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Changing Banking Landscape in Saudi

14 January 2021
The Saudi Central Bank ("SAMA") has just issued its policy note announcing its effort in developing Open Banking in the Kingdom of Saudi Arabia ("KSA").


SAMA has just issued its policy note announcing its effort in developing KSA. In line with strategic priorities set in the Saudi Vision 2030 and in the Financial Sector Development Program, SAMA aims to implement Open Banking in KSA by 2022.

KSA's digital economy

Recently, SAMA has supported innovation in KSA's financial sector through the following strategies and activities:

  • Launch of Fintech Saudi to develop the fintech ecosystem in KSA;
  • Establishment of the Regulatory Sandbox allowing financial institutions and fintechs to test and launch products in a tailored environment, permitting the operation of 7 fintechs in 2018, 14 fintechs in 2019, and 11 fintechs in 2020;
  • Issuance of Payment Services Provider Regulation to promote an innovative financial technology ecosystem in KSA; and
  • Launch of licenses for non-bank financial institutions, achieving the issuance of 15 licenses and exceeding the targeted 3 licenses by 2020.

Benefits of Open Banking

The development of Open Banking in KSA will enable customers to securely share their data with third parties, such as fintech payment providers. With the rise of fintech companies, new business models are introduced that would benefit significantly from such access to customer data by offering new financial services. Importantly, customers have the choice to consent to providing access to third-party providers. Such consent must be informed and provided explicitly.

Combined with KSA's stable, resilient, and trusted banking sector, Open Banking is promised to provide the following benefits:

Direct innovation
By enhancing opportunities to develop new products and services, the value proposition of financial players is increased and additional revenue streams are created. For example, banks and fintechs could develop applications that (with explicit customer consent) analyse the data of financial transactions, thereby being able to offer products based off consumption patterns to benefit the customers' experiences.

Increased competition
Reducing the barriers to entry for new players and providing them with a better understanding of customer needs will promote the offering of bespoke products and services at a more competitive price.

Increased financial inclusion
The delivery model of Open Banking has the potential to expand access to credit for a larger number of individuals. Additionally, the holistically more accessible model could help customers with a lower income reduce excessive expenditures, improve savings behaviours, and encourage better control on their financials. As such, Open Banking could contribute to increased financial health and financial awareness.

Greater efficiency
Given that the customer data can be instantly shared with a third party, managing their financial information and executing transactions will become more efficient. In addition, the development of technology may reduce the cost of innovation, providing a more feasible method of partnering with third-party providers.

Action plan of SAMA

The journey to Open Banking is split into three phases:

1) Design phase (first half of 2021)

Designing the technologies and processes of the Open Banking ecosystem and creating a governance involving market players.

2) Implementation phase (second half of 2021)

The developing of the frameworks, technology building blocks and initial activities, such as testing with financial market players, and enhancing customer awareness.

3) Go-live phase (first half of 2022)

The formal launch of Open Banking and the adoption of an approach to support customer awareness and guarantee a continuous improvement in developing the infrastructure.

Talk to us about what the Open Banking Policy means for you and your business. If you are looking to enter the Saudi market, we can help you navigate the legal framework and benefit from the new policy.  We can advise you on corporate, banking, regulatory, technology and data protection. 

Further Reading

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