Search
Close this search box.

We are creating some awesome events for you. Kindly bear with us.

Dubai Financial Services Authority introduces ‘Innovation Testing Licence’ for FinTech firms

Dubai Financial Services Authority introduces ‘Innovation Testing Licence’ for FinTech firms

Dubai Financial Services Authority (DFSA), the independent financial regulator the Dubai International Financial Centre (DIFC)1 is introducing a new kind of restricted licence to promote financial technology (FinTech) innovation. DFSA announced on May 24 that it will allow FinTech firms to apply for a class of financial services licence referred to as an Innovation Testing Licence (ITL).

DFSA will work with applicants to understand the business proposal and establish the appropriate controls for the safety of customers involved, on a case-by-case basis.

The ITL will allow qualifying FinTech firms to develop and test innovative concepts from within the DIFC, without being subject to all the regulatory requirements that normally apply to regulated firms. FinTech firms will be able to use the restricted licence to test an innovative product or service for six to 12 months. DFSA could consider extending that period in exceptional cases. If a firm has met the outcomes detailed in the regulatory test plan, and it can meet the full DFSA Authorisation requirements, it will migrate to full authorisation. If it does not, the company will have to cease carrying on activities in the DIFC that need regulation.

This initiative follows the launch of the FinTech Hive at DIFC, a FinTech lab/ accelerator, which plans to bring together leaders and entrepreneurs to compete and address the growing needs of the region’s financial services industry, using innovative technology solutions, in a variety of areas including trade finance, alternative finance and Sharia-based services.

The DFSA is also in the process of formalising its approach to loan-based and investment-based crowdfunding platforms (models wherel many persons lend sums of money to a company in return for the company’s legally-binding commitment to repay the loan at pre-determined time intervals and interest rates or in return for equity).  Loan-based crowdfunding has become a valuable source of financing for SMEs in several jurisdictions, as it provides funds at competitive and lower interest rates, compared to traditional bank loans.

The DFSA’s approach is aligned with the National Innovation Strategy of the United Arab Emirates (UAE), launched by UAE Vice President, Prime Minister and Ruler of Dubai, His Highness Sheikh Mohammed Bin Rashid Al Maktoum in 2014, to foster an innovation-friendly ecosystem.

Ian Johnston, Chief Executive at the DFSA, said: “FinTech is changing the landscape for financial services, providing more opportunities to seek financing and increasing financial inclusion. As regulators, it is our responsibility to provide a framework which supports the sustainable development of this industry while protecting consumers and financial stability.”

This challenge of supporting and promoting innovation, while protecting financial stability and consumers is something financial regulators around the world are grappling with today. Regulators are exploring the creation controlled environments in the form of regulatory sandboxes (Singapore, Australia), providing restricted licences, to maximise benefits and minimise risks. Countries are also forming International partnerships (a few examples here, here and here) for exploring FinTech innovation and developing markets.

1DIFC is a Federal Financial Free Zone administered by the Government of Dubai. DIFC seeks to be the financial hub for the Middle East, Africa and South Asia, providing a world-class platform connecting the region’s markets with the economies of Europe, Asia and the Americas. DIFC has its own independent civil and commercial legal framework, inclusive of financial services regulation and a courts system modeled closely on international standards and principles of common law and tailored to the region's needs. The objective is to create an optimal environment for financial services and related industries and services to grow. DFSA is the independent regulator of financial services conducted in or from the DIFC.

Featured image: Dubai International Financial Center (by Rick's ImagesCC BY 2.0)

PARTNER

Qlik’s vision is a data-literate world, where everyone can use data and analytics to improve decision-making and solve their most challenging problems. A private company, Qlik offers real-time data integration and analytics solutions, powered by Qlik Cloud, to close the gaps between data, insights and action. By transforming data into Active Intelligence, businesses can drive better decisions, improve revenue and profitability, and optimize customer relationships. Qlik serves more than 38,000 active customers in over 100 countries.

PARTNER

As a Titanium Black Partner of Dell Technologies, CTC Global Singapore boasts unparalleled access to resources.

Established in 1972, we bring 52 years of experience to the table, solidifying our position as a leading IT solutions provider in Singapore. With over 300 qualified IT professionals, we are dedicated to delivering integrated solutions that empower your organization in key areas such as Automation & AI, Cyber Security, App Modernization & Data Analytics, Enterprise Cloud Infrastructure, Workplace Modernization and Professional Services.

Renowned for our consulting expertise and delivering expert IT solutions, CTC Global Singapore has become the preferred IT outsourcing partner for businesses across Singapore.

PARTNER

Planview has one mission: to build the future of connected work. Our solutions enable organizations to connect the business from ideas to impact, empowering companies to accelerate the achievement of what matters most. Planview’s full spectrum of Portfolio Management and Work Management solutions creates an organizational focus on the strategic outcomes that matter and empowers teams to deliver their best work, no matter how they work. The comprehensive Planview platform and enterprise success model enables customers to deliver innovative, competitive products, services, and customer experiences. Headquartered in Austin, Texas, with locations around the world, Planview has more than 1,300 employees supporting 4,500 customers and 2.6 million users worldwide. For more information, visit www.planview.com.

SUPPORTING ORGANISATION

SIRIM is a premier industrial research and technology organisation in Malaysia, wholly-owned by the Minister​ of Finance Incorporated. With over forty years of experience and expertise, SIRIM is mandated as the machinery for research and technology development, and the national champion of quality. SIRIM has always played a major role in the development of the country’s private sector. By tapping into our expertise and knowledge base, we focus on developing new technologies and improvements in the manufacturing, technology and services sectors. We nurture Small Medium Enterprises (SME) growth with solutions for technology penetration and upgrading, making it an ideal technology partner for SMEs.

PARTNER

HashiCorp provides infrastructure automation software for multi-cloud environments, enabling enterprises to unlock a common cloud operating model to provision, secure, connect, and run any application on any infrastructure. HashiCorp tools allow organizations to deliver applications faster by helping enterprises transition from manual processes and ITIL practices to self-service automation and DevOps practices. 

PARTNER

IBM is a leading global hybrid cloud and AI, and consulting services provider, helping clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Nearly 3,800 government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM’s hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently, and securely. IBM’s breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and business services deliver open and flexible options to our clients. All of this is backed by IBM’s legendary commitment to trust, transparency, responsibility, inclusivity, and service. For more information, visit www.ibm.com