The Dubai Financial Services Authority is to allow fintech firms to apply for a restricted six-to-12-month financial services license in order to test out innovative new products and services on the ground.
The Innovation Testing Licence (ITL) will allow qualifying FinTech firms to develop and test concepts from within the Dubai International Financial Centre (DIFC), without being subject to all the regulatory requirements that normally apply to regulated firms.
The DFSA says it will will work with applicants to understand the business proposal and establish the appropriate controls for the safety of any customers involved, on a case-by-case basis.
The DIFC, which houses major financial services firms and retail outlets on a 110-hectare site, will effectively become a live sandbox environment for fintech startups to try out their ideas.
Ian Johnston, chief executive at the DFSA, says: “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.”
He says that firms who achieve the the outcomes detailed in the regulatory test plan and can meet the full DFSA Authorisation requirements will migrate to full authorisation. Those that fail the test will be forced to shut down the service.
The DFSA’s latest initiative follows the launch of the region's first fintech accelerator, FinTech Hive at DIFC, which opened for its first batch of applicants in April.