Besides banks, the instructions are also directed towards online payment and money transfer companies subject to the bank's supervision and control. According to a CBJ statement from 11 December 2022, the guidelines are part of a ‘new modern concept in financial services models’ meant to enable customers of banks and payment companies to share their financial and banking data with third-party providers (TPPs) using Application Programming Interface (API) technology in accordance with the laws and instructions in force in this regard, as reported by the Jordan News Agency, Petra.
The account information service (AIS) and the payment initiation service (PIS) are two examples of Open Finance services that allow third-party providers to offer customers reportedly innovative and competitively priced financial services and products. These services are also capable of supporting financial transactions and instant payments and allow customers to choose the financial products and services that are most appropriate for their needs, The Jordan Times reports.
According to the Central Bank of Jordan Governor, the new regulation will encourage innovation and competition while also supporting opportunities for transformation towards an inclusive and advanced digital economy. The instructions are part of the bank's ongoing efforts to keep up with technological advancements around the world and the rapid digitisation of the financial and banking sector, he added, cited by The Jordan Times.
According to Petra, the new instructions will require banks and payment and electronic money transfer companies in the Kingdom of Jordan to grant third-party providers direct and open access to customer data and accounts via the Application Programming Interface (API) in accordance with contractual arrangements. In addition, they establish detailed work procedures that govern interactions with third-party service providers, define the technical standards that must be adhered to when working with them, and outline a risk assessment, The Jordan Times concludes.
Open Banking and Open Finance are global initiatives that seek to put the control over data into the hands of the customer and provide financial data access to authorised TPPs so that the end-customer can benefit from better insights and financial solutions.
The Middle East takes no exception from this global advancement. In November 2022, Saudi Central Bank (SAMA) announced the issuance of the Open Banking Framework as one of the key outputs of the Open Banking Programme. Starting with 2017, the Central Bank of Bahrain (CBB) began working on regulations around Open Banking and in 2018 it released Open Banking rules that followed PSD2’s guidance. The Central Bank of UAE alongside the DFSA and ADGM (state regulators) are avid supporters of Open Banking. More info about Open Banking in the Middle East and around the world can be found here.
Inside our newly released Open Banking/Open Finance Report, Serena Sebastiani from PwC Middle East talks about how Open Banking is picking up pace in the GCC. We encourage you to download the report for more information.
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