Abu Dhabi Global Market (ADGM) has agreed to host digital banks at its International Financial Centre to foster innovation.
The Financial Services Regulatory Authority (FSRA), ADGM’s regulator, now seeks applications from conventional lenders to establish their digital presence at the financial centre.
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It will accept applications from local and global banks as well as from firms with innovative value propositions.
Furthermore, financial institutions can submit a joint application in partnership with technology companies.
FSRA will require a base capital requirement of $10m from the applicants. Also, they need to meet other requirements involving governance structures, IT security measures and certain senior management appointments among others.
The regulator expects that the establishment of digital banks to support the development of the overall financial ecosystem, improve financial services and encourage inclusion.
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By GlobalDataFSRA CEO Richard Teng 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.”
The digital banks to be established will provide deposits and other financial services primarily through online and digital channels.
