Saudi Arabia’s SAMA Opening-Up Policy Is Conductive to E-Commerce Development in the Middle East in 2021
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On the heels of Saudi Arabia’s central bank’s (SAMA) future launching of a framework for open banking in the kingdom during H1 2022, there is a buzz of excitement among fintech players who are already Open Banking pioneers and advocates in the region.
“With the support of market participants, SAMA plans to go live with Open Banking during the first half of 2022,” the regulator announced. The biggest beneficiaries could be the three startups building the rails for Open Banking in the region; Lean from Saudi, Dubai-based Dapi, and Bahrain’s Tarabut Gateway, the latter being the company behind the first Open Banking operation in the region.
Bahrain is home to the region’s first onshore fintech regulatory sandbox and Tarabut Gateway is one of the first graduates from this sandbox, becoming the region’s first open banking infrastructure provider, partnering with Bahraini and regional banks to help them roll-out Open Banking services.
What’s in it for Saudi Arabia’s Open Banking?
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Open Banking allows third-party developers to access customer data (with their permission) from their banks and act as a bridge to financial technology platforms like accounting and personal finance apps. It enables the secure sharing of financial and other data to enable seamless digital payments and money transfers. 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 decision is set to present significant opportunities for fintech companies and Saudis themselves, CNBC reports. With some 70% of the kingdom’s 34 million population under the age of 30 who are highly-digitally literate, it’s a lucrative market for fintech providers and start-ups alike. The central bank’s move “is set to revolutionize how customers, merchants, and financial institutions augment the value they reap from accessing financial data,” Tala Al Jabri, a Saudi national and venture capital investor, told CNBC. She expects it to “open up opportunities beyond financial inclusion by placing greater emphasis on Saudis to become more financially literate and in command of their own finances.”
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