*** ----> Bahrain takes a giant step into open banking | THE DAILY TRIBUNE | KINGDOM OF BAHRAIN

Bahrain takes a giant step into open banking

TDT | Manama     

The Daily Tribune – www.newsofbahrain.com

When the United Kingdom required its largest banks to open up their payment services and customer data to third-party providers, companies like Monzo and Revolut leveraged open banking to offer innovative banking solutions that traditional banks didn’t provide.

This initiative made the UK a leading financial hub for fintech innovation, attracting significant investments and fostering a competitive financial ecosystem.

Now, the Kingdom of Bahrain is on the cusp of a similar transformative change. The Central Bank of Bahrain (CBB) has implemented reforms akin to those the UK made in its Open Banking framework.

Experts say this is a pivotal moment for Bahrain’s financial sector, as the amendments introduced by the CBB are set to shake up the Kingdom’s financial landscape in unprecedented ways.

They predict these changes will drive innovation, improve customer experiences, enhance security, and boost the competitiveness of Bahrain’s financial sector.

Benefit to benefit

Accordingly, licensed banks must now collaborate with the Benefit Company to implement a “consolidated flow” method for customer approval and authentication during enrollment.

Additionally, the CBB has mandated that licensed banks provide information to information and payment service providers upon approval from these entities, effective September 1, 2024. Top banking officials also state that the revised reporting and disclosure requirements will take effect on September 30, 2024, under the Reporting Requirements Module and the Public Disclosure Module.

Licensees should submit implementation work plans by June 30, 2024, as part of the phased rollout of these new requirements.

Budgeting apps and more

In short, institutions and companies in Bahrain will soon be able to develop new financial products and services, such as budgeting apps, personalized loan offers, and investment platforms, leveraging open banking data to enhance accessibility and transparency.

According to CBB, these changes, introduced after extensive consultations and strategic updates, aim to improve accessibility and transparency in financial services across the kingdom.

To establish standard API

Khaled Humaidan, Governor of the CBB, said the move would broaden the scope of open banking services to encompass legal entities like institutions and companies.

This mandates collaboration between service providers and banks to establish standard API specifications and operational standards, ensuring alignment with Bahrain’s security directives.

It’s worth knowing that API stands for Application Programming Interface. It is a set of rules and protocols that allow different software applications to communicate with each other.

APIs enable software applications to interact and share data. For example, a weather app on your phone uses an API to get weather data from a weather service.

Innovation, transparency

Experts believe that the new decision will foster innovation by encouraging more competition and collaboration among financial institutions and fintech companies.

Customers will benefit from a more seamless and integrated banking experience through standardized APIs and secure authentication methods.

More investments

As the CBB ensures that open banking practices align with Bahrain’s security directives, the amendments provide a robust framework for protecting sensitive financial data.

These changes are also expected to attract more fintech investments and startups to Bahrain, boosting economic growth.

Benefits for Bahrain

Financial Innovation:

Bahraini fintech companies could develop new financial products and services, such as budgeting apps, personalised loan offers, and investment platforms, leveraging open banking data.

Transparency and Accessibility:

Consumers and businesses could benefit from easier access to their financial data, enabling them to make more informed financial decisions and access better financial products.

Customer Experience:

Banks and fintech companies could offer integrated services that provide a seamless and comprehensive view of financial information, improving overall customer satisfaction.

Security and Compliance:

The establishment of standard API specifications and operational standards would ensure secure and compliant data sharing, protecting consumers' financial data.

Economic Growth and Competitiveness:

Bahrain could attract fintech startups and investments, positioning itself as a regional leader in financial innovation, similar to the UK's fintech hub status.

Business Efficiency:

Businesses, particularly SMEs, could leverage open banking to streamline financial processes, such as automated accounting and easier access to financing options.