Open Banking and Finance Set to Flourish in MENA Region Over the Next Two Years
In a recent whitepaper titled «The Future of Financial Services and Trust in the MENA Region,» Paytech, Arab Financial Services (AFS), and Brankas shed light on the imminent rise of open banking and open finance in the Middle East and North Africa (MENA) region, according to The Fintech Times. This comprehensive report delves into various aspects of open banking, from trust-building to monetization strategies, and forecasts a substantial breakthrough between 2023 and 2025 in countries like Bahrain, Saudi Arabia, and the United Arab Emirates (UAE).
The whitepaper underscores how entities such as Emirates NBD’s BaaS APIs have empowered brands like Banque Saudi Fransi and Mashreq Bank to offer enhanced financial services while fostering partnerships with fintechs and startups. AFS and Brankas emphasize the significance of collaboration within the fintech sector, emphasizing that the success of open banking relies on diverse fintech players working together, whether they are payment processors, cybersecurity firms, or other key stakeholders.
Open banking is proving to be a catalyst for innovation and digital transformation for financial institutions worldwide. As of August 2023, more than 65 nations have embraced open finance, driving financial innovation across the globe. Notably, countries like Australia, India, Brazil, and the UK have extended data-sharing mandates beyond traditional banking sectors, amplifying the impact of open banking.
Todd Schweitzer, CEO at Brankas, envisions the transformative potential of open banking, stating, «To truly harness the transformative power of open banking, banks must evolve beyond just ticking the regulatory boxes. The real journey begins when we shift our focus from mere compliance to leading the charge in innovation. We must embrace new paradigms and adapt to the dynamic contours of a rapidly changing financial landscape. It’s about proactively shaping the future, not just responding to it.»
Trust is a pivotal element in the open banking landscape. AFS and Brankas explore how firms can build trust through open banking, acknowledging the challenges surrounding authentication and privacy standards. Despite these concerns, the Kingdom of Saudi Arabia (KSA), Qatar, and the UAE have emerged as the fifth, seventh, and tenth most trustworthy regions in the financial sector, according to Statista. This underscores the profound trust customers place in their financial institutions and the strong relationships banks have cultivated with their clientele over the years.
Samer Soliman, CEO of Arab Financial Services, believes that open banking is more than just a technological trend; it forms the foundation of the B2B financial landscape in MENA’s future. He notes, «The opportunities open banking brings to the fore are transformative, from the seamless integration of payroll systems to the swift execution of employee reimbursements. Financial industry leaders should adapt and reshape the financial contours of tomorrow.»
As the MENA region gears up for a significant open banking revolution, the insights from this whitepaper highlight the potential for innovation, collaboration, and trust-building in the evolving financial landscape.