The Central Bank of Kuwait (CBK) is giving products supporting sustainability standards priority to its regulatory sandbox.
The CBK is prioritising products that align with Kuwait’s environmental, social and governance (ESG) strategy in its regulatory sandbox. In confirming its commitment to best practices, the CBK is seeking products that promote ESG fintech innovation.
Launched in November 2018, the sandbox provides an environment for developers to test their products outside of a real-world setting. It runs across four stages and runs for the course of one year.
The sandbox starts with the application stage of the proposed product or service. Stage two is a thorough technical, regulatory and security evaluation. Participants then move into the experimentation stage, whereby the product performs under specific environments. In the final stage, the CBK either approves or rejects the product for the local market.
The sandbox’s priority on ESG-compliant products will have a positive effect on the local market. Kuwait’s financial offerings are already figures of the region’s industry footprint.
Kuwait’s fintech push
The sandbox remains central to the CBK’s development strategy and its increasing focus on fintech. Just a year after its initial launch, an update to the sandbox broadened the variety of participants.
Around the same time, the government announced a $200million fund to power technology investment. Fintech remains a clear priority for Kuwait’s financial sector, with environmental concerns at the top of the list.
These initiatives are contained in the Kuwait Vision 2035, which marks the country’s efforts to move away from its oil reliance. Kuwait is not exclusive in this sense, as similar strategies are common across the Gulf Cooperation Council (GCC).
The Fintech Times‘ Fintech: Middle East and Africa 2021 report brings to light the country’s fintech legacy and the strength of its financial industry. Kuwait is home to over 100 financial institutions, all offering different products and services. Banking in Kuwait is dominated by retail business, with personal loans/financing comprising 40 per cent of total facilities.
The Kuwait automated settlement system for interparticipant payments (KASSIP) was one example of such innovation. Launched by the CBK last August, the service ensures the security and speed of payment and settlement transactions.
KASSIP also allows banks to issue reports on and monitor payment settlements through a designated electronic platform.
This was also when the CBK launched its first open banking product. It provides users with analytical services for their banking transactions across different banks, along with e-payment services.
Read More: Central Bank of Kuwait’s Regulatory Sandbox to Prioritise ESG Products