Saudi Arabia isn’t simply copying the approach to Open Banking and Open Finance in other countries, but has developed a phased approach that places the end customer at the centre of the value chain. Raidiam’s Open Futurist, Marie Walker, caught up with renowned fintech expert and author of Fintech R&R, Jas Shah, to dive deeper into the growing trends in Saudi Arabia.
Watch the full conversation to learn more about the Kingdom of Saudi Arabia’s phased approach to Open Banking, and the key opportunities shaping the future of financial services in the country.
A Phased Approach to Open Banking
While other markets such as the UK and Brazil have already embraced Open Banking and Open Finance, Saudi Arabia is developing its own framework for how to implement and scale them.
Jas, who has first-hand experience of delivering projects in Saudi Arabia for financial services clients, notes that while the country’s approach shares similarities with the UK’s Open Banking Implementation Entity (OBIE) model, there are important differences. Whereas the UK mandated both Account Information Services (AIS) and Payment Initiation Services (PIS) from the outset, Saudi Arabia opted for a phased approach, mandating AIS initially, and prioritising key use cases such as SME lending and financial literacy, before further expansion.
This phased rollout reflects a commitment to strengthen the Saudi Arabian fintech ecosystem, to deliver benefits to businesses and consumers through enhanced user experiences and services.
Driving Opportunities for Financial Inclusion
A standout feature of Saudi Arabia’s Open Banking strategy is this focus on use cases to promote opportunity-driven growth, rather than simply pursing a compliance initiative. While Open Banking is often seen as a regulatory requirement, Saudi Arabia is deploying it as a tool to unlock innovation and new opportunities, particularly in areas of financial inclusion and lending.
Marie highlighted research from the Open Finance Canada initiative which shows that Open Finance in Brazil helped 30% more SMEs secure funding while reducing interest rates by 2%. With the Kingdom’s Vision 2030 aiming to establish 525 fintechs in the region over the next five years and drive SME growth, Jas believes improving the lending environment through Open Banking will be essential to underpin fintech innovation and financial inclusion. Jas noted that Saudi Arabia has the potential to replicate Brazil’s SME success by enhancing APIs to improve lending processes. He also pointed to the importance of creating a dedicated open banking rail for fintechs and banks to use standardised protocols.
Interoperability: The Key to Success for Open Banking
Interoperability will play a critical role in the success of Open Banking in Middle Eastern countries like Saudi Arabia, where a digitally savvy, internationally mobile population is increasingly engaged with fintech solutions. Jas pointed out that interoperability is particularly important for engaging younger, tech-savvy consumers and expanding financial access. He noted that markets like the UAE are leading the way by integrating multiple financial sectors, creating a more connected ecosystem that benefits consumers and businesses alike.
Marie shared Raidiam’s experience in the region through implementing the Central Bank of the UAE’s Open Finance initiative, which CBUAE is now extending through the Bank of International Settlements Project Aperta, building Open Finance interoperability to support SMEs and trade finance. By prioritising interoperability, Saudi Arabia has the potential to build a seamless, efficient financial infrastructure and avoid common pitfalls, such as fragmented APIs.
What’s next for Open Banking in Saudi Arabia?
Looking ahead, Saudi Arabia is expected to accelerate its Open Banking roadmap, with the release of the Payment Initiation Services (PIS) framework marking a significant step forward into action initiation and being able to move money as a result of data insight. Jas suggested that Saudi Arabia could take inspiration from Brazil’s Open Finance model to evolve the framework into open finance and insurance to expand the use cases for fintechs, SMEs, and consumers across the region. With Vision 2030 as a driving force, Open Banking and Open Finance could play a key role in expanding financial services and fostering economic growth.
The Middle East’s Role in the Future of Open Banking
With Saudi Arabia and the UAE both advancing their Open Banking and Open Finance initiatives, the Middle East is emerging as a key player in global fintech innovation. At Raidiam, we’re excited to watch how these developments unfold and look forward to playing our part in driving the next evolution of financial services in the Middle East and beyond.
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