The Saudi Central Bank (SAMA) has launched an ‘open banking lab’, in line with its Open Banking Framework issued in November 2022.
SAMA’s open banking lab aims to foster innovation and accelerate the development of open banking services across Saudi Arabia. The lab is to provide a “technical testing environment” to enable the development and testing of open banking services. The tests will also look to ensure compatibility with SAMA‘s open banking framework.
What does the central bank’s open banking framework cover?
The open banking framework is split into sections that ultimately aim to set out legislation, regulatory guidelines and technical standards for the open banking industry in the region. The key sections are as follows:
Saudi Arabia’s fintech strategy
The Kingdom continues to put a lot of resources into its Saudi Vision 2030. Overall, the strategic framework aims to reduce the country’s oil dependence, and diversify its economy, while developing its public sectors.
One part of the framework is namely the Financial Sector Development Program (FSDP). One major pillar of the program is Saudi Arabia’s fintech strategy to make the country a global fintech hub. It believes that enhancing fintech in the region could lead to empowering not only individuals but also society in Saudi Arabia financially. Ultimately, this aim looks to better the economy overall with such developments.
Open banking enables the consumers of financial institutions to securely share their financial data with a third-party provider. This enables firms to provide new financial services and products for consumers. SAMA also explained that it believes open banking services is to strengthen the partnership between banks and fintechs. It also said open banking could improve the financial infrastructure to ensure better use of consumers’ financial data.