Abu Dhabi - UAE: Digitalisation has led to a rapid transformation of the banking industry. Recognising this and to further support innovation, the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) is pleased to announce and welcome local and global applications to establish digital banks in its International Financial Centre based in Abu Dhabi, capital of the United Arab Emirates.
This initiative comes in response to regional and international enquiries seeking a proven and conducive ecosystem that fosters opportunities and market development. With innovation, supporting growth and anchoring activities in MENA for the benefit of the region as its ethos, ADGM provides an ideal jurisdiction and environment for the digital bank model.
A digital bank is one that accepts deposits, and carries on other related financial services activities, primarily through online, digital or electronic means rather than through physical interaction with customers. Digital banks are financial institutions that seek to provide novel customer and transactional solutions. The FSRA is of the view that, amongst others, digital banks in ADGM will add significant value to the SME, corporate and wholesale sectors and further contribute to the development of the overall financial ecosystem, promoting inclusion, and enhancing financial services and intermediation in ADGM and more widely.
MrRichard Teng, Chief Executive Officer, FSRA of ADGM said: “This announcement and the Guidance comes in response to substantive interest from the industry, and demonstrates ADGM’s track record in advancing innovation and supporting growth while managing risks to promote a strong and sustainable financial ecosystem. Digital banks can address the needs of many segments that are currently underserved by conventional institutions, such as the credit gap faced by small and medium enterprises. We welcome innovative models to bring about greater financial inclusion, meet the needs of underserved segments and reduce costs for consumers. Digital banks will further complement Abu Dhabi and the region’s financial and banking sector, reinforcing its competitiveness, vibrancy and resilience.”
Digital Bank Applications and Regulatory Criteria
The FSRA will accept applications from conventional banks to establish digital banks or branches of digital banks as well as applications from firms with innovative value propositions. ADGM also welcomes partnerships between technology companies and financial institutions in seeking to apply for a digital banking licence.
To assure high quality applicants that meet prudential requirements and safeguard systemic stability, the FSRA will require a base capital requirement of US$10 million, robust governance structures, compliance and risk management policies, IT security measures, and certain mandatory senior management appointments. In conjunction with this announcement, the FSRA is issuing a Guide to the Authorisation of Digital Banks in ADGM.
Depending on the type of innovative solutions to be provided, all applicants will be assessed appropriately for a digital banking licence. Firms looking to deploy innovative solutions in the payment space, such as e-wallets, tokens, and stored value card, can consider other form of licences that will attract a lower regulatory and capital burden than a full digital banking licence.
About Abu Dhabi Global Market
Abu Dhabi Global Market (ADGM), an international financial centre (IFC) located in the capital city of the United Arab Emirates, opened for business on 21 October 2015. Established by a UAE Federal Decree as a broad-based financial centre, ADGM augments Abu Dhabi’s position as a global hub for business and finance and serves as a strategic link between the growing economies of the Middle East, Africa and South Asia and the rest of the world.
ADGM’s strategy is anchored by Abu Dhabi’s key strengths including private banking, wealth management, asset management and financial innovation. Comprising three independent authorities: ADGM Courts, the Financial Services Regulatory Authority and the Registration Authority, ADGM as an IFC governs Al Maryah Island which is a designated financial free zone. It enables registered financial institutions, companies and entities to operate, innovate and succeed within an international regulatory framework based on Common Law.
Since its inception, ADGM has been awarded the “Financial Centre of the Year (MENA)” for three consecutive years for its initiatives and contributions to the financial and capital markets industry in the region.* For more details of ADGM, please visit www.adgm.com or follow us on Twitter : @adglobalmarket and Linkedin : ADGM
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© Press Release 2019