>> From Bahrain, it's theCUBE
Covering AWS public sector Bahrain.
Brought to you by Amazon Web Services.
>> Okay welcome back everyone, it's theCUBE Coverage.
We are here in Bahrain for AWS Summit
where cloud computing is changing the games.
The Fintech panel discussion,
Yasmeen Al Sharaf head of Fintech Innovation Unit
Central Bank of Bahrain, thank you for joining us.
>> Thank you for having me.
>> Abdul la Almoayed who's the Founder and CEO
of Almoayed Technologies, thank you for coming on.
>> Thank you for having us.
>> So we were a very robust conversation
before they turned on the cameras.
Fintech is hot, I've seen global Fintech
everyone knows what that is.
But it's interesting because
entrepreneurship and innovation
is not just for startups,
it's for countries and here in Bahrain,
this ecosystem and the mandate to go cloud first
has had a ripple effect.
We were talking about open banking,
mandate open banking versus regulation chasing innovation
and is holding it back,
you guys are taking a different approach.
Take a minute to explain the philosophy.
>> Yeah I think there's benefits to being
late adopters to the game.
I think in the case of Bahrain,
it's been a very interesting journey.
I think the, we started with the whole AWS.
But if you look at the prerequisites
of technical adoption and creating data pools
for analytics to run on,
I think the, what's interesting about Bahrain
is it's really led by regulation.
If you look at the prerequisites of
creating a digital economy, what's happening in
financial services or the digitization
or openness of financial services,
it really, one context of the bigger picture
of Bahrain's digitization plan or the economic strategy.
And really what happens here is if you look at
first built the data pools and or the data centers,
bring AWS in and create the data centers.
Number two is create a data or cloud first policy,
move the entire government onto the cloud,
and then give the ownership of the data to the people
by implementing the Bahrain personal data protection laws.
Once you've done that,
then you've given ownership to the people,
and you've created what we have.
Is we've started with a unique identifier,
so the citizens of the country or the residents of a country
have a unique identifier number where they're known by.
Once you've done that,
and then you start mandating certain sectors
to open up with API integrations,
you're creating a very very interesting value proposition.
It creates a much faster,
you leap frog a generation of technology.
You're going from the
classic screen scraping technologies or whatever,
to a very, a completely open infrastructure.
An open API where things are cryptographically signed,
people are in control of their data,
people can control the mobility of their data,
and you're really creating a very robust data pool
for a lot of algorithms to sit on.
>> You know what I love about this?
Yasmeen, we were talking before you came on camera,
is that you guys are thinking holistically,
as an operating system,
as being a geek that I am, I love that.
But it's not just one thing you're doing,
it's a system and it's a modernization view.
Now we all know that financial systems power economies.
And, Fintech Innovation Unit that you're in,
this is important, you got to have that leg of the stool,
that pillar-
>> Absolutely >> Working
>> Absolutely
>> You have a sandbox, you have technology-
>> Absolutely
>> Mechanisms to roll in tech, move things quickly,
you're moving fast-
>> Absolutely
>> What's the strategy, what are some of the key things,
what's the sandbox?
>> Let me start by saying that the Kingdom of Bahrain,
has always been considered as a center of excellence
as a financial center of excellence.
And we do realize at the Central Bank,
in order for us to maintain that position,
we have to innovate, we have to remain dynamic,
and agile enough to make the necessary reforms
within our regulations to meet the dynamics
of this digital economy.
Technology is changing the paradigm of the financial system,
and the change is happening extremely fast.
Write leaders have had to come up with a mechanism
where by they can harness and test the feasibility
of these innovations whilst putting the risks
in a controlled environment.
As regulators, we're not typically assigned to host
incubators, to host startups;
however, because of all this change in technology,
it has become extremely essential that we come up with
a regulatory approach to enable startups as well as
existing financial institutions to test out
their innovative financial solutions
in a controlled environment.
So a sandbox is really a controlled, live-bound,
time-bound environment enabling startups as well as
existing financial institutions to test out their
innovative solutions under the strict supervision
of the regulator without being required to
abide by full regulatory requirements.
Directly with volunteer customers.
>> Have you had to put the strict standards down
but I mean sandbox is what developers know.
It's a collaborative approach.
>> Absolutely.
>> You're not being an incubator, but you're setting up
a rules of engagement- >> Absolutely.
>> For startups to take what they know how to do.
>> Exactly.
>> Standup sandboxes, in the cloud,
that's what everyone does.
>> Absolutely.
And our journey with the sandbox has been very successful.
We've launched our sandbox back in 2017,
up to date, we have 35 companies that have been
admitted into the sandbox.
We have been able to graduate two companies successfully.
One of them has been licensed as a crypto-asset provider,
the other as an open banking service provider.
We have four other companies in the pipeline,
ready to graduate.
I think all in all, our experience with the sandbox
has enabled us to grow and develop as regulators.
It has enabled us to maintain open communication
with innovators, to learn the needs of innovators.
And to enable innovators to get familiarized
with the regulatory environment of the Kingdom of Bahrain.
>> You know, you guys are doing some really pioneering work.
I just want to say it's really commendable.
I know it's fast and new, but if you look at the
United States with Facebook,
they're not asking to be regulated.
Regulation, if it comes to late is bad,
because, you know, things can get out of control.
And if you're too early,
you can put a clamp down and stifle innovation.
So the balance between regulation and innovation
has always been an art, if you will.
>> Exactly.
>> What do you guys, how do you view that?
What's the philosophy?
>> So from a regulatory perspective,
we think that regulation and innovation goes hand in hand.
And we have to embrace innovation open-heartedly;
however, having said that, regulators have to
run all common sense checks.
Meaning that we don't accept an innovation
that will potentially pose more harm
to the financial stability of the economy,
as oppose to the advantages that poses.
We've passed a number of different regulations
to support innovation in the financial services sector,
dating back to 2014 when we first issued our
payment service provider licenses
allowing more competition,
and innovation within the payments sector.
We've issued crowd funding regulations,
we've issued robo advisory regulations,
we've issued insurance aggregator regulations,
crypto-asset service provider regulations,
open banking regulations, just to name a few.
And I think that each of the regulations
that we have issued, solves a specific pain point.
Whether it's to enhance financial inclusion,
whether it's to empower customers,
by retaining ownership back of their
financial information and data,
or whether it's to also empower startups
and enable them to gain access to funding
through digital platforms.
>> Abdulla, I want to get you in here because
as an entrepreneur, I love all that, great,
I just want to get funded.
I want to bring my product to market.
I need a capital market, that's going to be robust,
and I need to have that as capital providers,
say venture capitals or private equity,
supporting their limited partners.
So I want to see that, I don't want to be standing there
when I need gas for my car,
I need fuel, I got to get to the next level.
This is what entrepreneurs want.
>> Spot on. I think the one thing, John,
that is very important, that people look at.
In the context of fintech today,
raising money and investing into fintech,
regulatory uncertainty is one that defines
scalability today.
Once your technology is proven,
where you go next really is dependent on
the regulator that you'll be dealing with
in the context of that specific activity
that you'll be performing.
In the case of Bahrain, I must say we were blown away
by the receptiveness.
>> In what way?
>> Yasmeen mentioned open banking for example.
We got into the regulatory sandbox,
which you hear a lot about sandboxes all around the world.
We got into the sandbox, we got into the sandbox,
with an idea of building an account aggregator,
direct API integration to these banks.
And we got into the sandbox,
there were no regulations at the time,
they liked the idea, we started bouncing ideas
back and forth on how to develop it,
we developed the technology,
we started piloting the technology,
we integrated to 15 banks in the country
on a sandbox environment.
The white paper on open banking was listed,
they sent it out for consultation,
we integrated on a production environment,
so more than 70% of the banks in the country,
the Central Bank of Bahrain mandated
open banking across the entire nation,
with every retail bank, all in a period of
less than 18 months.
>> That's insane.
>> That's the kind of context--
>> That's so fast. >> Exactly.
>> So as an investor, or as an entrepreneur
that looks at the sector,
the question is here, if anything, I think,
the regulator in Bahrain,
is the one that's leading the innovation.
And these are the benefits of being late adopters,
we get to test out and see what's going on
in the rest of the world, and really develop
great regulations that will embrace and foster innovation.
>> You know I love the liquidity conversation
because this goes to the next level.
Liquidity is a wonderful thing, cause startups
want to go public, that's what happens in the US.
Mergers and acquisitions.
We have an incubator that we're going to interview here.
Flat6Labs just had one of their companies
got sold to Match.com, so you're seeing a lot of
cross boarder liquidity.
>> Yup.
>> This is a new dynamic, it's only going to get stronger.
More companies going to come out of Bahrain, in the region,
liquidity is important.
>> Absolutely.
>> So how do you guys want to foster that,
what's the strategy, continue to do the same?
>> So from a regulatory perspective, again,
we don't really host incubators or accelerators,
but what we do is we refine our regulations
to support startups to gain access to liquidity.
For example, our crowd funding regulations
that have been passed in 2017,
and they support both, equity as well as financing
crowd funding including conventional as well as
compliant crowd funding transactions.
We're also currently working on refining our
regulations for enabling venture capitalists
to take roots in Bahrain and to support these startups.
>> Yeah, I think John, you mentioned two things.
You mentioned regulation leading.
When you mandate something like open banking,
you are ultimately pushing the entire sector forward
saying you better innovate as fast as possible.
And there's a gap that you need to basically bridge.
And that really loosens up a lot of liquidity
when it comes to partnerships,
when it comes to acquisitions,
when it comes to these banks ultimately looking
for better solutions.
So that's the role of the regulator here,
we are seeing a lot of VC activity
come to the region right now,
the region is only starting to open up,
AWS just went live a few months ago.
We're seeing the cloud adoption start to really take effect,
and this is where you'll start seeing real scalability.
But I think the most compelling thing here is previously,
people would look at the middle east
with a bit of skepticism,
how much innovation can really take place?
And the reality is here,
there are a few prerequisites that have been put in place.
Foreign ownership is at a hundred percent,
cloud-first policy,
there's a lot of things that can really foster innovation,
and we're, I mean, we're as an entrepreneur,
we're living proof of this whole team Bahrain initiative.
Of the fact that you can get in,
you can build an accounts aggregator,
in a country that never ever had the regulations,
to adopt it, to mandate it, and to be ultimately,
I think Bahrain will become the global reference point
for open banking very soon.
Because it has mandated regulation of open APIs
with cryptographic signatures,
ultimate security of frameworks,
with a robust infrastructure across an entire nation.
And don't forget, we still have a population of
below the age of 30.
70% of our population below,
so it gives a very compelling story to test your technology,
and then what we'd end up saying is
once you're on AWS or any cloud for that matter,
then the scalability of the technology
just depends on the where you want to go next.
>> There's no doubt the demographics are solid here.
And I love the announcement here,
the bachelors degree in cloud computing.
We've seen some data science degrees,
so new skills are coming on.
My vision is interesting,
I think that what interests me
about the region of Amazon being here is
these regions create revitalization.
You guys are perfect position,
with this modernization trend is beautiful.
Not only to be a template for the world,
but a center for global banking.
So I think to me, is that, I'm trying to put together
and connect the dots of where this goes
in the next two decades.
I mean if the crypto currency market continues to get
matured, and stabilized,
that's still flowing with a lot of money,
a lot of money in the region.
>> Absolutely.
>> So it's not just the region business to do here
for companies to come here,
it's you guys playing a role in the global financial system
that's of interest to me.
What's your vision for that?
>> Absolutely.
I think that regulators around the world
are starting to realize the importance of
collaborating together, to try and work on
policy challenges in light with innovation
within the financial services sector.
And to share experiences, to share lessons learned.
At the Central Bank of Bahrain, we're a member
of the Global Financial Innovation Network,
which is an initiative that has been passed
by the FCA in the UK.
Again, we're also a member of the
Fintech Working Group of the GCC,
and through these two different initiatives,
we work alongside other regulators,
to collaborate on solving policy issues,
to share experiences and knowledge,
and to try and harmonize our regulations
because at the end of the day,
startups and innovators ultimately will want to scale up,
and want to serve customers across different jurisdictions.
So it's important to have that kind of harmonization,
in terns of regulations.
To foster innovation as well as to safeguard
the overall security of the international financial economy.
>> What key partnerships do you guys need to do
to kind of go global on this 20 year vision?
Is there other things that have to fall into place,
that need to happen?
>> I think 20 years is a long time.
>> Say 10.
>> I'd say, let's take five years for example,
if you say in the next five years,
and where I see this going,
the question is, what do entrepreneurs and startups need,
to look at a jurisdiction and say,
that's where I want to test my technology.
You need a robust infrastructure,
you need a regulator that embraces you,
you need technical subsidies
and financial subsidies that are available,
and then you need an independent arm
that can really hand-hold you and take you,
through that process.
>> Trust is critical, trust and moneymaking.
>> Absolutely.
>> Just to add to that, in Bahrain, we take great pride
in our human capital which we believe
is one of our biggest assets.
And today with having Amazon Web Services in Bahrain,
this has enabled training of young Bahrainis
for the data and knowledge economies,
which is expected to create around five thousand jobs,
within the coming five years through different schemes,
such as Amazon education, for example.
>> This is super exciting, I wish we had more time.
Congratulations, love the vision, again,
entrepreneurs like to make money,
they want an environment that's going to be trustworthy,
and some scalability behind you.
So good luck, we're behind you, we'll keep following up.
>> Thank you for having us.
>> It's theCUBE coverage here for Bahrain for AWS,
I'm John Furrier, stay tuned
for more after this short break.
(upbeat music)