Lab paves way for Saudi Arabia Open Banking launch
The Kingdom of Saudi Arabia has launched an open banking lab for banks and financial technologies.
The new lab, announced by the Central Bank of Saudi Arabia (SAMA) earlier this month, will create a technical test environment for the development of new open banking services ahead of the launch of open banking services in the first quarter of 2023.
This move follows the launch of an open banking framework by SAMA in November, proposing a set of regulatory guidelines and technical standards aimed at supporting banks and FinTechs’ ability to offer open banking services in the country.
The initial rollout, which only simplified Account Information Services (AIS), has now been extended to include Payment Initiation Services (PIS) and represents the latest in a series of regulatory initiatives undertaken by SAMA with the aim of promoting FinTech innovation through experimentation.
Building on Saudi Arabia’s recent history of sandbox-led innovation, the new lab will also create the conditions for firms to run technical tests on their open banking services before going live on the market – a move that Abdulla Almoayed, managing director at Tarabut Gateway, said represents the next step in the country’s sandbox-driven FinTech journey.
“While SAMA has an active regulatory sandbox for FinTechs to test their products across various verticals, the launch of the Open Banking Lab takes technical testing to a new level,” Almoayed said in a comment sent to PYMNTS.
Still in the early days of open banking, the central bank initiative promises to accelerate adoption in the Kingdom, with important benefits for the wider FinTech ecosystem.
Open Banking accelerates FinTech innovation
FinTech innovation represents a key pillar of Saudi Arabia’s Vision 2030 strategy for economic development, playing a central role in reforming and modernizing the Kingdom’s financial sector.
Alongside the open banking framework and various regulatory sandboxes, key milestones reached over the past two years include the issuance of licenses for the country’s first fully digital banks and the arrival of regional FinTech players from neighboring GCC countries.
As FinTech leaders from other countries in the region have often told PYMNTS, Saudi Arabia’s large market and increasingly sophisticated regulatory and technical apparatus make it an attractive target for expansion for businesses emerging from Gulf FinTech hubs such as Dubai and Bahrain.
The symbol of this trend is the Tarabut Gateway. After graduating from Bahrain’s regulatory sandbox in 2018, the MENA-focused (Middle East and North Africa) open banking company announced last month that it had received approval from SAMA to begin testing its services in Saudi Arabia’s FinTech sandbox.
As Almoayed told PYMNTS, the firm is now setting up a dedicated operation to cater specifically to the Saudi market.
“We are excited by the size of the market and all the opportunities it presents. The team is committed to supporting the Kingdom to succeed in open banking and hopes to achieve this through close collaboration with the entire ecosystem, be it FinTechs, banks or the regulator,” noted he.
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