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Fostering innovation and creating new customer experiences through Open Banking

Open banking has been a notion explored by both incumbents and fintechs especially when driving the innovations agenda towards a more complete and experience driven financial services ecosystem. The emergence of Covid-19 has accelerated the agenda by allowing digital organizations to fast track their developments towards innovations while goading the traditional brick and mortars to adopt more digital ready practices.

As the shift in the digital space has now started to be more focused on key business areas such as customer experience, convenience, data integrity and so forth, regulators are now working together to establish open banking regulations to bring together a connected ecosystem whereby all the involved stakeholders from the consumers to the providers duly benefit equally.

The shift towards a more digitally dependent economy has now urged the new norm for digital phenomenon such as, cashless payments in the MENA region to flourish. With that being said, open banking regulations are allowing providers to take the next step forwards and supporting use cases such as cross-border payments, digital banking and aggregation. Organizations and regulators are now working more together with each other than they were before, a blessing in disguise, it has pushed forward the next evolution for the connected digital economy for the region.

Demands for more mobile solutions have leapfrogged years in advance as users are now ever more dependent on the conveniences and availability of these offerings at the touch of their fingertips has cemented the notion that going back to the old ways is almost impossible. Codebase Technologies have been at the forefront in helping traditional banks and upcoming fintechs, adopt the Open API revolution through its proprietary Fintegrator proposition which allows banks and fintechs to collaborate and deliver new innovative solutions in a highly secured environment.

There are various innovative use cases and examples of how the open banking agenda can benefit the MENA region including such as shared KYC services amongst banks and other incumbents. A concept where for example, a telco collects the customer’s information for offering mobile services and help service providers validate such information, provides an added convenience and saves cost of managing compliance allowing them to focus on delivering new shared experiences.

The EU/UK has seen a monthly growth of 16% in API calls from 180 million calls in October 2019 with 20 to 30 million calls added additionally per month. Average API availability sits at 98.48% which in turn allows for a continuously enriched digital ecosystem. Studies has shown that countries that lag behind on these regulations risk being left behind in the global markets thusly providing the Middle East a golden opportunity to embrace the open banking economy even more.

Another innovative use case fostered by open banking has been account aggregation and use of intelligently architected analytics. Allowing customers to link multiple bank accounts and enable intelligent analyzing of their expenses, budgets and etc to suggest beneficial recommendations on how they can save more money by giving them intuitive recommendations to seamlessly switch service providers such as utility, telco, internet and subscriptions.

Using the available provided data from the aggregated accounts, financial institutions can now analyze the readily available information on the customer’s financial health and help take and drive data driven credit decisions. Thusly this use case helps not only mitigate financial risk both to the customer and institutions but allows both parties to engage in healthier financial practices that foster better informed and effective decision making.

The market outlook in the MENA region with the presence of open banking aspires to enrich the financial and digital lifestyles of the consumers, although still working out many addressable pain points and challenges. Open banking is poised not only to help fintechs but also deliver connected experiences for RegTech, InsureTech, E-commerce and HealthTech sectors with a single aim to offer new and hyper personalize propositions to consumers.

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MENA is fostering a favourable environment for Open Banking

Open Banking has arrived. Clearly, bankers are eager to be seen as early adopters in Open Banking, just as countries with and without regulations are racing to embrace it. 


Open APIs are enablers of Open Banking

During my conversations with members of the banking community, I noticed that Open Banking is still fuzzy in the minds of many and it is sometimes confused with Open APIs. By Wikipedia’s definition, Open Banking is the use of Open APIs that enable third-party developers to build applications and services around the financial institution. In short, Open APIs enable Open Banking, or think of Open APIs as the feeders to an Open Banking ecosystem.


Regulators’ dilemma

Open Banking was pioneered in Europe in 2015 and was enforced in 2018 as a mandatory rule written in the PSD2 requiring banks to open up their payments APIs to third parties. Adoption has been lacklustre over the past two years and was held up by several challenges.

In Asia, the Monetary Authority of Singapore (MAS), the country’s central bank, was the first regulator in the region to release a framework and playbook for Open APIs. Its approach was clear of high-handedness and instead left it to the choice of the financial community whether to adopt its Open API framework and a playbook that listed 400 recommended APIs. Without mandating its Open API framework has also resulted in a lukewarm market reaction with only the nation’s dominant bank, DBS, being ahead of the game after declaring more than 200 APIs published to date.


Banks have constraints

For banks, there is understandably some pushback when it comes to sharing APIs publicly. First, it is the vast amount of infrastructure costs needed. Followed by the third party information security risks as banks have traditionally assumed the role of a custodian of their customers’ data. The only motivation for a bank to open up its APIs would be the ability for it to leverage external parties to build innovations on top of its products and services, so that it can serve its customers better and position itself ahead of the digitalisation curve.

To add on, the Covid-19 pandemic and an impending global recession are slowing down innovation projects. Banks may rein back on R&D resources and shift their gear towards building solutions that meet the immediate needs for contactless banking, cost reduction and productivity growth.

Fostering a favourable environment for Open Banking

So, Open Banking will not happen simply with an extensive list of Open APIs on the board. For Open APIs to access data meaningfully and to drive innovations in Open Banking, a few things need to be in place first.


  • A vibrant fintech and start-up community. It has to be a vibrant community where discerning venture capitalists, a friendly regulator and an untapped market coexist to let start-ups and entrepreneurs thrive. In MENA, the initiatives by the Abu Dhabi Global Market (ADGM) to connect MENA economies to the Belt-and-Road corridor is set to open scores of opportunities for the fintech and start-up community.


  • A national infrastructure that garners public consensus. The Singapore government rolled out SingPass (a personal login access) and MyInfo (a “Tell-us-Once” service that pre-fills digital forms) and is expanding these initiatives to its larger National Digital ID ecosystem project. Having digital ID infrastructure built and led by the government will ward off the challenges like those encountered in Europe as it removes the obstacles caused by a common lack understanding of information security among the populace and their general reluctance in sharing personal data with outsiders.


  • A collaborative platform to marry the goodness of financial institutions and fintech start-ups. One good example of a collaborative platform is API Exchange (APIX) launched by the ASEAN Financial Innovation Network (AFIN) in 2018 as the world’s first cross-border, open-architecture platform that serves as a matchmaking marketplace where fintech and financial players collaborate and build innovative solutions. Another example is the ADGM Digital Lab where financial institutions and fintech players can collaborate and build the next generation of digital financial services. ADGM Digital Lab is jointly developed by ADGM and OneConnect Financial Technology.


  • An anchor player to lead the change. The sheer influence of a market leader who can take innovations from pilot to actual implementations at scale will be able to pave the way for embracing change.

MENA is heading in the right direction towards fostering a positive environment for collaborative innovations between banks and fintech players. Soon, there will be a clearer balance of risk and return and everyone will be able to reap the true benefits of Open Banking.

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DAPI – Open Banking in MENA – Standards for our Region

Simply put, Open Banking enables consumers and companies to do more with their financial data and accounts in two ways.

First, financial management apps help consumers and companies bring together data from multiple accounts in one place from where it can be analyzed more completely. This way, they get a better understanding of how and where they are spending their money. In turn, such insights help consumers and companies make better financial decisions, access credit on better terms etc. This is known as an “account information” service, where information is being collected from a customer’s accounts (with the customer’s consent) and stored and presented in a single app.

Second, by using apps that make payments simpler and cleaner, consumers and companies can make transfers from their bank accounts more easily. Platforms can automate payroll, top-up peer to peer digital wallets, send money abroad using remittance apps, or pay bills directly from their bank accounts. This is known a “payment initiation” service.

Companies like DAPI – known as aggregators or third party providers (TPPs) – sit between the fintech app community and banks. Through our connectivity with banks across emerging markets we enable our fintech community to develop the same types of compelling apps that were described above and that have become hugely popular in the United States and Europe.

Open Banking is established when banks and financial institutions are required by regulators to enable TPPs to access their platforms. Of course, with this regulation come a number of standards. These are the standards by which banking is effectively “opened” and democratized and financial innovation is spurred for the benefit of consumers.

Since there is so much at stake, such as the security of customer’s data and access to payment systems, developing and adhering to standards is incredibly important.

In markets where Open Banking has been implemented like Europe, UK, Australia, Singapore Bahrain standards were set in three core areas.

First, what common “Open API” standards do banks and TPPs need to have in place to enable secure and stable connectivity between them (technical standards)?

Second, what standards are there around TPP certifications or licensing to ensure that the TPP is properly managed and adheres to best data and security practices?

Third, what standards are there around consumer protection to ensure that consent, authorization, data usage and dispute resolution are front and center at all times?

For us, there is no question that any Open Banking regulatory framework must incorporate strong standards across all 3 pillars.

Standards need to be developed inclusively (by regulators, banks, and TPPs) and be adopted by all ecosystem participants – banks and TPPs. If different banks and TPPs adopt different standards, adoption would be limited and the costs of integration high.  The ecosystem would not thrive.

Aside from Bahrain (and to a degree KSA where SAMA has defined payment initiation and account information services as licensable payment services), regulators across MENA have yet to implement Open Banking frameworks. That process will take time.

For DAPI, the immediate question for our region is what technical standards or codes of conduct should the industry adopt, particularly around enabling account access, prior to the full implementation of Open Banking ie prior to banks being required to enable API connectivity for TPPs. It should not be that innovation in our sector is put on hold pending the implementation of full Open Banking regimes and mandated API connectivity – that’s also not how things developed around the world.

The ecosystem around Open Banking has been allowed to develop across the world prior to the development of full Open Banking regimes. Regulators have to have use-cases around which they can build informed regulatory frameworks. Before imposing costs on banks they need to know that there is consumer demand for Open Banking products. That means there has to be some thinking about how our ecosystem can develop in a pre-regulatory phase – what pre-regulatory standards should apply.

Prior to the implementation of Open Banking regulatory frameworks In Europe, the UK, Australia, and the United States TPPs enabled consumers to access their accounts – with consumer consent at all times – using their user-name and passwords.

Banks typically refer to this as “scraping” – the implication being that scraping, which has been embraced globally by consumers, is a sub-standard means of connectivity. Whilst the ultimate end goal should always be Open API connectivity, regulators, in the EU and Australia for example, have taken progressive positions on alternative means of access i.e. “scraping”.

For example, in March 2020 the Australian Securities and Investment Commission confirmed that it endorsed “scraping” as a means of access for fintechs. In Europe and the UK, this method of access was only stopped earlier this year once banks had complied with their Open API connectivity obligations, i.e. only once alternative connectivity was established for TPPs.

There were no restrictions on forms of non-API alternative access (ie “scraping”) prior to banks being required to open up. In Australia there are no restrictions period.

At DAPI adherence to standards, whether to do with account access, cyber-security, customer consent, and data retention are our holy grail. We think it is of utmost importance to adhere to a pre-regulatory standards framework or code of conduct now and not just when Open Banking frameworks are implemented. Our region’s consumers deserve it.

As regulators within our region move forward to consider Open Banking frameworks we urge them to be inclusive, consultative (listen not just to banks but fintechs and consumers) and practical in how we develop this ecosystem (and practical and relevant standards) both in pre-regulated and regulated environments.


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MENA Open Banking Vision – A Point Of View Of Abdulla Almoayed, CEO and Founder of Tarabut Gateway

You don’t need a crystal ball to predict that the world is moving towards Open Banking. Open Banking is redefining financial services as regulators and governments seek to increase competition and choice. Changing customer expectations have accelerated the adoption of this global movement and have pushed countries across the globe to embrace this disruption. While Europe might reasonably claim to be the ‘cradle of Open Banking’ by kickstarting the movement back in 2016, it is not a dream anymore in the MENA region, but a reality.

The path towards Open Banking varies across geographies and markets, but the goals are shared. Open Banking drives improved collaboration between financial service providers to create tailored products and services for customers. Each jurisdiction is applying a different approach to achieve the same universal goal; better choice for one and all.

Within the MENA region, Bahrain has spearheaded the development of Open Banking by issuing the first set of regulations in 2019. Since then, as part of Tarabut Gateway, MENA’s first licensed Open Banking platform, we have been able to integrate to all retail banks in the country. An achievement that has been accomplished in record time; hence setting the MENA region apart from the rest of the world.

So, what are the key lessons learned from Bahrain’s Open Banking framework?

Customer Experience is King

In a region where internet users are 11.8% higher than the rest of the world, customers expect more. They expect unmatched user experiences and improved financial services.

One of the key challenges any third party provider would face is the difference in authentication journeys between banks. While Bank A might ask the user to simply authenticate through facial recognition, Bank B might ask the user to enter their username, password, customer information file (“CIF”) number, and a One Time Password (“OTP”). Not only making it confusing for customers to use Open Banking services but could be daunting as well.

The need for standardization across all bank journeys proved to be a key determent in increasing customers’ confidence levels in this new technology.

Open Banking Beyond Compliance

Notably, banks have traditionally viewed the custody and protection of their clients’ data as a responsibility, more of a stewardship role than an asset to be commercialized. However, if done well, facilitating data sharing can deliver increased security through enhanced know-your-customer capabilities and identity validation. Thus, opening the door to a world of new opportunities for banks and financial institutions. For the banks that are prepared to go beyond compliance, these changes present rich opportunities to shape innovative offerings and drive new revenues. To enable API-driven services, banks will make significant changes to their technology infrastructures. By strategically monetizing APIs, banks can offer better products to customers and disarm the threat of other nimble competitors.

The Game Has Just Begun

From SME Lending, product comparisons, to streamlined payments… the use-cases of Open Banking are endless. The truth is that Open Banking offers considerable short- and long-term opportunities for financial institutions. The benefits shouldn’t merely be seen as something that will be enjoyed in the distant future – they’re ripe for picking now. It’s a journey that is likely to start with more elementary Open Banking use cases and advance to more sophisticated use cases over time. With 5 banks in Bahrain now offering the first regional Open Banking use case; i.e. Account Aggregation, we’re witnessing great interest in other regional banks to follow suit and go much beyond. The question is no longer whether or not we will need to deal with the implications of open banking. We will. The question is whether we are ready to make the most of it.


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Recognising the importance of Open Banking and the role of FinTech in the UAE

Wai-Lum Kwok, Senior Executive Director at the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM), shares his vision as a regulator for an open and collaborative ecosystem.


In a post Covid-19 world, digitization and innovation will be the key to helping the global economy recalibrate to a new normal.  Policy makers and regulators can be an important catalyst in enabling this transformation, bringing together FinTechs and financial institutions to solve common challenges and create new business opportunities and growth areas.

For instance, Open Banking, championed in certain jurisdictions such as Europe and Australia, has facilitated greater collaboration and innovation in the retail payments space.  At ADGM, we believe the benefits of open innovation and collaboration can be brought beyond payments to a wider range of financial services.  For example, ‘marketplace banking’ business models that expose internal business assets or services in the form of APIs to external counterparties, are creating an entirely new ecosystem of banking services predicated on intelligent data management and agility in developing new products.

A cornerstone of our efforts in supporting this vision is the ADGM Digital Lab — a digital sandbox and marketplace where FinTechs and financial institutions can co-create and test solutions to address specific challenges or business needs, with direct guidance and engagement by regulators.

Underpinned by APIs, and leveraging smart digital tools to create representations of its operating systems and data, a bank can use the Digital Lab as an innovation space instead of building its own.  Working together with FinTechs and regulators, the bank may pose problem statements and run proofs-of-concept (POCs) in an environment that replicates its production, making it easier for the bank to validate the intended outcome of the solution before launching into actual procurement and production.  The bank can safely evaluate the impact of opening up certain APIs to the industry, by using a synthetic representation of the data.  In this way, the bank will be able to see the types of innovations that publishing the data would enable.

Not just a testing ground, the Digital Lab is also a marketplace to build the digital community.  Users such as FinTechs can create profiles and showcase key features (e.g. funding raised, clients served, etc.) to seek investors and business opportunities.  Certification tools to validate listed APIs and solutions (in accordance with the standards published by ADGM) will be available on the platform, as well as noticeboards, collaboration tools and innovation challenges, all within a digital environment.

Looking ahead, there is a sense that FinTech innovation will take on an accelerated significance in the UAE and the wider MENA region.  Under the leadership of the UAE Central Bank, with its FinTech office now operational, we can expect a slew of initiatives to be rolled out in support of the FinTech ecosystem.  At ADGM, we want to play a part by offering the Digital Lab as a trusted and collaborative marketplace for experimentation and PoCs, to build the enablers for the digital economy and the next generation of financial services.

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MENA Open Banking Vision – a point of view of Hakan Eroglu, Global Open Banking Lead, Advisors at Mastercard

Europe was just the beginning of the Open Banking global movement, with PSD2 in der EU and UK Open Banking the world’s most popular and frequently cited regulation and initiatives.

In the past few years, I have been involved in multiple discussions with fintech, banking associations and regulators on how they can learn from Europe. Today, I’m getting more and more questions on the developments among the new trend setters – in Latin America we have Brazil and Mexico with Open Finance, in Australia we have Open Data, in Nigeria Open Banking and in MEA with its developments in Bahrain.

This blog series will aim to demystify Open Banking and suggest a MENA vision from regional and global thought leaders.

Let’s take a look at what a MENA Open Banking ecosystem could look like and how it can serve consumers with better financial products and services:

“To Be Regulated, or Not To Be Regulated” this is NOT the question here

Regulation can play a role in helping banks and fintechs to technically prepare for Open Banking. But it can especially help to develop new business models and foster innovation for financial inclusion. However, the ecosystem can come up with market-driven Open Banking frameworks with the blessing of the regulators as well. At the end of the day, it will only be successful if fintechs and banks are working together to solve customers’ problems by meaningful applications with cutting-edge data-driven technologies and frictionless customer experiences.

In mandated jurisdictions Open Banking require banks to share their consumer bank account data and initiate transactions such a payment through application programming interfaces (API). These APIs can then be used — with customers’ consent — by third party providers (TPPs) such as fintechs to open up the financial services industry and offer consumers products tailor-made for their individual needs.

Open Banking is the answer to the change, not a threat

Disruption in the financial services industry is already ongoing — whether banks want it or not. Open Banking is seen as a potential threat to banks that is disrupting their business models. The reality is that tech giants and emerging payment service providers are using Open API concepts to tap into the banking space and compete against incumbent players. Banks need to get up to speed to compete and become faster in digital transformation.

The current COVID-19 pandemic has changed customer behaviour with increasing contactless payment, ecommerce and gig economy growth. Banks need to be in a position to keep pace with this rapid change, that is further accelerating with the pandemic as a catalyst. Open Banking is a friend rather than an enemy.

At this time of global concern, the MENA Fintech Association considered how we could shine a light on the global Open Banking movement that is rapidly gathering momentum.

This silent technological revolution can play a major role in positively impacting those in need.

A Vision for MENA

The MENA region should use the global momentum to come up with more progressive Open Banking — or even an Open Finance ecosystem. The experiences in Bahrain with the first wave of Open Banking regulation combined with the approaches in the new global hubs could help to shape it. The goal is to develop a truly innovative set of use cases for all relevant customer segments. This will help banks to lead revolutionizing banking and be super fast in addressing constantly changing customer needs. Key areas for a new framework could be the following:

  • Use cases in scope: 360-degree view of customer, financial advisor for retails, businesses and affluent customers, SME liquidity and cash management, bookkeeping, account, loans & mortgage application & switching, remittance, frictionless creditworthiness and more – forming a cross-FS ecosystem of core banking and payments capabilities
  • Banking products in scope: all types of deposit accounts, credit cards, ewallets (fiat and crypto currencies), loans, mortgages, capital market instruments (e.g. stocks, ETFs), insurance policies
  • Access to banking products: access to account balances/values and transaction information – and write access, namely initiating transactions such as domestic and remittance payments, buy/sell stocks
  • Real-time payments: any open banking enabled payment flow should be fully integrated with real-time payments to allow frictionless and instant payments between customers, fintechs and banks.
  • Standardized onboarding and licencing of fintechs: data security and privacy are super important on the one hand and on the other hand access to data should be granted to fintechs in a simplified process


The MENA Fintech Association believes that open banking will be a positive force of change across the Middle East and North Africa during and after this incredibly difficult time.


This is the first of a six blog post series.  More will be revealed.