FinTech enthusiasts rejoice! The Saudi Arabian Monetary Authority (SAMA) announced its intent to construct an open banking infrastructure for the Kingdom’s financial industry. SAMA stated its belief that open banking will play a “pivotal role in the further development of the Kingdom’s financial sector [and its] journey towards innovation and financial inclusion.”
Open banking refers to the concept of banks and other financial institutions sharing consumer financial data through the use of open application programming interfaces (APIs). With the right frameworks in place, the use of APIs can be regulated, as is the case in some other countries (e.g. the UK). Through this, institutions in the financial industry can create new financial products and services for consumers. This, in turn, significantly lowers barriers to entry for FinTech startups, making the industry more competitive overall.
Ambitious Saudi innovators should start brainstorming now as SAMA hopes to have the open banking infrastructure go live by the first half of 2022.
The only other financial regulator in the GCC to have embraced open banking so far is the Central Bank of Bahrain (CBB).