EDB: Financial services firms operating in Bahrain enjoy up to 48% cost advantage
Given the growing importance of technology and innovation in developing the financial services industry in the GCC region, the in-depth study analysed key data, factoring in direct and indirect annual costs associated with yearly operating costs. The categories benchmarked included office space, talent acquisition, business set up fees, taxes, as well as visa, work authorisation and residency costs comparing locations in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.
Ali Al Mudaifa, Chief of Business Development at the Bahrain Economic Development Board, said that strong technology hubs are crucial for financial services firms to innovate and remain competitive in the digital economy. He highlighted Bahrain's efforts to become a regional leader by providing a supportive environment that features cost-effectiveness, advanced infrastructure, and progressive regulations.
Al Mudaifa highlighted that Bahrain's financial services sector offers both cost benefits and opportunities for sustainable growth and technological leadership in the GCC. He emphasised that the aim is to enable global financial institutions to take advantage of Bahrain's strengths and skilled workforce to drive technological progress across the region.
Bahrain has become a regional hub for financial services firms looking to set up global operations, providing significant savings in various operational areas. According to the EY report, annual labour costs for a financial services tech hub in Bahrain are up to 24% more competitive than the GCC. Additionally, businesses can save 85% on annual business and licensing fees and enjoy 60% better value for office space rental. Financial services in Bahrain are regulated by a single regulator, the Central Bank of Bahrain (CBB), which provides a simplified, streamlined process where the country's category-based licensing procedure for financial services firms allows companies the flexibility to engage in various activities.
Andrew Phillips, Partner/Principal and Co-leader of Quantitative Economics & Statistics (QUEST) at Ernst & Young, noted that technology hubs are central to the modern financial services sector, enabling firms to create innovative solutions, attract skilled professionals, and enhance their digital capabilities. He pointed out that Bahrain's competitive cost structure offers a favourable environment for financial services innovation, allowing tech hubs to allocate more resources to innovation rather than operational expenses. Phillips highlighted that, compared to other GCC locations, Bahrain's cost advantages make it an attractive destination for establishing financial services technology hubs.
Bahrain's reputation as a regional hub for financial technology, tech talent, and innovation is exemplified by the Kingdom's performance in international rankings and the presence of several global financial institutions that have established or expanded their operations in the country. According to the World Competitiveness Ranking by IMD, Bahrain ranked 4th globally for skilled labour and 6th globally for digital and technological skills.
Notable firms that have selected Bahrain for its tech talent include Citi's Global Tech Hub, which pledged to employ 1,000 Bahraini coders, and J.P. Morgan's Global Technology Centre, expected to create 200 high-quality job opportunities for the local workforce. In the financial services sector, talent is a major cost factor, in the EY case study of financial services tech hub, the most common occupations are highly skilled data analysts as well as software and web developers, who collectively represent over half of the total talent employed.
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