The Saudi Arabian Monetary Authority (SAMA) is introducing an open banking policy to advance digital innovation in the financial services sector.
Saudi Arabia’s central bank said the plan is for open banking to go live in the first half of 2022. Through the initiatives in the policy, the goal is to foster the advancement of digital technologies and create new financial services and products.
Open banking, which is used across numerous countries, facilitates the connections and permissions between users’ banking data and third-party financial platforms. It enables the secure sharing of financial and other data to enable seamless digital payments and money transfers.
“Open banking will lead to direct innovation by enhancing opportunities to develop new products and services — either ‘in-house’ or in collaboration with third parties – to increase financial players’ value proposition and create additional revenue streams,” according to the policy document.
Aside from providing banking customers in the Kingdom with a way to securely manage and share financial data, open banking will also give people access to custom products and services. The policy is also intended to improve trust among all stakeholders in a financial relationship.
Open banking is anticipated to increase competition in the country by lowering the barriers to entry for new participants. Through the development of new financial products customized to specific customer segments, the initiative is also intended to bring about financial inclusion in Saudi Arabia, according to the report.
This initiative aligns with priorities set for both Saudi Vision 2030 and for the Financial Sector Development Program (FSDP). Goals include developing a digital economy and fostering private sector growth to encourage participation by more entrepreneurs.
In a PYMNTS interview, Frank Dux, managing director of CoCoNet, said that although FinTech innovators advance competition and improve the end-user experience, corporations often struggle with outdated tools. The mindset is that businesses will stay with their financial institutions because it’s too much of a hassle to switch, even if it means having outdated products.