The Central Bank of Saudi Arabia (SAMA) on Wednesday (Nov. 2) announced the launch of its open banking framework, which includes a set of legislation, regulatory guidelines and technical standards to enable banks and FinTechs to provide open banking services in the country.
After Bahrain, Saudi Arabia becomes the second country in the Gulf Cooperation Council (GCC) to implement an open banking framework. Meanwhile, the United Arab Emirates has granted an initial license to Tarabut Gateway while it prepares to introduce a formalized legal framework for open banking.
Commenting on the regulatory approach taken by Bahrain and Saudi Arabia, Nino Ocampo, chief product officer at Tarabut Gateway, told PYMNTS that he has been impressed by the way that SAMA and the Central Bank of Bahrain have been able to learn from the mistakes of open banking pioneers in the EU and the U.K.
“When the open banking mandate was introduced in the U.K., a lot of the banks saw it as a regulatory initiative that they just had to meet. And they didn’t see any real incentive to fully participate,” he explained.
In contrast, Ocampo said that Saudi Arabia’s open banking regulation has laid out a framework for banks to create premium open banking APIs that they can charge third parties for access to. This way, instead of banks doing the bare minimum to enable authorized entities to access account data, they are encouraged to share richer data in a more accessible manner as a way of generating revenue.
Read on: As MENA FIs Adopt Open Banking, EU’s Mistakes Loom Large
In this week’s announcement, SAMA outlined a phased rollout of the scheme, with account information services introduced first, followed by payment initiation services.
SAMA is also tracking banks and FinTechs to ensure their readiness to launch open banking services within the first quarter of next year.
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