DFSA launches Innovation Testing Licence for fintech companies

The Dubai Financial Services Authority (DFSA) announced the launch of Innovation Testing Licence (ITL) that will permit fintech startups to apply for a class of financial services licence.

ITL is a restricted financial services licence that will allow qualifying fintech firms to build, develop and test innovative concepts from within the Dubai International Financial Centre (DIFC). Working along with applicant, DFSA will strive to understand the business proposal and set up the appropriate controls on a case-by-case basis, for the security of any customers involved.

“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,” Ian Johnston, Chief Executive at the DFSA, said.

The ITL approach by DFSA for fintech firms signals the next phase of it’s regulatory roadmap to foster innovation in Dubai. It also aligns with the mission to create an innovation-friendly ecosystem in line with the goals of Dubai 2021 strategy that was set out by UAE Vice President, Prime Minister and Ruler of Dubai, His Highness Sheikh Mohammed Bin Rashid Al Maktoum.

“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,” Johnston added.

With the help of the restricted licence, fintech companies can test an innovative product or service for six to 12 months, which can be extended under exceptional cases. A firm can migrate to full authorization if it meets the outcomes specified in the regulatory test plan. If it does not, the company must cease carrying on activities in the DIFC that need regulation.