Hashel said. The new guidelines pave the way for interested parties to apply from now until June 30th. Initial approvals, according to the CBK governor, will be made by the end of the year.
For more on the digital banking landscape in the Middle East, with a particular focus on neobanks, check out this overview from Medici.
Speaking of central banks, the head of Argentina’s central bank, Miguel Ángel Pesce, recently gave an interview with the Buenos Aires Times. The main focus of the conversation was a preliminary agreement with the International Monetary Fund to deal with the country’s $44.5 billion debt to the organization. The agreement, which includes a pledge to reduce the country’s fiscal deficit as well as other measures, comes after a two-year negotiation process and still requires the approval of both Argentina’s congress as well as the IMF board of directors.
Yet it was Pesce’s separate conversation with Buenos Aires reporter Jorge Fontevecchia – published this week – that may be of greater interest to followers of international fintech. In that interview, Pesce explained some of the more controversial policies of Argentina’s central bank toward fintechs, including deposit insurance requirements for payment service companies. Pesce defended the practice as a way of “making more independent the assets of companies lending out the assets deposited in them” and of assuring that companies that serve as financial intermediaries are regulated as such. Pesce acknowledged that while this policy has engendered “some resentment in the short term,” it is necessary to ensure a “solid system” that banking services customers can rely upon.
In terms of innovation, Pesce spoke positively about the launch and adoption of interoperable QR codes, which were made mandatory in Argentina for all electronic invoices starting in late December 2020. He noted that interoperable QR codes could do to physical cash what electronic checks have done to paper checks (“a very important step in this direction”). And while he offered no timetable on the transition, “it’s going to end up happening,” Pesce insisted.
Read the full interview at Buenos Aires Times
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Here is our look at fintech innovation around the world.
Latin America and the Caribbean
- San Francisco, California-based Tribal Credit secured $60 million in Series B funding to fuel expansion in Latin America.
- Chilean digital lender Mento teamed up with Mambu, leveraging the company’s cloud banking platform to reach underserved markets in the country.
- Brazilian insurtech 180º Seguros raised $33 million (BRL 177 million) in funding in a round led by 8VC.
Asia-Pacific
- Russia’s Sberbank went live in China with its mobile money transfer solution.
- The Malaysian, Thai, and Indonesian central banks have teamed up to enable cross-border QR payments between the countries.
- CoinDesk featured Taiwanese fintech XREX, which uses stablecoins to power its business remittance service.
Sub-Saharan Africa
- Nigerian brokerage app Bamboo locked in $15 million in Series A finding.
- Kenya-based wealthtech startup Ndovu launched in Nairobi.
- Fintech analyst Chris Skinner shared his insights on the evolving fintech scene in Africa.
Central and Eastern Europe
- Latvian open banking company Nordigen partnered with SaaS investment platform Tapline.
- Slovakian mutual fund manager Tatra banka announced a collaboration with Temenos Multifonds to enhance its fund accounting and investor servicing operations.
- Polish payment service provider Przelewy24 announced new CEO Jacek Kinecki.
Middle East and Northern Africa
- Brimore, a social commerce platform based in Egypt, secured $25 million in Series A funding.
- Israel-based financing company Bizi announced $7.5 million seed investment to help SMEs secure lines of credit.
- The UAE’s central bank picked Accenture to lead a consortium of companies to help fulfill its National Payment Systems Strategy.
Central and Southern Asia
- Indian B2B ecommerce platform Moglix raised $250 million in Series F funding at a valuation of $2.6 billion.
- India’s Bank of Baroda partnered with NCR Corporation to modernize its fleet of 9,800 ATMs.
- Lahore, Pakistan-based fintech Taro Technologies locked in $3.5 million in pre-seed funding to launch its Buy Now Pay Later option.
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