Finance (5)
Can anything challenge the belief that investing in digital assets is a guaranteed route to riches?
We deal with all kinds of financial problems on the Money Clinic podcast, but after speaking to young traders who lost their shirts in the $40bn wipeout of crypto token luna, I found it hard to offer them any solutions.
Subbaiah, 29, got into crypto last year after seeing his friends make money.
The IT worker in Bangalore watched tutorials by online influencers, started trading in and out of various coins and made enough to dream about quitting his day job and trading full-time.
Unfortunately, this early success gave him the confidence to borrow on credit cards to boost his trades. Tempted by the prospect of a 20 per cent yield, he moved his entire $7,000 portfolio into luna — only to see it reduced to $150 when the coin’s value collapsed this month.
“I thought I could make money easily,” he tells me on the podcast this week. “I never thought about the downside, that everything could go to zero.”
Not only is Subbaiah’s money lost, the credit card debt will be a lasting reminder of how this was a risk he couldn’t afford to take.
You might have limited sympathy for those who have been financially reckless, trading unregulated and volatile crypto assets in an attempt to get rich. In the UK, regulators have consistently warned: “Be prepared to lose all of your money.” So why has this come as a surprise?
Yet, glance through the tales of woe on Reddit threads topped with suicide helplines, and only those with hearts of stone will fail to question what more we should be doing to protect young consumers from financial harm.
Financial regulators are still struggling with how to respond, but there are also serious questions for platforms (those that enable crypto trading as well as social media platforms). As the gatekeepers to the crypto kingdom, they’re profiting from this craze, and should better police it.
However, even the outgoing chair of the UK’s Financial Conduct Authority admitted last week that harsh warnings were not putting young people off. Charles Randell recently visited a school near the FCA’s east London headquarters, and chatted to a group of 13- and 14-year-old students about the risks of crypto.
They accepted it was “like gambling”, but nevertheless still believed they could make money. “They were very able students, but the hope of getting rich was stronger than any facts or rational arguments I could give them,” he said.
“With celebrities as varied as Kim Kardashian and Larry David willing to take money to promote speculative crypto, how do we curb people’s enthusiasm to do something that may seriously harm their financial lives?”
Crypto may be risky and unregulated, but it’s impossible to avoid. Even if young investors are aware of the FCA’s warnings, they’re much more likely to have seen influencer endorsements on social media, crypto ads on the side of buses or taken part in “play to earn” online games such as Axie Infinity.
Last year, FCA research estimated that 2.3mn British adults owned some form of crypto asset, which is not far off the numbers who invest in stocks and shares Isas. Although most crypto holders knew their investments were not protected, more than one in ten believed otherwise.
There’s rising evidence some people who have lost money on their crypto investments mistakenly think they could be entitled to compensation.
The UK’s Financial Services Compensation Scheme (FSCS) tells me that “crypto” is one of the most searched-for terms on its website — yet it’s not a product it covers. In response, the FSCS has created educational content about what to consider before you invest in crypto, including its “Protect your money” podcast.
This is commendable — but could better financial education really discourage people from taking huge risks to get rich quick? One of Money Clinic’s podcast experts, professional investor Ilan Solot, believes that it can.
“We need to be preparing young people for a financial world where they’re going to be offered situations with high leverage, and people on YouTube saying you can earn 20 per cent and there’s no risk,” he says.
I’m a big believer that we need to start doing more in schools. The FT’s Financial Literacy and Inclusion Campaign (FLIC) has devised a school workshop about risk including a “higher or lower” game — similar to the 1980s British TV show Play Your Cards Right — where we challenge teenagers to predict short-term crypto price movements.
In my role as a FLIC trustee, I am often required to pose as the late flamboyant presenter Bruce Forsyth.
One lucky student is selected to guess as their classmates bellow “higher!” or “lower!” (they frequently get it wrong, which is embarrassing, but less costly than doing so in real life).
Once, a student thought the answer was lower, but I influenced him to change his mind by repeatedly asking “Are you sure?”
When I revealed the correct price was substantially lower, he was rightly miffed: “But Miss, you told me it would go up!”
But here’s the thing: how can anyone guarantee that you’ll make money? As I told the students, if I were an influencer on TikTok telling them to buy this coin, what recourse would they have if they lost all their money? Correct answer — none — and gold stars awarded.
There are other regulated activities that older students could legally try that are risky and financially harmful, such as spread betting, day trading or gambling, yet some protections exist.
The UK has (finally) banned punters from gambling using credit card payments; spread betting sites must carry prominent warnings about the high numbers of customers who lose money and the FCA has clamped down on the amount of leverage unsophisticated investors can use. Meanwhile, the crypto world remains a free-for-all.
The first rule of gambling is never to bet more than you can afford to lose, but crypto investors should also heed traditional investment “rules” such as diversification.
Contrast Subbaiah’s experience with that of 34-year-old Money Clinic podcast listener Dan. He holds crypto, but kept this under 15 per cent of his wider portfolio.
While he steered clear of leverage (and luna) he’s still seen the value of his crypto holdings fall by several thousands of pounds in the latest sell-off.
He’s not happy about this — but it hasn’t cost him his financial resilience. He’s not a forced seller and (to coin a phrase beloved of crypto investors) he can “hold on for dear life” and hope for a bounce.
You might think they’re nuts for investing in crypto, but I am hugely grateful to our podcast guests for bravely sharing their experiences of losing money.
With all of the hype merchants promising you can trade your way to riches, talking about the realities of going broke may be the most powerful educational tool for young investors who are tempted to take a punt.
source: The Financial Times
يعد التمويل الجماعي (Crowdfunding) من أحدث طرق جمع الأموال للشركات الناشئة ومن أكثرها رواجاً خلال فترة جائحة كورونا (كوفيد19)، لما يتمتع به من صفات لا تتوفر في غيره من أساليب التمويل، وقدرته على سد الفجوة الائتمانية التي تواجه رواد الأعمال، فإذا كنت من الراغبين بتمويل شركتك الناشئة وتجد الصعوبة في الحصول على الأموال بالطرق التقليدية، فتابع معنا هذا المقال لتعرف أكثر عن التمويل الجماعي، ومتى يكون هذا الخيار مناسباً لتمويل مشروعك، وما هي أفضل منصات التمويل الجماعي العربية، وأهم النصائح لقيادة حملة تمويل جماعي ناجحة.
ما هو التمويل الجماعي؟
التمويل الجماعي هو وسيلة لجمع الأموال من خلال عرض رائد الأعمال لمشروعه، على إحدى منصات الإنترنت المخصصة للتمويل الجماعي، ليستثمر به مجموعة كبيرة من الأشخاص بمبالغ صغيرة لتلبية احتياجات التمويل لرائد الأعمال، ويتم عادةً استخدام منصات التواصل الاجتماعي للترويج لحملة جمع الأموال.
متى يكون التمويل الجماعي مناسباً لمشروعك؟
إذا كان مشروعك من نوع المشاريع الصغيرة والمتوسطة فغالباً ما سوف يواجه برفض الاقراض من قبل البنوك بسبب ضعف الموجودات والأصول وارتفاع المخاطرة على الإقراض، في هذه الحالة عليك الاتجاه إلى منصات التمويل الجماعي فهي خيار مناسب لتمويل المشاريع الصغيرة والمتوسطة.
إذا كان مشروعك من نوع "المشاريع الاجتماعية" أي لديه أهداف اجتماعية إلى جانب أهدافه الربحية، كتوفير فرص عمل للأشخاص الأكثر ضعفاً في المجتمع، أو أن للمشروع مساهمة في الحفاظ على البيئة والتنمية المستدامة، فإتجه إلى منصات التمويل الجماعي فقد تحظى بفرصة الحصول على التبرعات لتمويل مشروعك من قبل جمهور المنصة، كذلك سيكون من المناسب اللجوء إلى منصات التمويل الجماعي في حال كان لديك نموذج أولي لعملك وتريد اختبار المنتج وقياس مدى ملائمته لمتطلبات السوق وينقصك المال لإنتاج الدفعة الأولى، فمنصات التمويل الجماعي تتألف في معظمها من "جمهور" وليس من مستثمرين كبار، لذلك من الممكن أن يبدون الحماسة لتمويل مشروعك في حال استطعت إقناعهم به، وفي الحالة الثانية، أي إذا كانت المنصة تقوم في الأساس على تجمع لمستثمرين كبار من الأفراد والشركات، فيمكن لك أن تحظى بخبرتهم.
ماهي أهم منصات التمويل الجماعي العربية؟
قبل اختيارك لمنصة التمويل الجماعي يجب عليك التعرف على أشهرها والخدمات والمزايا والاختلافات في كل منصة، إليك بعض الأمثلة عن أهم منصات التمويل الجماعي العربية:
منصة "ذومال"
تعتبر منصة "ذومال" من أوائل المنصات العربية المختصة بالتمويل الجماعي، ولقد تم تأسيسها من خلال مبادرة من أربعة شركات استثمارية عربية كبيرة، تحدد المنصة شرطين رئيسيين لرواد الأعمال لعرض مشاريعهم على المنصة، أولهما وجود هدف محدد وثانيهما، هو وجود نهاية محددة، وتستقطع المنصة 5% من أرباح المشروع، وفي حال فشل المشروع فلا تطالب المنصة أو العملاء من المستثمرين من رواد الأعمال أي رسوم.
منصة "منافع" السعودية
تقبل منصة "منافع" السعودية كافة أنواع الشركات والمؤسسات ولكنها تلزم رواد الأعمال عند قبول مشاريعهم على المنصة بتحويل شركاتهم إلى شركات مساهمة مغلقة، كما تستهدف المنصة الشركات ذات النمو السريع، والشركات التي ترغب بالحصول على تمويل لا يزيد عن 5 مليون ريال سعودي عن كل جولة استثمارية.
منصة "يُمكن.كوم" المصرية
تعمل منصة "يُمكن.كوم" المصرية على دعم رواد الأعمال من أصحاب الأفكار والحلول المبتكرة والذين يبحثون عن دعم مادي أو التعاون مع خبراء أو تسويق أفكارهم لتحويلها إلى مشاريع ناجحة، كما تتيح بنفس الوقت الوصول إلى أفكار مشاريع استثمارية مستوحاة من التحديات التي يعرضها الآخرون مقابل مكافأة.
- منصة "إمكان" السعودية
تستقطب منصة "إمكان" الشركات الناشئة لتعرض مشاريعهم الخاصة للاكتتاب على جمهور منصة "إمكان" من المستثمرين، وهنا يأتي دور المنصة حيث يقوم فريق عمل منصة "إمكان" بمراجعة وتدقيق ملف المشروع والتجهيز للحملة التسويقية لعرضها على المستثمرين في مدة محددة لجمع مبلغ الاستثمار المطلوب، وبعد نجاح حملة الاكتتاب يتم إصدار الأسهم للمستثمرين والداعمين للمشروع.
وتهدف منصة "إمكان" بشكل خاص إلى دعم مشاريع "الفنتك" (التكنولوجيا المالية) في إطار رؤية المملكة العربية السعودية "2030" للتحول الرقمي في الخدمات المالية.
منصة "لوا" الأردنية
تقوم منصة "لوا" الأردنية على تقديم قروض لرواد الأعمال من خلال المستثمرين المتوفرين على المنصة، وتشترط المنصة إعادة الأموال المقترضة على شكل أقساط شهرية، وتستهدف المنصة بشكل رئيسي المشاريع الصغيرة والمتوسطة في كافة أنحاء العالم العربي، ويمكن للمتقدم الحصول على القرض بعد موافقة "لجنة الائتمان" على طلبه، ومن ثم يتم عرض المشروع على المستثمرين في المنصة.
منصة "يوريكا" العالمية
تتميز منصة "يوركا" بانتشارها العالمي، فللمنصة مكاتب في كل من دبي، ولندن، وكوالالمبور، وأمستردام. تقدم منصة "يرويكا" عبر شبكة مستثمريها الفرص الاستثمارية الواعدة في مناطق مختلفة من العالم، من ضمنها الشرق الأوسط،، وتعرف المنصة عن نفسها كمنصة "للاستثمار الجماعي" فتمويل الشركات يتم عبر شراء الأسهم في الشركة، أي أن المستثمرين الذين يقومون بتمويل مشاريع رواد الأعمال المعروضة في المنصة يصبحون شركاء لرواد الأعمال الأمر الذي يوفر الحافز لهم لمساعدة هذه الشركات على النجاح.
منصة بسيطة
تعرف منصة "بسيطة" عن نفسها بأنها شركة صاعدة تعمل وفق نموذج "الكليك فانسينج" (التمويل بالنقر) (clickfinancing)، وهو النموذج الذي يتيح لمستخدمي الانترنت بالمساهمة في تحقيق أهداف التنمية من خلال مشاهدتهم وتفاعلهم مع إنتاجات منصة "بسيطة" المرئية، وتختص "بسيطة" في التسوق والإعلانات، وحملات مواقع التواصل الاجتماعي، وإنتاج المحتوى المرئي.
تبحث منصة "بسيطة" عن سبل مساعدة المبادرات الإيجابية أو مساعدة المنظمات المختلفة في إعداد حملات على مواقع التواصل الاجتماعي، أو تسويق القضايا المجتمعية، أو الهوية التجارية، والحلول التسويقية، والمحتوى المرئي.
نصائح لحملة تمويل ناجحة
في ختام هذا المقال نقدم إليك سبعة نصائح لحملة تمويل ناجحة:
- اختر المنصة المناسبة لمشروعك: قبل اختيارك لمنصة التمويل الجماعي عليك بأن تسأل نفسك، هل تريد أن تقترض المال من الجمهور أو المستثمرين؟ أم أنك تريد تحويل شركتك إلى شركة مساهمة عبر عرضها كأسهم للمستثمرين كما تفرض بعض المنصات؟
- ضع خطة عمل محكمة: ستحتاج إلى خطة عمل مصممة بشكل صحيح قبل إدراج مشروعك على المنصة، فجمهور المنصة سيرغبون في رؤيتها أيضاً، لذلك احرص على أن تتضمن خطتك توقعات واقعية للإيرادات والنفقات، بالإضافة إلى تفاصيل حول كيفية نمو الشركة، وأن تحدد لأي غرض تجمع الأموال لأجله. إذا كنت غير متأكد من هذه الأجوبة فأتبع النصيحة التالية.
- تحدث مع الخبراء: تقدم معظم منصات التمويل الجماعي الفرصة للتواصل مع الخبراء من مستثمرين ورواد أعمال ومختصين في دراسة الجدوى الاقتصادية، احرص على التواصل المكثف معهم، كذلك لا تتردد في الاستعانة بخبراء من خارج المنصة من مستثمرين ورواد أعمال لمساعدتك على تقديم أعمالك بأفضل طريقة.
- تعرف على منافسيك: ابحث عن أشخاص لديهم مشاريع مشابهة لمشروعك، تعرف على طرق ترويجهم لمشروعهم ولا تتردد في استلهام أسلوب ترويجهم لتكييفها مع حملتك التسويقية.
- لا تستخدم منصات التواصل الاجتماعي لطلب المال فقط: لا تكتفي بطلب المال على منصات التواصل الاجتماعي الخاصة بك باستمرار، حاول تقديم الأفكار المثيرة للاهتمام عن مشروعك والأخبار التي تتعلق به، ثم أترك رابط الوصول إلى تمويل مشروعك على المنصة في الخاتمة.
- ركز على 48 ساعة الأولى: تعد 48 ساعة الأولى من لحظة إطلاقك لحملة التمويل الجماعي من أكثر الأوقات أهمية، فالانطلاق ببداية جيدة سيضعك في وضع جيد طوال حملتك.
- الحملة لن تكون مجانية: يجب وضع هذا العامل في عين الاعتبار فالحملة الترويجية سوف تتطلب منك جهداً كبيراً منذ وضع الخطة إلى حين تنفيذها كما قد تتطلب منك دفع الأموال لتسويقها عبر المؤثرين على منصات التواصل الاجتماعي أو شركة مختصة في التسويق.
A recent ii poll shows that more active investors are buying than they were at the end of February.
interactive investor coronavirus poll: More armchair investors go shopping – but many are still waiting for further falls
As the coronavirus pandemic continues to send global markets South, a poll of 2,295 interactive investor customers between 11 - 16 March 2020 shows that more active investors are buying than they were at the end of February.
This second wave of investor research follows on from a wave 1 poll of 2,337 investors between 28 February – 2 March 2020, when market jitters were taking hold.
The most recent wave 2 survey shows that whilst many investors are still doing nothing amid Covid-19 concerns, this is down 6 percentage points (from 53% to 47%) two weeks ago. Instead, more investors are starting to take the plunge and buy – some 43% of investors said they are increasing their stock market exposure - up 8 percentage points from the last survey (35%).
However, many investors are all too aware that the market could sink lower. Some 19% of investors think the FTSE 100 becomes a buy if it heads down to 4,500, 9% think 4,000 and 8% think even lower.
There has been little change in the proportion of investors saying they have deliberately increased their cash (8% vs 10% two weeks ago), while those moving into gold or bond funds remains at 1% respectively.
Those who are still investing after market falls are tending to favour shares (55%, up from 49% in wave 1), followed by investment trusts (20%, down from 26% in wave 1). Some 11% of investors are looking at active funds, and 7% passive funds, and 8% are looking at ETFs.
The UK was the most favoured region for those increasing their stock market exposure (70%), followed by the US (15%) and this was very similar to the wave one research.
Rebecca O’Keeffe, Head of Investment, interactive investor, says: “History suggests that the best time to buy is when the market is fearful – and the market is firmly in panic mode now. Many of us can look back and wish that we had held off buying, but it is nigh on impossible to call the bottom of a market.
“Most global markets were at or close to record levels before the start of the sell off, with some (such as the US) arguably at stretched valuation levels, so there was always plenty of potential downside in the event of a negative shock. Most of us have (mercifully) not experienced an event such as Covid-19 in our lifetimes so there is a huge element of uncertainty still around.
“Selling now would crystallise losses for many investors.
Yes, it could still get much worse, but history suggests that, if you have a reasonable time horizon for your investments, then it is usually better to be buying during these periods of extreme fear and risk aversion than it is to be selling.
“And you also have to think about dividends and total returns – something that investors often forget in times of pronounced market stress.
The FTSE 100 may be back at levels not seen since 2010, but it has paid out high levels of dividends since then and while there may be some companies that are forced to cut their dividends over the coming months, the likelihood is that dividends will still continue to be paid at a reasonable rate.”
source: ii.co
Coronavirus fears shouldn't stop you from adding to your investment portfolio
14 Mar 2020 Written by Admin AdminUncertainty has powered the incredible roller coaster ride in stock prices these past weeks and the remarkable (as well as historic) drop in bond yields. Don’t expect that to go away anytime soon. But do keep in mind legendary investor Ben Graham's advice: “The intelligent investor is a realist who sells to optimists and buys from pessimists.”
Translation: During market routs like the one happening now consider adding to your investment portfolio.
Graham’s student, Warren Buffett famously said, “Widespread fear is your friend as an investor because it serves up bargain purchases.” Translation: Now might be a good time to put some cash to work or increase your contribution to your 401(k).
My tune will rarely change on this subject. Corrections, even bear markets, create opportunities for patient investors. According to J.P. Morgan’s 2020 Guide to Retirement, from Jan. 3, 2000, to Dec. 31, 2019, $10,000 invested in the Standard & Poor's 500 index grew to $32,421 for an annualized total return of 6.06%. By simply missing the ten best days, that same $10,000 investment grew by half as much, to $16,180 for an annualized return of 2.44%. Ouch.
Can cash carry coronavirus? World Health Organization says use digital payments
In recent columns, we discussed how to prepare your 401(k) for a downturn and talked about sound investing principles in the face of violent sell-offs. Stock prices may still face selling pressure as the number of COVID-19 cases in the U.S. rise. So it is still a good time to review a few facts.
What's really moving the market
- In the near term, no one has any idea what is moving stock prices. If you've been glued to the financial news networks you might be struck, as I have been, by how many pundits can tell you with certainty why stocks are trading as they are at any moment. Yet we know that in the short-term stock prices are influenced by computer-driven buy and sell programs and institutional money which moves in and out with lightning speed. Short-term moves then reflect money flows rather than fundamentals.
See beyond the moment
- The underlying fundamentals of a company will eventually matter again. Take tech bellwether Microsoft. The stock peaked on February 10th at $188.70. After warning on February 26th that sales in the PC unit — about 35% of total sales — will come in below expectations, the stock has been hopping around like a lotto ball on Powerball jackpot night. The long-term fundamentals of the company will likely still delight investors for years and when the focus returns to fundamentals the stock price will trade accordingly. Buffett once said: “…when a great company gets into temporary trouble…we want to buy them when they’re on the operating table.“ Consider that as you review your investments this weekend.
Don't get sucked into the panic
- Human nature never changes. Panic begets panic. The Dutch tulip bulb bubble in the 1600s, one of the most famous bubbles of all time, demonstrates very clearly what rampant speculation wrought. At the height of the mania, rare tulip bulbs traded for multiples of the average person’s annual salary. Remain cool. And rational.
Think about your mix
- Diversification is always smart. I can’t add much on this topic, except to say—you should follow a prudent diversification strategy that aligns with your appetite for risk. Stocks may be down double- digits but bonds are up. That is the point of diversification.
Keep cash to the side
- Keeping your powder dry is for times like these. Cash on the sidelines comes in handy when stocks decline. Consider adding cash to your stock holdings and if your bond holdings have appreciated above your target, trim those back and add to stocks to ensure your allocation reflects your goal. Graham and Buffett would be proud.
source: usatoday
Bahrain fintechs to grow 43% by end of year, says Bahrain FinTech Bay CEO
30 Mar 2019 Written by Admin SAEKhalid Saad, Chief Executive Officer of Bahrain FinTech Bay, tells Swiss Arab Entrepreneurs about the evolving fintech industry in Bahrain and the Arabian Gulf region, the establishment of a sister company at Silicon Valley, and why investing in talent matters for the future of the region.
The number of financial technology start-ups established in Bahrain will grow 43% from around 70 currently to at least 100 by the end of 2019, buoyed by growing investment in the sector and a supportive legislative environment, according to the CEO of Bahrain FinTech Bay, Khalid Saad. In an exclusive interview for Swiss Arab Entrepreneurs, Saad revealed his end of year forecast for the fintech industry in Bahrain, estimating the total regional industry value at $2bn and predicting it will increase to $2.5bn in the next few years.
The ballpark figure of the number of fintechs in the Gulf is between 300-400 comprising companies that have spun off individual platforms and focusing on fintech, crypto asset operator platforms, blockchain, data analytics, and many more, Saad explained. However, the Middle East accounts for just 1% or less of total investment in fintech globally, which means there is an opportunity for investment in fintech to increase, he added.
“The reality is that the disruption is here. Fintech has been the phenomenon of disintermediation of the financial services sector that has been trickling down to other sectors since the global financial crisis. In Bahrain and the Gulf, this reality has become much more evident over the past few years, and we’ve been looking very closely at ensuring that the ecosystem in Bahrain is being built and that it’s ready for this disruption,” Saad said, adding that the small island kingdom, where Bahrain FinTech Bay is based, is only just at the beginning of its journey.
Regional fintech landscape
In neighbouring United Arab Emirates and Saudi Arabia, legislation has been gaining pace to support the development of the fintech industry, with the Saudi Central Bank recently announcing the start of a ‘sandbox’ regulatory environment that allows local and international fintech firms to test new digital solutions. Saad expects to see this trend accelerating into the near future and ascribes the rapid adoption and standardization of financial technologies and practices by traditional mainstream financial institutions to the massive disruption that fintech has created.
“There is general acceptance that the modus operandi is not the same anymore, and that we need to do business differently,” he says. “This is not just a temporary phenomenon or a fad but rather it’s a much wider play at hand and the financial institutions as we know them are going to fundamentally change. Big tech companies are already coming in and eating the pie of the traditional financial institutions, meaning that these institutions will need to adapt and figure out what they need to do to survive and maintain their share,” he warns.
Changing consumer habits of the new generation of millennials, whose way of thinking and doing business is very different than that of their predecessors, are another key driver for the adoption of fintech. “We are now moving from a product centric world to an experiential world where consumers want real time information, available at any time. I think the other theme that will really drive fintech developments in the region is financial inclusion, i.e. ensuring that the underbanked or the banked become part of this financial system through fintech. I think we can achieve that, and this is what will help drive development in the GCC for years to come,” Khalid explains.
Bahrain’s fintech milestones
Founded just about a year ago to support the development of a fintech industry in the MENA region, Bahrain Fintech Bay has played an instrumental role in facilitating the right regulatory environment and supporting the establishment of start-ups across different sectors in the kingdom. “We are pushing ahead with open banking which I think is a massive development and an absolute game changer. We’ve created a dedicated fintech and innovation unit within the Bahrain Central Bank. We managed to literally go from the idea of starting a sandbox to launching it in six months,” Khalid said. Currently, 28 companies, of which 10 are crypto-related firms, are operating in the regulatory sandbox in Bahrain, cutting across different sectors such as crowdfunding, blockchain, payments, challenger banks, open banking, and others.
“These are firms that came here because there is that regulatory environment which helps crypto currency activity, Khalid said. He added: “Significantly during the previous month, the Central Bank of Bahrain have pushed out the next crypto asset module license in Bahrain. We are also standardizing E-KYC so it becomes a national utility tool for the financial services at a country level.” The so called “electronic KYC” or “know-your-customer process” is used in banking as a paperless and electronic method of verifying the identity of customers.
Bahrain has one of the largest conventional financial sectors in the region and is one of the top two global hubs for Islamic finance behind Malaysia, which creates significant opportunities to innovate in the space of Islamic Finance. “The sector of Islamic Finance 1.0 era has been over for the last few decades. We are now moving into Islamic finance 2.0 that will be heavily reliant on technology,” Khalid says. As part of its initiative called the Global Islamic and Sustainable Fintech Centre, Bahrain Fintech Bay is raising a 100 million-dollar fintech fund which will ultimately tie in the ecosystem, Khalid adds.
Bahrain Fintech Bay: A global force
Outside of the region, Bahrain Fintech Bay is developing a sister platform in Silicon Valley which will be inaugurated in late March or April this year. The company also owns platforms in Detroit and Singapore. Khalid tells Swiss Arab Entrepreneurs: “The vision behind this investment is developing the ecosystem further and exposing our partners to innovative solutions and technologies. There is a lot going on in Silicon Valley so having a footprint there would enable us to meaningfully connect the platform here in Bahrain with that in Silicon Valley. Ultimately, if you have that footprint you become a global platform with relevance. As we celebrate one year since we were founded, that connectivity is absolutely key.”
Moving forward, talent development will be key to developing the fintech sector in the region, which is why Bahrain Fintech Bay launched the National Fintech Talent Program together with Tamkeen (The Bahraini Labour Fund) that aims to equip the next generation of talent with the skill set required to play a leadership role in fintech innovation. The company also has in place a strategic partnership with Georgetown University in the US alongside the Georgetown Professional Development Course in Fintech.
Khalid says that setting up a business in the kingdom is an easy and straightforward procedure, with the whole country acting as a free zone of a sort. If a company’s offering is in technology, they would need a normal commercial registration, and if a company is conducting some form of financial services that would need to be officially regulated by the Central Bank. There are two options, one is to apply for an existing license category or if they don’t fit in that category, they can apply to the regulatory sandbox. The same procedure applies to foreign companies. In Bahrain, any company that establishes a base will be treated as a local company, Khalid tells us.
“We are at a time when the ecosystem is growing stronger together. Bahrain is a small place – just like Singapore is a small place – but a company can come here, incubate, innovate, ideate, and test. I would need to be able to give companies the opportunity to expand into other markets because if they do that and they grow then everybody wins that’s why you need to establish partnerships with different jurisdictions. You’ve got to be competitive individually but it’s all about meaningful collaboration,” he concludes.
