The embrace of open banking by Saudi Arabia has significantly reshaped the financial sector landscape in the region, according to a prominent fintech CEO.
In recent discussions, Abdulla Al-Moayed, the CEO of Tarabut, commended the Saudi central bank for its pivotal role in fostering inclusive financial regulations. In May 2022, the Saudi Arabian Monetary Authority (SAMA) initiated its open banking program, marking a transformative chapter for the future of financial technologies in the Kingdom and beyond.
Open banking is a technological advancement that allows consumers to share their financial data securely with third parties.
Open banking changes the very nature of relationships across the financial ecosystem for Saudi Arabia and for the region as a whole. This is only a good thing,
Al-Moayed stated.
Nader Abdelrazik, CEO of the US-based fintech firm MoneyHash, shared a similar viewpoint, asserting that open banking in Saudi Arabia is poised to significantly bolster the synergy between banks and fintech firms, unlocking a plethora of business opportunities.
Abdelrazik highlighted the dependence of banking and finance innovation on the accessibility and adoption of open data frameworks. The establishment of such frameworks is expected to enhance collaboration between existing financial entities and attract new players, fostering a robust digital economy and benefitting consumers.
SAMA’s report on its Open Banking Policy emphasizes its commitment to cultivating digital technology growth and formulating regulatory frameworks to support such initiatives. SAMA views open banking as a key driver in the advancement of the Kingdom’s financial sector.
Al-Moayed shed light on SAMA’s efforts to standardize application programming interfaces (APIs), which are streamlining the nation’s financial platforms. These efforts are aimed at broadening financial inclusion by offering secure, smooth, and affordable access to financial services and advice.
APIs facilitate communication between various software applications, enabling the integration and exchange of data and functionalities. Standardized APIs enable interoperability between providers, leading to a more cohesive financial ecosystem,
Al-Moayed explained.
He further elaborated on the capacity of APIs to drive the creation of innovative financial services and products tailored to a diverse array of consumer needs. By granting access to financial data, these APIs are nurturing an innovative climate that allows fintech startups to concentrate on solving end-user problems.
Tarabut, a leading provider of APIs in the region, is setting a prime example for industry standards. Our mission is to enable the connections necessary to expand financial inclusion for everyone, by building the infrastructure that enables secure, seamless, and inexpensive financial services and advice. As with all financial and personal data, we should be clear that trust, security, and safety are a non-negotiable part of the process,
Al-Moayed asserted.
On the topic of security, the CEO emphasized Tarabut’s commitment to continuous measures to ensure security, including multi-factor authentication for all transactions and data access requests, as well as employing advanced encryption standards for data protection.
Al-Moayed also highlighted the importance of data access controls and regular compliance checks to maintain high security standards and regulatory adherence within the open banking ecosystem.
He commended the collaborative efforts with SAMA during the regulatory sandbox period, which demonstrated open banking’s potential to transform financial accessibility.
Fostering symbiotic relationships
Al-Moayed discussed the national drive in Saudi Arabia to encourage a symbiotic relationship between banks and fintechs through data sharing and the adoption of innovative technology solutions. Banks and fintech firms can work together to develop personalized and innovative financial products, expanding market reach and enhancing product offerings.
Safeguarding consumer data
Al-Moayed pointed out that SAMA has laid down a robust legal framework for the protection of consumer data, requiring explicit consent before sharing financial information with third-party providers. This approach ensures consumer control over their data and fosters trust in the open banking ecosystem.
A smooth transition
As traditional banks in the Kingdom adapt to open banking, they are redefining their roles to become more integral in their customers’ financial lives. Al-Moayed noted the eagerness of banks to embrace transformation, acknowledging the value of innovation introduced by fintech startups. Strategic alliances between banks and fintech firms are anticipated to enhance competitiveness and agility in a dynamic market.