Voice of the Industry

Navigating the sands of innovation: Open Finance in the GCC

Monday 26 February 2024 08:17 CET | Editor: Vlad Macovei | Voice of the industry

Serena Sebastiani from PwC Middle East embarks on a journey through innovation in the GCC's financial sector with a focus on Open Finance. Discover the region's strategic evolution.


Serena Sebastiani from PwC Middle East embarks on a journey through innovation in the GCC's financial sector with a focus on Open Finance.


The banking industry has entered its fifth transformation phase, marked by the emergence of Application Programming Interface (API) banking as a new channel, occurring alongside digital transformations like Open Finance, Banking-as-a-Service (BaaS), and Banking-as-a-Platform (BaaP).

The metamorphosis is particularly evident in the GCC, which is driven by a supportive government mandate and a growing fintech ecosystem. Here, financial services are deeply intertwined with the region’s growth ambitions, and Open Finance is more than a trend; a strategic evolution. The countries in the Gulf are proactively engaging in initiatives to accelerate their positioning as global financial hubs, with a focus on enabling sustainable, inclusive, and innovative banking and fintech ecosystems powered by emerging technologies.

Bahrain pioneered the Open Banking initiative in 2019, with a government-led and prescriptive approach. The key regulation created a strong foundation for the market to trigger new competition, encourage innovation, and increase financial inclusion.

The country spearheaded one of the earliest regulatory sandboxes, establishing itself as a vibrant playground for fintech innovation. Bahrain Fintech Bay has evolved into a regional hub, nurturing and exporting homegrown success stories like Tarabut Gateway, a leading Open Banking platform.

Now, with a strong foundation in place, Bahrain is heading towards Open Finance, and has granted an operating licence to Fintech Galaxy in November 2022, to integrate into multiple bank APIs through a united interface (FINX).

The Kingdom of Saudi Arabia (KSA) launched Open Banking in January 2021, with a regulator-led initiative driven by the Saudi Central Bank (SAMA). In line with the objectives of the National Fintech Strategy, the imperatives of the Saudi Open Banking framework are to unlock innovation opportunities for incumbents and fintech, to promote financial inclusion and to drive the digitisation of the financial sector.

The comprehensive framework was launched in October 2022 and includes an Open Banking-mandated regime, rules for Third-Party Providers (TPPs), technical, and securities standards, that market participants (banks and fintech) are proactively implementing.

The Open Banking journey in KSA builds in two releases: 

  1. Account Information Services (October 2022).

  2. Payments Information Services (Q4 2023). 

Banks are set to introduce differentiator use cases beyond the ones mandated by the Saudi Central Bank, tailor-made for the needs of the customers (premium APIs), and to fully embrace Open Banking by defining a clear monetisation strategy and by ensuring technology readiness, which seems to be a challenge for TPP integration.

A progression to wider use cases and Open Finance has yet to be released, however, Saudi Arabia has so far demonstrated a progressive approach that has allowed early-stage fintech ventures to grow and expand.

The UAE stands as a beacon of technological advancement in the region, with Dubai and Abu Dhabi leading the charge. The UAE approach to Open Finance is comprehensive, considering not only the regulation and technology, but also the integration of services across banking, real estate, and government services, that are to create a seamless digital economy.

The UAE ecosystem is already operating in the Open Banking space, with examples such as Lean Technology, Dapi, and Tarabut Gateway that have developed APIs to bridge banks and fintech. As an example, Mashreq has used its APIs to offer financing services to clients and non-clients using noon.com's app, and it integrated its NEOBiz Connect API with Virtuzone's platform earlier this year. 

Free zones regulators – FSRA of Abu Dhabi and DFSA of Dubai have issued licence regimes for TPPs for both AIS and PIS. In June 2022, DIFC also launched its Open Finance Lab, a six-month-long initiative that saw the participation of various UAE banks.

The Central Bank UAE (CBUAE) launched the Financial Infrastructure Transformation (FIT) Programme in February 2023, with Open Finance being one of its nine initiatives. CBUAE’s vision for Open Finance is to stimulate innovation across the UAE’s financial sector by encouraging more consent-driven, data-rich, collaborative, secure, and customer-centric digital business. It is envisaged to provide market players with an infrastructure that allows for interoperability among participants, whose development is planned to start in January 2024.

Banks are preparing for Open Finance focusing on regulatory, strategic, and technological readiness. They aim to monetise relevant use cases while considering impacts on existing systems.

Oman is on a path of financial sector reform, with a clear focus on digital transformation. The Central Bank of Oman has been supportive of fintech initiatives, with its Vision 2040 to create a more diversified economy. Key strategies for economic diversification are outlined, with fintech and digitalisation of financial services being primary objectives. Oman's National Fintech Strategy underlines its commitment to developing a supportive ecosystem for Open Finance.

Kuwait's financial sector is beginning to embrace an FS transformation agenda: the Central Bank of Kuwait has launched several initiatives aimed at modernising the country's financial services. This includes the Kuwait Electronic Payment System (KEPS), which facilitates secure and efficient electronic payments and settlements. Nevertheless, after the launch of the Open Banking Working Group in August 2022, a focused Open Finance initiative has not been activated, besides the presence of a regulatory sandbox.

Qatar has a keen interest in improving its digital finance capabilities, with the Qatar Central Bank and the Qatar Financial Centre actively promoting fintech, emphasising on payments, and lately issuing a digital assets regulatory framework for market consultation.

The vibrant GCC Open Finance ecosystem suggests the path towards a digitally-enabled financial sector, with an emphasised customer experience.

While each GCC country is advancing at its own pace, a concerted effort for regional integration would be a key to success, fostering cross-border partnerships, harmonising regulations, and ultimately creating a more interoperable ecosystem.

Locally, key consultations and coordinated efforts between regulators and market participants are essential to drive engagement and adoption, but also to define valid and customised use cases.

This editorial piece was first published in the Open Finance Report 2023. We encourage you to download the report and find out the latest trends and developments in the world of Open Banking and Open Finance, as the road to Open Data continues.

About Serena Sebastiani

Serena is a Director at PwC Middle East, with 13 years of experience. Virtual Assets Leader for FS Consulting, Serena is focused on fintech and the future of money. She advises regulators and the private sector on FS transformation initiatives.



About PwC Middle East 

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 152 countries with nearly 328,000 people who are committed to delivering quality in assurance, advisory, and tax services. Find out more by visiting us at www.pwc.com.

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Keywords: Open Banking, Open Finance, regulation, report
Categories: Banking & Fintech
Companies: PwC
Countries: Middle East
This article is part of category

Banking & Fintech


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