WOR~LD FLANK
DEVELOPMENT COMMITTEE
(Joint Ministerial Committee
of the
Boards of Governors of the Bank and the Fund
on the
Transfer of Real Resources to Developing Countries)
ONE HUNDREDTH MEETING
WASHINGTON, DC - OCTOBER 19, 2019
DC/S/2019-0034
October 19, 2019
Statement by
Abdulrahman Al-Hamidy
Director General Chairman of the Board
Arab Monetary Fund


ARAB MONETARY FUND
Statement by
Abdulrahman Al-Hamidy
Director General Chairman of the Board
100th Meeting of the Development Committee
October 19, 2019
Washington, DC
On behalf of the Arab Monetary Fund (AMF), I would like to express my sincere gratitude to the World
Bank for the kind invitation to participate in the Development Committee Ministerial meeting as an
observer. I am pleased to address you on the critical needs to regulate the FinTech industry focusing on the
Arab region.
FinTech is a dynamic industry, interlinking the financial services and technology sectors allowing start-ups
and new market entrants to innovate products and services provided by the traditional financial services
providers. As such, FinTech has gained significant momentum across the world including the Arab Region
and remains high on the agenda of industry participants and Governments seeking to develop, modernize,
and diversify the financial services sector.
Regulations of the financial services industry are being challenged by the rise of FinTech firms, and the
latter continue to induce fundamental changes on various levels, from the way that banking works, to the
way that capital is raised, even to the form of money itself. These changes call for a wide range of financial
regulations in an era of technology-enabled finance.
FinTech Industry Landscape
The FinTech industry flourished in 2018 both on global and regional levels and continues to do so in 2019.
Key drivers of FinTech growth include record levels of deals and financing, emergence of new global tech
hubs, and a relatively favourable regulatory environment. The combination of these factors enables the
FinTech sector to further digitize its services, expand into new markets and increasingly provide seamless
integrated experiences to end users. This has, in turn, lowered the barriers to entry and enabled recent
entrants to expand into adjacent markets and offer new products.


It is estimated that during the first half of 2019, global FinTech investment reached US$22 billion across,
with deals going up 4 percent in QI compared to last year. Last year also saw a record number of deals and
an unprecedented surge in Funding on the back of multiple mega rounds and giant deals, such as Ant
Financial's record of US$14 billion fundraising in May 2018.
On the regulation front, the regulatory net is widening, and some fintech firms that are currently outside the
perimeter may find themselves subject to regulation in the future. For instance, 2018 witnessed the
development of a crucial set of regulations in the European Union including General Data Protection
Regulation (GDPR), Open Banking, and the revised Payment Services Directive (PSD2). The latter two are
very impactful and are overlapping in nature, requiring banks to open APIs (Application Programming
Interfaces) to customer data. As a result, consumers are the ultimate beneficiaries of Open Banking and
PSD2 because the regulations provide them with choices through competition and establish consistency
around security protocols to protect consumers.
The need to regulate FinTech industry
Regulation is a key enabler for FinTech and innovation to flourish properly, due to the fact that regulation
can ensure competition in the market and can create an environment conducive to innovation. Hence, it is
important to have regulation that maintains a balance between encouraging FinTech innovation and
preserving financial stability.
In order to achieve this balance, regulators need to be active in the FinTech space by engaging with different
stakeholders to better identify and understand risks; this is in addition to the fact that regulation itself can
be the driver of innovation within financial services. In this regard, it is crucial to address the concern of
whether there is sufficient information available to accurately track the magnitude and precise nature of
FinTech developments that may harm the stability of the financial system.
To accomplish this task, it is imperative that regulators employ a blend of different talent and skills that
combine regulatory and technical knowledge, so that issues around innovation are properly examined. By
taking such an approach, regulation can enable innovation firms to access the market, drive competition
between incumbents and create better outcomes for consumers whilst reducing risks on financial stability.
Moreover, there is a need to further explore the necessity to standardize FinTech regulations across regions.
In this case, a FinTech specific regulatory environment would be necessary to ensure legal clarity,
predictability and fair competition. This is in addition to ensuring the ease of doing business and the
authority of FinTech regulators are not limited.
Challenges of regulating FinTech
FinTech is creating significant opportunities for the various players in its ecosystem and has played a key
role in strengthening financial market infrastructures, promoting financial stability and increasing financial
inclusion. Furthermore, the players in the sector have been able to capitalize on these opportunities to
broaden the supply of financial products and services and increase their quality and effectiveness, which
has led to more consumer and ultimately societal benefits.
However, the evolving use of FinTech solutions and emerging technologies also brings risks, that regulators
and supervisors have been monitoring and responding to. The key risks that have been identified relate to
the increasing reliance of financial services firms on technology, the use of large data sets, the increasing
interconnectedness within the financial sector, and the prospect of greater concentration and group-think
behaviour.
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Furthermore, the expansion of the FinTech industry scope into new territories, such as cryptocurrencies,
the adoption of cloud computing, and the move of some non-financial services firms into the provision of
financial products and services such as lending to SMEs and retail payments systems, raise questions around
where the regulatory perimeter should be drawn and how much regulation is 'too much'.
Thankfully, many countries are making great progress in this regard. For example, the existing data
protection legislation in jurisdictions, such as the General Data Protection Regulation (GDPR) in the
European Union, already covers some of the data protection issues arising from FinTech, the regulatory
treatment of data will be key as the financial services industry opens up, and competition and innovation
within the sector speeds up.
Nevertheless, FinTech developments are increasingly pointing to new areas in which additional regulation
may be required, such as in the use of artificial intelligence and distributed ledger technology (DLT), which
are increasing the pressure on regulators to act. This is in addition to the need to determine responsibility
in the open banking world and for a broader risk framework, incorporating all players handling customer
data. For example, regulation has been key in open banking by establishing the basis on which data can be
shared between different parties, which is often through an application programming interface (API).
International Cooperation
The social and economic benefits of FinTech are sizeable, but also come with a number of risks. Hence,
rather than working independently, countries and standard setters should work more quickly and efficiently
to mitigate these risks through international cooperation. This is particularly important in areas such as
cybersecurity, anti-money laundering, the interconnectivity of cross border payment systems, and the
exploration & integration ofblockchain technologies. In a globalized world, FinTech services and solutions
are becoming increasingly cross-border focused and hence regulation must reflect such developments and
account for the complexities it may bring.
Role of AMF in supporting regulations in Arab Region
In response to the challenges of FinTech, the Arab region is becoming increasingly dynamic as many
countries are adopting specific licensing regimes and regulations to counteract these challenges. There has
been a rise in regulatory sandboxes, incubator programs and other regulatory and legal changes in response
to such needs that will bring the region to the forefront of innovation. These changes will bring numerous
future benefits to the region as a whole. FinTech investment in the Arab countries is growing fast and is
expected to be valued at USD 2.5 billion by 2022.
The Arab Monetary Fund (AMF) plays an important role in supporting Arab countries in setting-up an
efficient ecosystem for the FinTech sector by creating the Arab Regional FinTech Working Group. The
Working Group serves as a knowledge platform to exchange intra Arab expertise with international experts
and creates a network among regulators, practitioners, experts and academia. It also promotes innovation
and supports relevant Arab authorities in developing and regulating the use of FinTech solutions towards
realizing their strategies and visions for their own countries.
The AMF has also established an online FinTech knowledge portal, which will ultimately serve as a live
consultation among member countries. This is in addition to workshops, trainings and technical assistance
that the AMF continuously provides across major FinTech topics and issues.
We, at the Arab Monetary Fund, are committed to help adopting a progressive working plan in order to
create a proper ecosystem in Arab countries to foster FinTech sectors. We believe that a consistent regional
approach is needed, and we encourage International Financial Institutions (IFIs) to optimize and take joint
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action to formulate ambitious programs to support investments in the FinTech industry, formulate proper
guidelines, collaborate in oint capacity building programs, and support member countries in designing their
FinTech strategies. Finally, we would like to seize this opportunity to invite our international partners to
come together to develop a joint action plan on how best to design the optimal regulatory ecosystem for the
promotion of FinTech.
To conclude, let me reiterate, once again the AMF's appreciation for the Development Committee and for
the opportunity it has given us to highlight such critical issues.
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