Central Bank of Kuwait’s regulatory sandbox to prioritize ESG products
The Central Bank of Kuwait (CBK) gives priority to products that support sustainability standards in its regulatory sandbox.
CBK prioritizes products that are in line with Kuwait’s environmental, social and governance (ESG) strategy in its regulatory sandbox. To confirm its commitment to best practice, CBK seeks products that promote ESG fintech innovation.
Launched in November 2018, the sandbox provides an environment for developers to test their products outside of the real world. It goes over four stages and takes place over the course of one year.
The sandbox starts with the application stage for the proposed product or service. Step two is a thorough technical, regulatory and safety evaluation. Participants then enter the experimentation stage, where the product works under specific environments. In the final phase, CBK approves or rejects the product for the local market.
Sandkasse’s prioritization of ESG-compatible products will have a positive effect on the local market. Kuwait’s financial offerings already figure for the region’s industrial footprint.
Kuwait’s fintech push
Sandkassen remains central to CBK’s development strategy and its increasing focus on fintech. Just a year after its initial launch, an update to the sandbox expanded the pool of participants.
Around the same time, the government announced a $200 million fund to drive technology investment. Fintech remains a clear priority for Kuwait’s financial sector, with environmental concerns at the top of the list.
These initiatives are contained in Kuwait Vision 2035, which marks the country’s efforts to move away from oil dependence. Kuwait is not exclusive in this sense, as similar strategies are common across the board Gulf Cooperation Council (GCC).
Fintech Times‘ Fintech: Middle East and Africa 2021 the report highlights the country’s fintech heritage and the strength of the financial industry. Kuwait is home to over 100 financial institutions, all offering different products and services. Banking in Kuwait is dominated by retail, with personal loans/financing accounting for 40 percent of total facilities.
The Kuwait Automated Settlement System for Interparticipant Payments (KASSIP) was one example of such innovation. The service was launched by CBK in August last year, and ensures the security and speed of payment and settlement transactions.
KASSIP also allows banks to issue reports on and monitor payment settlements through a designated electronic platform.
This was also when CBK launched its first open banking product. It provides users with analytical services for their banking transactions across different banks, along with e-payment services.
