Bahrain-based banks are ready for Open Banking

The central bank’s commentary follows the grace period allowed for implementation which started on October 28 2020 and ended on April 30 2021. It may be recalled that CBB had issued rules relevant to Open Banking in December 2018 which were aligned to the European Payment Services Directive (PSD2). These standards have been recently developed to keep pace with developments of innovative solutions provided by fintech companies which target not only the retail consumer, but also the small and medium enterprises and the corporate sector.

The Bahrain OBF included the supporting technical standards, including APIs, customer experience guidelines, cyber security standards, and other relevant operational standards. The Bahrain OBF was developed with a view to improving the reach and quality of service offerings by retail banks through digital online and mobile channels. This initiative is part of a larger upgrade of the Bahrain-based financial sector which must remain competitive in the face of demand for connectivity within the financial services ecosystem. The Bahrain OBF will help foster competition and enhance efficiency of the financial system keeping in view changing consumer trends.

More specifically, following are some of the anticipated effects on the banking system from a consumer perspective:

Since 2017, CBB has established the Regulatory Sandbox and attracted a variety of fintechs to participate, in addition to issuing Open Banking regulations referred to above, rules related to Crowdfunding, Crypto-asset Platform Operators, Contactless Payments, Digital Financial Advice (‘robo-advice’), Cloud Computing, Insurance Aggregators, and, most recently, it also set up a CBB Digital Lab ‘FinHub973’.