The Dubai Financial Services Authority (DFSA) today released the details of its Innovation Testing Licence (ITL) which allows fintech firms to go through a special testing stage prior to their approval as fully operational firms.
The aim of the initiative is to reduce the barriers for innovative startups to enter the financial market by making it easier for a fintech firm to validate and refine concepts before the expensive licensing process.
According to the proposal, each qualifying firm that applies to establish itself in Dubai will initially work under a special restricted financial services licence. Fintech operators will be able to use the ITL licence to test their products for a period of 6 to 12 months, which could be extended upon DFSA’s discretion.
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Successful applicants will then be required to obtain a full financial services licence to continue formally operating. By contrast, fintech firms that fail to meet the outcomes detailed in the regulatory test plan will have to cease activities.
This ITL licence includes a number of restriction and conditions regarding the activities that a fintech firm can carry out, to ensure that the product and consumer exposure are appropriately controlled.
Ian Johnston, Chief Executive at the DFSA, commented: “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.”
Mr. Johnston added: “Our efforts to develop a regulatory framework that promotes growth and innovation, while protecting financial stability and consumers, is part of our contribution to Dubai’s greater vision of becoming an information-based society and a smart city.”