Middle East

Experts say digital banks to help Kuwait keep up with global trends

Kuwait: The recent decision by the Central Bank of Kuwait to open the door to the establishment of digital banks is a new milestone to keep up with the latest developments in digitalization and global financial services by state financial regulators. The Kuwaiti bankers and experts agreed. In another interview, they argued that the move was also triggered by a growing need from tech-savvy younger generations looking for accessible financial services.

Waled Al-Awadhi, executive director of the supervisory division of the Central Bank of Kuwait (CBK), said that digital banks do not have branches and provide all banking services through digital channels. This technology-based model reveals cost and time savings, adding that these banks do not have the paperwork complexity of traditional banks. Awadhi reveals that the Central Bank of Kuwait has focused its efforts to achieve digital transformation, enhance cybersecurity and drive innovation in recent years, especially during the coronavirus pandemic. ..

He said most regional banks have excellent capabilities in digital banking services. A new feature of the new banking license recently announced by the central bank is that it enables the establishment of stand-alone digital banks that can provide all banking services online only, he explained. He believed that digital banks would be able to offer creative financial solutions at low cost using the latest financial technology.

Awadhi said existing traditional banks also have the capacity and necessary infrastructure to deliver digital services. He pointed out that existing banks could also apply for a license to open a digital unit or a new digital bank in partnership with a stockholder. He said financial stockholders could also apply to get a license to set up a digital bank.

He has the same regulatory requirements, guidelines, instructions and controls that apply to traditional and digital banks, with the capital required to set up a digital bank in Kuwait at 75 million KD (about $ 247.5 million). ) And a traditional bank. He has indicated that CBK will receive applications for a digital banking license until June 30, 2022. It examines all applications and gives initial approval by the end of the year. He said the CBK will also set a deadline for licensed people to complete the procedure and put it into operation.

3 models

Dr. Mohammed Al-Kamis, Manager of Offsite Supervision at the Central Bank of Kuwait, said the CBK decision on February 2, 2022 began with the collection of digital banking license applications. He added that he developed a digital banking framework and was adopted after studying the relevant best practices of more than 25 central banks and the experience of 40 digital banks around the world. Khamis added that the Kuwait framework can provide digital banking services according to three models: traditional in-bank units, or partnerships between such banks and digital institutions, or the establishment of stand-alone digital banks. ..

Meanwhile, Issam Al-Tawari, managing partner of Newbury Economic Consultant, said licensing digital banks in Kuwait is needed due to significant developments in this area and intensifying international competition in various countries. Said. Tawali said opening this large number of digital banks around the world could attract the majority of Kuwait’s young investors to the banking market, which is not under the supervision of CBK, especially because 65% of Kuwait’s population is young. I warned. This category is fully linked to non-traditional digital services. He suggested that the general global trend in the banking sector is the transition to digital banks, which offer a wide range of innovation and entrepreneurship.

However, Tawali has ruled out the possibility of Kuwaiti youth applying for a digital banking license, given the announced requirements and conditions. He pointed out that they would not be able to apply for a digital banking license unless they came up with an innovative service and set up a stock holding company. He states that other companies that are eligible to apply for a digital banking license have a large customer base because they can work with other institutions to establish digital banks and profit from their customer base. I did. On February 2, CBK issued guidelines specifying the requirements for establishing a digital bank as a technology-based business model, opening the door to receiving applications and required documents until the end of June 2022. .. – KUNA

https://www.kuwaittimes.com/experts-say-digital-banks-to-help-kuwait-keep-pace-with-global-trends/ Experts say digital banks to help Kuwait keep up with global trends

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