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Arab Monetary Fund and Fintech Galaxy expect a 25% growth in open banking across Arab nations, fostering financial inclusion.

The Arab Monetary Fund (AMF) projects that during the next five years, the open banking industry in Arab nations will expand by 25%.

Members of the Arab Regional Fintech Working Group (WG) collaborated with Fintech Galaxy, a regional open banking firm, and ten Arab central banks to compile the AMF study. In keeping with the Fund’s efforts to assist Arab central banks in implementing a successful framework for open banking and finance initiatives, the guide was published.

The Rules for a Successful Open Banking and Finance Environment Adoption investigates the Arab world’s open banking and finance scene. It draws attention to significant advancements and related difficulties in a number of Arab nations. These comprise Oman, Saudi Arabia, Bahrain, Jordan, and the United Arab Emirates. It also includes Kuwait, Egypt, Morocco, and Palestine.

It examines international open banking and finance regulatory systems, including top nation requirements and adoption requirements. Also included are deployment problems and global adoption lessons. Finally, it suggests ways to increase financial inclusion and integration.

Regarding the manual, His Excellency The Arab Monetary Fund’s director general and chairman, Dr. Abdulrahman Al-Hamidy, commended the Arab Reginal Fintech WG’s initiative in producing the guide. He suggested that Arab nations use it as a source of insightful information for putting in place effective open banking and finance systems.

Arab open banking

What makes a framework effective?

A robust basis for the open banking ecosystem is provided by an efficient regulatory framework that considers a variety of factors related to open banking and finance. These consist of:

  • What is open banking
  • categories of players
  • the extent of data exchanged
  • standards for data sharing and access
  • Mechanism of consent and informed consent
  • data safety
  • Finding the Third Party Providers (TPPs) under regulation
  • entry to TPPs
  • granting licences to various service providers
  • technical and operational needs
  • consumer protections
  • Application programming interfaces (APIs) and the open banking/finance framework are implemented under a governance model.
  • API standardisation
  • standardisation of terms in contracts with unregulated businesses.

Authorities must provide pertinent frameworks and allow the market to take use of open banking’s and APIs’ capabilities to implement a variety of use cases in order for the industry to adopt open banking and finance. Account aggregation, digital lending, digital identity verification, credit scoring services, and remote customer onboarding are all included in this. In addition, it covers buy now pay later (BNPL) agreements, account-to-account payments for significant purchases, and personal financial management.

Learnings acquired

The report makes some inferences from worldwide experiences. The majority of open banking laws are the result of extensive stakeholder input and discussion.

Additionally, the paper offers a practical, step-by-step approach that outlines the essential activities and considerations required to successfully develop openbanking and finance frameworks, together with the relevant players. It also emphasises the need for open banking and finance frameworks to be customised to the unique circumstances of each nation. It should also take into account its digital financial infrastructure, readiness and advancement levels, and corresponding legal and regulatory frameworks.

The CEO and founder of Fintech Galaxy, Mirna Sleiman, emphasises: “This guideline simplifies complex concepts so that everyone can learn from it and grow with it.” Additionally, it expedites the adoption of open banking throughout the region. The goal of the collaborative method is to exchange best practises, offer fresh perspectives, and benefit all stakeholders.

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