Sunday, December 4, 2022
spot_img
Editor's PickKuwait expects to license digital banks by end of 2022 on the...

Kuwait expects to license digital banks by end of 2022 on the back of new guidelines

With the release of new digital bank guidelines by the Central Bank of Kuwait (CBK), applications are now open until the 30th June 2022 for interested parties to bid for a digital banking license.

The new rules were formulated by benchmarking regulatory treatments of 25 central banks studying use cases from 40 digital bank business models.

The guidelines outline the definition of digital banks, their legal framework, licensed activities and procedures to set up digital banks.

Under the framework, digital banks can be classified into three main mechanisms: a unit within a traditional bank; a partnership between a bank and a digital institution where the bank handles core banking operations while the second party handles relations with customers, trademark and other areas of operation and service; and as a standalone digital bank.

The regulator noted that applicants will be evaluated over a period of six months, and initial approvals are expected to be granted before the end of the year.

Several entities had vocalized their digital bank ambitions including Kuwait Finance House (KFH). Back in 2020 when the Islamic bank began merging with Ahli United Bank (AUB), it revealed that it will be transforming AUB’s Kuwaiti subsidiary into a digital bank, as requested by CBK. In October 2019, regional telecommunications company Zain entered into a partnership with Kuwaiti Shariah bank Boubyan Bank to build an Islamic digital bank to serve the Kuwaiti market. Should both these initiatives come to fruition, Kuwait could be home to two fully-fledged virtual Islamic banks.

LEAVE A REPLY

Please enter your comment!
Please enter your name here