Mubasher: The Central Bank of Kuwait (CBK) has issued guidelines that set the requirements for establishing digital banks, as tech-based business models have been vital within the banking and finance sector.

This comes in line with the CBK’s plans to utilise the latest advancements for financial stability, in addition to encouraging innovation and fulfiling future economic needs, according to a press release on Wednesday.

CBK Governor, Mohammad Al Hashel, noted that Kuwait’s new guidelines comprise five parts focusing on the definition of digital banks, their legal framework, licensed activities, besides phases and procedures for setting up digital banks through the CBK’s online application form. The requirements also cover the supervisory and regulatory instructions and controls.

Digital banks operate within three main models, including a unit within a traditional bank or establishing a standalone digital bank. The third model is in the form of a partnership between a traditional bank and a digital institution where the former handles core banking operations while the institution handles relations with customers, trademark, and other areas of operation and services.

“The CBK will receive and collect all completed application forms and documents as of the date of issue of the guidelines until 30 June,” according to the press release.