The Arab Monetary Fund reveals vision on the future of open banking

By Edil Corneille

The Arab Monetary Fund (AMF), in collaboration with the Arab Regional FinTech Working Group, published a report titled “A Vision of Open Banking in the Arab World”. The report apprised on the key role of the financial and banking sector in enabling and promoting FinTech innovation in the Arab region through open banking.

The report stressed the importance of expanding the use of open banking beyond core payment services, to cover all types of financial assets which comes as a natural response to the current shift from open banking services towards the broader concept of open finance. With this shift, it is now possible to streamline basic financial services such as money transfers and Know-Your-Customer (KYC) checks through limited access to account and payment services.

Banking as a service, banking as a platform and banks as third-party providers have been showcased and revenue-generating opportunities for traditional institutions have been presented.

While regulation and market dynamics remain the main drivers of growth in Europe and the United States of America respectively, the growth of open banking in the Arab region is primarily driven by market diversity. For instance, whereas some Arab countries focus on the financial inclusion of their underbanked population, other commodity-dependent countries seek to diversify their economies by establishing regional FinTech hubs.

Five key pillars have been enunciated, namely,  principles over prescriptions, phased implementation, consumer data right, technical standardisation and interoperability, and a level playing field.

The report is the result of a collaborative effort among a group of experts and researchers as members of the Arab Regional FinTech Working Group, in particular AMF, the MENA FinTech Association (MFTA), MFTA’s Open Banking Working Group, Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC), with the participation of the group members representing Arab Central Banks and Monetary Authorities. The report has also benefited from contributions and comments of several players in the region, members of the group, namely DAPI, Lean, Tarabut, Mastercard, and OneConnect.

The information presented has been derived from a recent survey among 18 Arab Central Banks and Monetary Authorities across the Arab region. The survey focused on the role of the Arab Central Banks and Monetary Authorities in driving domestic growth in open banking.