Currently how embedded is Open Banking into the regional banking and finance sectors?
Open banking has seen a mix of regulatory and market-driven approaches. Adoption varies across the region.
Saudi Arabia has issued guidelines to prepare for open banking, emphasising the importance of platforms and APIs. Saudi Central Bank’s (SAMA) Open Banking Framework, launched in 2022, has accelerated the adoption of APIs among banks and fintechs. Major banks like Al Rajhi and Riyad Bank have begun collaborating with fintechs to create innovative financial products and services. The fintech ecosystem in Saudi Arabia is expanding and I am excited to meet a few of them at LEAP 2025
In UAE – AI Etihad Payments (AEP), is driving open finance initiatives as part of the Central Bank’s ambition to modernise and enhance the financial infrastructure through the Financial Infrastructure Transformation Programme. It is enhancing the digital payment infrastructure in the UAE, facilitating secure and efficient payment solutions. We have seen the launch of Aani – an instant payments platform allowing individuals and businesses to transact via their mobile instantaneously, improving cash flow and enabling financial inclusion. The Central Bank has also launched the financial services Sandbox, allowing banks and fintech firms to test innovations in a controlled environment.
Bahrain, has implemented the Bahrain Open Banking Framework (OBF), which sets out guidelines for banks and fintechs to collaborate and innovate. This has enabled banks such as Bank ABC and Al Baraka Islamic Bank to launch open banking platforms that enable customers to aggregate their financial data, providing a holistic view of their finances.
Qatar, Kuwait and Oman have also started working on their open banking efforts.
Elsewhere – consortiums such as the Banking Industry Architecture Network (BIAN) play a crucial role in standardising banking APIs and promoting interoperability among banks.
What do judge as the most profound effect that Open Banking has had on the region’s banking market?
The most profound effect of open banking on the region’s banking market is its ability to foster competition and enhance consumer choice. This has led to an acceleration of digital transformation among banks and is growing the financial ecosystem, benefitting customers with enhanced experiences.
By allowing third-party providers access to consented customer data, banks are compelled to innovate and improve their offerings — budgeting tools, investment advice and real-time insights into spending patterns that are more personalised to individual customer needs.
Emirates NBD have launched the Liv. app to target younger, tech-savvy customers. Another example is Abu Dhabi Commercial Bank (ADCB). The bank has integrated personal finance management tools into its offerings, allowing customers to track spending, set budgets and manage financial goals more efficiently. First Abu Dhabi Bank (FAB) has also been taking several steps – including in the commercial banking space
In Saudi Arabia, platforms like Tamara (a buy-now-pay-later service) and Lean Technologies (a data connectivity platform) have thrived by integrating with traditional banks.
BenefitPay, a Bahraini app, facilitates near-real-time peer-to-peer payments between individuals or from individuals to businesses. Transactions volume have surged 73% every year over the past three years, which in turn has enhanced financial inclusion.
This shift benefits consumers and supports the broader economic goals of diversification and innovation. It has opened up new revenue streams for banks and intensified the overall drive for modernisation and improved efficiency.
Has AI made any noticeable changes or improvements to the development or functionality of APIs?
Artificial Intelligence (AI) has significantly enhanced the development and functionality of APIs within the context of open banking. One of the most significant improvements is API specification and documentation automation. AI-powered tools can now generate API specifications from simple natural language descriptions, reducing development time and ensuring consistency. This has lowered the barrier to entry for non-technical stakeholders, allowing them to participate in the API design process.
Generative AI powered API solutions help automate API development, design, document and code generation, improving developer productivity.
AI has also enhanced API security and testing. By leveraging machine learning algorithms, developers can identify potential vulnerabilities and optimise API performance more effectively. Additionally, AI-driven analytics provide insights into API usage patterns, helping organisations refine their services and improve user experiences.
AI-driven analytics allow banks to better understand customer behaviour and preferences, leading to more effective API designs that cater specifically to user needs. For example, AI can analyse transaction data to identify patterns that inform how APIs should be structured for optimal performance.
What inroads has Open Banking made into corporate and commercial banking in our region?
Open banking is making inroads into corporate and commercial banking in the Middle East, albeit at a slower pace than retail banking. By integrating third-party applications into their systems via APIs, banks can offer businesses tailored financial solutions in payments, cash management, lending and trade finance.
Real-time payments and enhanced treasury services are becoming more prevalent and are driven by open banking initiatives. APIs enable seamless integration of corporate accounts with various financial services, improving cash flow management and operational efficiency. Saudi Arabia’s Riyad Bank offers API-based solutions for corporate clients to streamline their cash management processes. FAB’s Global Transaction Banking has taken several steps in Open Finance, APIs and payments tokenisation, including Virtual Account Management APIs. HSBC UAE is another example. The bank has integrated APIs that allow corporate clients to automate payments and reconcile accounts in real-time.
Furthermore, open banking facilitates better credit assessment and lending processes. By accessing comprehensive financial data, banks can offer tailored financing solutions to businesses, particularly small and medium-sized enterprises (SMEs), which have traditionally faced challenges in securing credit. This not only supports business growth but also strengthens the overall economic landscape. Again, Abu Dhabi Commercial Bank is a good example. The bank uses open banking to provide customised lending solutions to SMEs. By leveraging open banking data, banks can assess the creditworthiness of SMEs more accurately.
Open banking facilitates better data sharing between banks, corporates and trade platforms, reducing friction in trade finance processes. Mashreq Bank’s API-driven instant payment solution offers real-time low-value payments for corporates.
Which parts of the overall banking and financial world are proving more resistant or challenging to the use of Open Banking and APIs?
Despite its promising outlook, several areas within the banking sector remain resistant or face challenges regarding the adoption of open banking and APIs. One significant barrier is data security concerns; customers are often apprehensive about sharing sensitive financial information with third-party providers due to fears of breaches or misuse.
Traditional banks, particularly those with legacy systems may struggle with the technological infrastructure required. Additionally, cultural resistance plays a role; many traditional banks are cautious about relinquishing control over customer data.
Regulatory harmonisation also presents challenges as different countries within the region adopt varying standards for data sharing and security protocols. Coordinated efforts among regulatory bodies are essential to build consumer trust and ensure a secure environment for data exchange.
