Middle East Open Banking Forum

What is Open Banking?

Open banking is also known as “open bank data.” Open banking is a banking practice that provides third-party financial service providers open access to consumer banking, transaction, and other financial data from banks and non-bank financial institutions through the use of application programming interfaces (APIs). Open banking will allow the networking of accounts and data across institutions for use by consumers, financial institutions, and third-party service providers. Open banking is becoming a major source of innovation that is poised to reshape the banking industry.

What are the Advantages of Open Banking?

With Open Banking come some advantages of online banking that benefit customers and bank owners. Some of them are:

  1. Helping customers in their operations: – obtaining answers and services tailored to each person’s needs becomes easier with Open Banking. This is because, due to the infinity of APIs that exist and that can arise, everything is simpler. All you need is access to technology. Time spent is reduced and operations are automated.
  2. Centralization of services: – with Open Banking, banks once again have full control over the various services their customers need: advice, loans, transfers, and financing. Thus, everything is done with greater order and under a single administration.
  3. Increase in the financial market: – with the arrival of more clients in Open Banking, the diversification of APIs and services will be greater. In this way, there will be numerous offers adapted to the needs of everyone.

What are the Challenges facing providers and consumers with Open Banking?

One of the main challenges facing open banking is security. The majority of companies that are championing open banking are small FinTech companies, not tech giants like Apple and Google, and a lack of homogenous technical standards, such as certain security requirements, combined with complex internal technology systems may make the process susceptible to corruption and fraudulent activity. By creating complex chains of data access, it also makes it harder to prove who was at fault following a theft.

Another concern about open banking is liability, as inserting third-party providers into the banking process increases the risk of scammers gaining access to customer information and their finances. Under open banking, consumers should have any losses replenished by their bank unless there is reason to suspect fraud or negligence, but with both banks and FinTechs alike facing increased security threats, without proper legal clarification it’s inevitable that providers will try and blame a third party.

Finally, a lack of education and awareness around open banking’s capabilities has made consumers less likely to consent to their data being shared, limiting banks and FinTechs ability to innovate. Recent research by Accenture shows that two-thirds of consumers would not be willing to share their personal financial data with third-party providers while in September, independent consumer review body, Which?, revealed that 92% of consumers had never heard of open banking. To negate this, banks and FinTechs must educate consumers on the ways in which open banking can improve how they organize and take control of their finances, including through monitoring spending and making better saving and investing decisions.

What is open finance?

Previously, all financial matters were handled in a one-stop-shop — a bank. Not only did they hold the key to all financial business decisions (for example, whether a loan was approved), but they often also had a limited range of financial products they could physically offer.

Open finance is based on data-sharing principles that can empower banks to offer a broader range of possibilities to their clients that are suited specifically to their needs. Meanwhile, for consumers, this opens up a world of financial possibilities. With open finance, consumers could potentially access more effective: Private mortgages, Savings systems, Pension funds, Insurance, Credit, Investments.

Essentially, it can empower consumers to take control and do more with their money. Banks can collaborate with various providers to deliver a wider variety of services based on consumer data.

What are the key differences between Open Banking and Open Finance?

The differences between Open Banking and Open Finance are not always clear. However, based on what is happening around the world, through regulatory actions or market driven initiatives, we can point some:

  1. API Providers (ASPSPs): – Open Finance APIs can be provided by ‘other’ types of account holder such as insurance companies, pension funds, and wealth managers.
  2. API Clients (TPPs): – Open Finance APIs can address different ‘clients’, such as TPPs regulated by a National Competent Authority (NCA) according to PSD2 or organisations not regulated by an NCA.
  3. Security: – Open Finance client identification may/may not use NCA issued authorisation numbers, PSD2 eIDAS certificates, and/or scheme lists.
  4. Contracts: – Open Finance APIs may require commercial contracts between the API Provider and the API Client.


  1. Open Banking is the biggest change since the invention of the cheque book.
  2. Open Banking market value expected to reach $43,152million by 2026.
  3. The Saudi Central has announced the launch of an Open Banking framework to be implemented in 2022.
  4. Regulated third party service providers guaranteeing data security is the major concern under Open Banking.
  5. Open Finance can solve the inefficiencies in money management.
  6. Beyond banking gaining traction across international markets.
  7. Successful ‘Super Apps’ converging e-commerce and financial services valued between USD 4 – 40 billion.
  8. According to research by FinTech TV, the embedded finance sector is expected to grow up to five times by 2025, from a current valuation of $22.5 billion to over $250 billion.


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