Saudi Arabia’s central bank recently announced the opening of a new lab where businesses may test their products against a pre-established framework, which is expected to strengthen the country’s open financial services.
The service is a brand-new idea that allows customers of financial institutions to safely exchange their data with a third-party provider, enabling them to access new and cutting-edge services and products.
The bank, also known as SAMA, made the declaration in response to the release of its Open Banking Framework in November 2022. It is intended to support innovation and hasten the sector’s growth.
The central bank stated in the statement that the lab will give banks and fintechs a technical testing environment to allow them to develop, test, and accredit their open banking services to verify compatibility with the Open Banking Framework. It will have a positive impact on the industry by reinforcing the partnership between banks and fintechs and by enhancing the financial infrastructure to ensure better use of customers’ financial data.
The Open Banking Framework, which was introduced in November, consists of a thorough collection of laws, regulations, and technical standards based on global best practises to help banks and fintechs in the Kingdom.
The first edition concentrated on services for account information, while the second will focus on services for payment initiation. One of the aims of the Fintech Strategy, one of the cornerstones of the Financial Sector Development Program within Saudi Vision 2030, is the adoption of open banking services.
The Kingdom was intended to become a worldwide fintech centre where technology-based innovation in financial services serves as the bedrock to improve people’s economic empowerment and society. The Fintech Strategy was adopted by the Council of Ministers in May 2022.
The Saudi Central Bank is keeping tabs on bank and fintech growth to make sure they are prepared to introduce open banking services in the first quarter of 2023.
The number of active fintech businesses increased to 147 in 2022 from 82 in 2021, according to the most recent Fintech Saudi Annual Report. In the previous four years, the industry expanded 14.5 times as well.
According to the research, Riyadh is home to 79% of these businesses, with the remainder having their headquarters abroad.