Helping Fintech Flourish

The Central Bank of Jordan says it’s fast laying the groundwork for the creation of a cashless economy.

By Dina al-Wakeel

The Central Bank of Jordan  has issued several regulations in recent years to catch up with the ever-changing payment methodologies.

Maha M. Bahou, executive manager of the CBJ’s Domestic Payments and Banking Operations Department, says the Central Bank will continue to embrace innovation and forge partnerships to further develop the Kingdom’s fintech ecosystem.

How advanced is Jordan’s fintech sector today compared to the region and the world?

Jordan now is becoming like a regional hub for fintech. We want to provide the market with a very conducive regulatory framework and enabling environment for them, whether by providing facilities to reach venture capitals or even angel investors. We even exceeded this by going into partnership with one of them and now we are experimenting with some very innovative ideas with another two. So you will be hearing about the birth of two national entrepreneurs at the end of this year or the first quarter of next year.

Do we have the necessary regulatory infrastructure for fintech?

We already have very robust and comprehensive financial market institutions and comprehensive IT infrastructure to enable the safe and efficient flow of funds regardless of the type of service. On the other hand, we started working on the laws that would support electronic transactions. In 2015, a new law was passed for electronic transactions and we also amended the CBJ Law to include payments as one of the objectives and to explicitly enable the CBJ to manage this sector and to oversee it. We also amended the law to include escrow accounts, safeguarding people’s money regardless of the type of innovation. So we are trying to cope with the innovations and change. If you check the electronic transaction law there is a chapter that talks about e-checks, [which we added] after we were approached by one of the startups, although in Jordan we don’t have electronic checks yet. So the moment we are convinced of an innovation we start working on the regulation. The challenge is huge because although we believe that fintech provides the market with tremendous benefits and values it also poses risks. We have to be very rational and work on balancing the benefits with the risks.

Do you think that Jordanians are ready to embrace fintech particularly because most of them are still unbanked?

I cannot see how the Kenyan people adopted innovation while Jordanians cannot. Jordanians are highly educated and they welcome technology. So regardless of the age they will adopt it. When it comes to money they are more conservative, which is why the CBJ took the lead in creating the ecosystem, as people’s confidence is higher in us.

What examples are there of fintech working well in Jordan today?

I can tell you that today we have only three types of real time services.  There are the new real time gross settlement systems, eFawateerCom, and Mobile Payment which are the only 24/7 real time services. So it provides people with convenience regardless of their physical location. For the government the real time collection of money is highly important; a government institution mentioned a few months ago that direct cost savings for this exceeded JD30 million. So today maybe we’re talking about JD50 million. According to our estimates, the cost of cash in the country exceeds JD400 million which is huge. We need a more transparent, convenient and traceable ecosystem where everyone is winning. The government is definitely the first winner and they would reap the highest level of benefits. I think we have to move faster in our endeavor to digitize government services.

The number of transactions is expanding and increasing exponentially through eFawateerCom with the amounts now exceeding $3 billion.