Saudi regulator issues licensing guidelines for digital-only banks

Physical presence in Saudi needs to be maintained for digital-only banks

  
Saudi currency, riyal, is seen at a local currency exchange in Manama, Bahrain October 16, 2018. Image used for illustrative purpose

Saudi currency, riyal, is seen at a local currency exchange in Manama, Bahrain October 16, 2018. Image used for illustrative purpose

REUTERS/ Hamad I Mohammed

The Saudi Arabian Monetary Authority (SAMA) has issued additional licensing guidelines for digital-only banks in the kingdom, the regulator said on twitter.

Conditions for the digital-only bank include that it should be set up as a locally incorporated joint-stock company and maintain a physical presence in Saudi Arabia. The promoter should also have experience and knowledge in the financial industry and technology-related expertise.

While it is not expected to establish physical branches, the regulator may require setting up costumer service centers in some exceptional cases.

Other requirements include a clearly articulated business plan that covers the IT infrastructure, the financial projections, the target segment, and the proposed products and services.

These guidelines must be considered as additional conditions to be met along with the licensing guidelines for conventional banks, SAMA said in the detailed report on the licensing criteria for digital-only banks.

The kingdom has launched several initiatives to embrace the digital transformation in the financial services industry, including launching a regulatory sandbox to allow start-ups to test their products and services in an environment with relaxed controls.

(Writing by Nada Al Rifai, edited by Seban Scaria)

(nada.rifai@refinitiv.com)

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