The UAE financial sector welcomes the new Open Finance regulations

Recently, the Central Bank of the United Arab Emirates (CBUAE) issued the Open Finance Regulation. With this regulation, the CBUAE will establish a comprehensive framework for regulating licensing, supervision and operation Open finance.

The new regulation will enter into force in stages. Even in the early stages of the UAE financial sector, he is happy with the move. Recognizing this as an important development in the UAE financial sector, the regulations will impact all categories of CBUAE licensees.

What is open finance?

“Open Finance is a secure way for financial institutions to open their systems to accredited third-party providers,” says Zina Ashour, founder of Women in Crypto Arabia. “It allows these parties to access financial data held by the financial institution.”

He explains that Open Finance can lead to the creation of innovative solutions in the field of financial services, tailored to the individual needs of the client. With Open Finance, for example, you can manage all your bank accounts, investments and expenses in one application, regardless of the institutions involved.

“Open Finance takes the concept of open banking a step further,” says Khaled Ahli, Executive Director of ME at CREALOGIX. “It expands secure data exchange between financial institutions and third-party providers to cover a wider range of financial products such as investments, insurance, pensions and mortgages.”

To read: What does open banking mean for the MENA region?

Abdulla Almoayed, CEO of Tarabut Gateway, takes this connectivity a step further. He says Open Finance can create a world where all our accounts are seamlessly connected into one interface. “…and your money will be automatically transferred from your savings account to your investment account without lifting a finger.”

New opportunities

Ashour believes that the Open Finance Regulation is likely to have a significant impact on the fintech field in the UAE.

In her opinion, the regulation opens new opportunities for innovative services, imposes high safety standards and increases competition. “This could lead to more consent-based, data-rich, collaborative, secure and customer-centric digital enterprise and service models.”

Ahli is also excited about the transformative potential of Open Finance in the UAE. He believes this will help create a more level playing field for fintechs to collaborate and innovate alongside established players. “This fosters a dynamic ecosystem that benefits everyone from banks to consumers.”

Ashour is particularly pleased with the regulatory emphasis on customer safety and consent. “The fact that customers have control over their data and who can access it is a significant step forward in financial services. It puts the power back in the hands of the consumer, which is a positive change.”

Looking at it from a different perspective, Almoayed is grateful for the clarity and regulatory certainty in the new regulations. He believes that the comprehensive nature of the regulations provides much-needed regulatory clarity for fintechs operating in the Open Finance space.

“This reduction in ambiguity will allow us to invest in the UAE with the utmost confidence,” says Almoayed.

To read: Fintech acceleration programs: Paving the way for innovation and growth

Said Murad, a senior partner at Global Ventures, looks at regulation from a technical perspective. He is fascinated by the company’s centralized API hub and trust structure Al Etihad Payments AND Core42. In his opinion, they help provide a unified and secure interface for all stakeholders.

“This centralized system, together with a regulatory sandbox for continuous experimentation, ensures a safe, innovative and promising financial ecosystem in the UAE,” says Murad.

Enabling collaboration

Murad believes that a noteworthy aspect of the UAE Open Finance Regulation is its comprehensive approach. He says that unlike similar initiatives elsewhere, the UAE version includes both open banking and open insurance.

Additionally, Murad says the new regulations require financial institutions, including banks, insurance companies and payment service providers, to allow accredited third-party providers to access financial data. He adds that the regulation requires all CBUAE licensees to comply with data sharing and service initiation requirements.

Almoayed believes that regulation enables financial institutions to innovate through cross-industry collaboration. Using the functionalities of their partners, they can develop new products and services, expanding their reach to previously unavailable customer segments.

“For financial institutions, Open Finance opens up a treasure trove of opportunities,” says Ahli. “Imagine a giant sandbox where banks can experiment and develop new offerings, ultimately reaching new customer segments and streamlining operations.”

He says this collaborative environment fosters competitive advantage by enabling institutions to better meet changing customer needs.

The benefits extend to both sides of the financial services barrier.

“Customers are the real winners in the Open Finance game,” says Ahli. “They gain greater transparency of their financial data and can manage it seamlessly across platforms. This enables them to make informed financial decisions and unlocks access to a wider range of products and services.

To read: Fintech trends in 2024: growth of the “open banking” market in the region

Almoayed says Open Finance makes financial services more inclusive and can be tailored to customers’ specific needs. “Furthermore, customers can benefit from all these additional personalized benefits without compromising security and transparency thanks to reliable data processing.”

Leading by example

Almoayed strongly believes that the Open Finance regulations in the UAE are transformative for the region. He hopes this will help pave the way for the rest of the region to follow suit. He says the regulation will have a significant positive impact on fintechs and will trigger a competitive race for licenses.

“This regulatory framework fosters innovation, healthy competition and the development of the country’s financial landscape,” says Almoayed. “I hope this can be a catalyst for the rest of the region to start implementing the same comprehensive legislation.”

Ahli says Open Finance is laying the foundations for a completely new way of living and interacting in the digital age. He believes this shows how industries can integrate to create a seamless digital experience in everything we do. “This is a future where managing your finances will be as easy as booking a ride or ordering groceries.”

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