The Mauritius Banking Sector has been established since 1838 and boasts the oldest banking institution of the south of the Sahara, and one of the oldest banks of the Commonwealth. There are 22 banking institutions in Mauritius carrying out business locally and internationally and offering a wide array of services, from traditional retail banking facilities to specialized services such as fund administration, private banking, structured trade finance, Islamic banking, investment banking and custody services.
Traditional banking has been a staple of our financial life for a few generations now and is one of the most important pillars of economies around the world. However, since the emergence of new technologies and connectivity and fueled by the recent global pandemic, the demand for digital services have boomed exponentially. Indeed, digital banking is the automation of traditional banking services. While traditional banks have been providing online services via internet banking and mobile banking platforms, digital banking means to digitize all of the banking operations and substitute the bank's physical presence with an everlasting online presence, eliminating a consumer's need to visit a branch.
In 2020, the Bank of Mauritius established a 24/7 digital payment system, the Mauritius Central Automated Switch (MauCAS), designed to make banking, e-commerce and mobile payments interoperable and encourage cashless means of payment. In the same vein, the regulatory authority has been empowered to license digital banks. In December 2021, the Bank of Mauritius published its first guidelines for the licensing of digital banks.
Who can apply for a digital banking license in Mauritius?
Any body corporate, including existing local banks, active foreign banks or a private company incorporated solely for the purpose of carrying out this type of business may apply to the Bank of Mauritius for a digital banking license. The applicant corporation must demonstrate adequate experience and track record of its shareholders, board members and senior officers in the field of banking, financial technology, e-commerce or other related fields. A fully digital bank need not set up physical headquarters or branches on the island to be able to offer services locally or internationally. However, a local physical office is required to be used solely for administrative purposes, to deal with customer complaints or to interact with the Bank of Mauritius.
Licensing phases
Once an application for a digital banking license is determined as complete and approved by the Bank of Mauritius, the successful applicant commences business as a restricted digital bank and enters a mobilization period of a maximum of 2 years whereby it will be required to develop its governance, internal control and risk management frameworks and be allowed to conduct limited banking business. Upon completion of the mobilization period, a further transitional period of a maximum of 3 years follows whereby the restricted digital bank would be required to further enhance its information systems, internal control, corporate governance and risk management framework to meet prudential and regulatory requirements applicable to banks globally. There is no minimum period for exiting the mobilization period or the transitional period as long as the restricted digital bank meets all the requirements to the satisfaction of the Bank of Mauritius.
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