SAMA, the Saudi Central Bank (previously known as Saudi Arabian Monetary Agency) has issued the Open Banking policy today listing the objectives and benefits of it for the local financial sector. The move is part of a series of different initiatives that SAMA has introduced over the last three years to help create and grow a fintech ecosystem in the Kingdom.
“The issuance of this policy builds on the efforts of SAMA in diligently pursuing the strategic objectives of the Financial Sector Development Program, underscoring its commitment to promoting innovation, and trust within the sector, re-enforcing competition and raising efficiency,” said the government organization in a statement.
Open Banking is a practice of banks sharing their customer data including account details, transactions, and other details, securely with third-party financial services providers including fintech and other players, (with the consent of the customers), through the use of APIs.
In the policy, SAMA highlights that the initiative will enhance trust in both customers and market participants including banks, fintechs, and other financial players, adding that all these stakeholders have a pivotal role to play in the journey towards innovation and financial inclusion.
SAMA plans to go live with the open banking initiative in the first half of 2022. For the next 12 months, it will work on the design of Open Banking ecosystem and its implementation (which would also include testing with the financial ecosystem players).
In these next eighteen months or so, SAMA said that it will work with the participants of the financial market to co-build the Open Banking ecosystem, This approach will result in the optimal Open Banking framework to address the ecosystem stakeholders’ needs.”
It’s a welcome development for the entire financial ecosystem of Saudi but the biggest beneficiaries could be the three startups building the rails for Open Banking in the region; Lean from Saudi, Dubai-based Dapi, and Bahrain’s Tarabut Gateway.
The full policy can be read here (PDF) on SAMA’s website.