PYMNTS GCC Series: Partnerships, PayTech Innovation Move Kuwait Into Digital Era

In this third installment of the PYMNTS series on the state of FinTech innovation in the Gulf Cooperation Council (GCC) countries, we turn our attention to the State of Kuwait, one of the wealthiest countries in the world by gross national income per capita, according to World Bank data.

See Part 1: PYMNTS GCC Series: High Smartphone Penetration, Govt Support Boosts UAE’s FinTech Growth

See Part 2: PYMNTS GCC Series: Bahrain Drives Open Banking Adoption in MENA

Kuwait is home to the world’s oldest sovereign wealth fund, the Kuwait Investment Authority, and the country’s finance sector is relatively more mature than those in other GCC countries — Bahrain, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE) — in terms of traditional financial services.

But until 2021, when digital-first bank Weyay launched in the country, Kuwait lagged behind some of its more FinTech-friendly neighbors.

However, digital-forward banks such as Kuwait Finance House (KFH) and NBK, which owns Weyay, have gotten with the times and embraced blockchain technology through an instant cross-border partnership with Ripple. The Gulf Bank has also deployed biometric facial recognition in its mobile banking application to authenticate instead of using traditional passwords.

Overall, it’s an indication of how local legacy players are embracing, albeit slowly, digital transformation to unlock growth, especially as the appetite for convenient, digital banking solutions grows among the country’s young and tech-savvy population.

Digital Wallets and Cross-Border Payments

Some Big Tech mobile wallets such as Apple Pay, Google Pay and Samsung Pay are not supported on the Kuwaiti market, and in their absence, alternative, local near-field communication (NFC) solutions have sprung up to fill the gap.

In 2018, KFH launched its own NFC-based contactless payment app for Android mobile devices, supporting credit and debit card payments from Visa and Mastercard.

Read more: Kuwait Finance House Teams Up With Visa For Mobile Wallet

Elsewhere, the SiDi app has gained popularity among Kuwait’s large migrant population as a convenient multicurrency digital wallet offering competitive foreign exchange (FX) rates and real-time cross-border transfers.

Other cross-border innovations occurring in Kuwait’s financial ecosystem include the adoption of the RippleNet framework by KFH and NBK. RippleNet is a cross-border payment settlement solution built on the Ripple blockchain.

So far, the technology has been implemented in payment corridors between Kuwaiti banks and their partners in Turkey, Saudi Arabia and the UAE.

Regulators on the Move

From a regulatory perspective, Kuwait has also accelerated the pace of development in recent years.

Foremost among digital reforms to the country’s banking and finance regulation include the passing of electronic payments regulation and the launch of a regulatory sandbox overseen by the Central Bank of Kuwait (CBK) in 2018. These developments bring Kuwait in line with other international FinTech leaders and its GCC peers.

See also: Kuwait’s Central Bank Sets Regs for Digital Banks

More recently, in February 2022, the CBK issued guidelines for setting up digital banks in Kuwait. The guidelines were issued alongside an invitation to submit applications for digital bank licenses which ran until last month.

The CBK will now assess applications for a period of six months with the intention of approving new digital banks at the end of the assessment period.

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