The Arab Monetary Fund in the Framework of the Arab Regional Fintech Working Group publishes report reveals the vision on the future of Open Banking Operations in the Arab region
The report presents a collaboration framework between regional stakeholders aiming to establish a common vision for open banking and open finance
The report also publishes the results of a comprehensive survey among 18
Arab Central Banks and Monetary Authorities
The vision outlines 5 key pillars for open banking in the region
Innovation identified as the main catalyst of growth for open banking
The Arab Monetary Fund (AMF), in collaboration with the Arab Regional Fintech Working Group, published today a report titled “A Vision of Open Banking in the Arab World” shedding light on the key role of the financial and banking and sector in enabling and promoting Fintech innovation in the Arab region through open banking.
The report is the result of a collaborative effort among a group of experts and researchers as members of the Arab Regional Fintech Working Group, in particular AMF, the MENA Fintech Association (MFTA), MFTA’s Open Banking Working Group, Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC), with the participation of the group members representing Arab Central Banks and Monetary Authorities. The report has also benefited from contributions and comments of several fintech players in the region, members of the group, namely DAPI, Lean, Tarabut, Mastercard, and OneConnect.
The report aims to a establish an effective collaboration framework between regulators, banks, fintech companies and relevant stakeholders towards achieving a common vision for open banking and open finance that addresses the needs of Arab economies and promotes their growth.
The information presented in this report was derived from a recent survey among 18 Arab Central Banks and Monetary Authorities across the Arab region. The survey focused on the role of the Arab Central Banks and Monetary Authorities in driving domestic growth in open banking by encouraging innovation and promoting the fintech industry, thus creating a sustainable open banking ecosystem in this part of the world.
The report detailed a set of findings and recommendations, most notably, reaffirming the role of innovation as a main catalyst of growth for open banking in the Arab region and across the world. The report also stressed the importance of expanding the use of open banking beyond core payment services, to cover all types of financial assets which comes a natural response to the current shift from open banking services towards the broader concept of open finance. With this shift, it is now possible to streamline basic financial services such as money transfers and Know-Your-Customer (KYC) checks through limited access to account and payment services.
The report also showcased various open banking models, such as banking as a service, banking as a platform and banks as third-party providers, which presents substantial revenue-generating opportunities for banks.
Moreover, the report also emphasized the role that open banking services can play in enabling innovative products and services for both consumers and businesses and in fostering sustainable growth in the financial services industry within the Arab region.
The report highlighted, as well, the various factors driving the growth of open banking in the Arab region. While regulation and market dynamics remain the main drivers of growth in Europe and the United States of America respectively, the growth of open banking in the Arab region is primarily driven by market diversity. For instance, whereas some Arab countries focus on the financial inclusion of their underbanked population, other commodity-dependent countries seek to diversify their economies by establishing regional fintech hubs.
The report concludes with a comprehensive vision for open banking in the region, spanning five key pillars: “principles over prescriptions”, “phased implementation”, “consumer data right”, “technical standardization and interoperability” as well as “level-playing field”. Achieving this vision will require effective and active collaboration between regulators, banks, fintech companies and other stakeholders.
Lastly, the report pointed out the impact of open banking in driving competition across all Arab financial markets, not only among banks and fintech companies, but also among the fintech companies themselves. The outcome of which will be an enhanced Arab environment that promotes innovation among banks and fintech companies which will enable economic growth through an improved and inclusive financial ecosystem.
The report can be downloaded on this link