“Connecting Minds, Creating the Future” is the Expo 2020 Dubai tagline, however, it could equally be applied to open banking and, looking ahead, open finance.
As existing and start-up financial institutions seek to build new business models to address the evolving needs of their customers, especially in this post-Covid digital world, open banking can be the key to unlocking our financial future.
This claim is backed up in a survey of central banks and monetary authorities in the region by the MENA Fintech Association (MFTA). At the end of 2020, the survey found that eight of the 18 bodies surveyed ranked fostering innovation and attracting fintechs as their top priority for open banking.
As open banking expands into open finance, encompassing a full range of asset classes, its potential to accelerate the future of finance is only increasing.
A model of cooperation
What makes open banking so crucial to financial innovation? In simple terms, open banking enables third-party financial service providers access to data from financial institutions thanks to secure, often standardised platforms (APIs or application programming interfaces) on a global scale.
Open banking adoption has seen a wealth of new solutions being developed to better serve the needs of customers, whether corporate or consumer. From large banks launching personal finance management apps to stand-alone specialists developing innovative digital payment tools, open banking has rightly emerged as a catalyst for the next generation of financial innovation.
Here in the Middle East, open banking is relatively nascent. However, last year, research from Finastra, one of the largest fintechs in the world, found that 88 percent of UAE banks were planning to enable open banking by the end of 2021. The MFTA report highlights the top tool they would like to see created is a personal finance manager that aggregates customer accounts.
Open banking adoption has seen a wealth of new solutions being developed to better serve the needs of customers, whether corporate or consumer.
We already have examples of cooperation models in action within DIFC’s Innovation Hub ecosystem, which brings over 60 percent of the region’s fintech and innovation businesses together with the world’s leading financial brands.
Beyond open banking to an open economy
The opportunity to accelerate from open banking to open finance and beyond is enormous. We are already seeing the expansion of open banking benefitting the wider finance industry.
To realise its full potential across the region, collaboration across the ecosystem is key. As the MFTA report highlighted, forming industry working groups was ranked as the number one success factor for an effective ecosystem by those surveyed.
This is not simply in terms of the banks and fintechs themselves, but also from regulatory bodies and industry organisations, which must provide enabling frameworks.
This is why the Dubai Financial Services Authority (DFSA) now grants specific licenses to spearhead the UAE’s involvement in open banking for Account Information Service Providers (AISP) and Payment Initiation Service Providers (PISP).
Dubai is also looking to strengthen its cross-border collaborative approach with other markets by exploring open banking frameworks and building relationships with multiple jurisdictions to facilitate the safe, seamless transfer of data internationally.
Most recently, this has been demonstrated in an announcement from DIFC (pictured above) and the UK Government’s Department of Digital, Culture, Media and Sport on an Adequacy Assessment. If agreed, it will help ensure Dubai further capitalises on its position as a global financial centre of choice for innovative fintech firms.
So, while open banking and open finance already represent a key catalyst for the banking industry’s innovation journey, its application across the wider financial industry and indeed, across other sectors such as government, e-commerce, telecoms and healthcare, offers even more potential as a driver of broader innovation.
Bringing together financial solutions could unlock radical collaboration and combinations to develop a frictionless experience for customers. In fact, according to McKinsey in June this year, economies that embrace data sharing for finance could see GDP gains of up to 5 percent by 2030.
As people from around the world visit the World Expo, in which is a festival of human ingenuity, this huge opportunity for innovation is one which Dubai is poised to capitalise on.
Arif Amiri, CEO of DIFC Authority.
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By ITP
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How open banking can drive the future of finance
Bringing together financial solutions could unlock radical collaboration and combinations to develop a frictionless experience for customers
Arif Amiri, CEO of DIFC Authority.
“Connecting Minds, Creating the Future” is the Expo 2020 Dubai tagline, however, it could equally be applied to open banking and, looking ahead, open finance.
As existing and start-up financial institutions seek to build new business models to address the evolving needs of their customers, especially in this post-Covid digital world, open banking can be the key to unlocking our financial future.
This claim is backed up in a survey of central banks and monetary authorities in the region by the MENA Fintech Association (MFTA). At the end of 2020, the survey found that eight of the 18 bodies surveyed ranked fostering innovation and attracting fintechs as their top priority for open banking.
As open banking expands into open finance, encompassing a full range of asset classes, its potential to accelerate the future of finance is only increasing.
A model of cooperation
What makes open banking so crucial to financial innovation? In simple terms, open banking enables third-party financial service providers access to data from financial institutions thanks to secure, often standardised platforms (APIs or application programming interfaces) on a global scale.
Open banking adoption has seen a wealth of new solutions being developed to better serve the needs of customers, whether corporate or consumer. From large banks launching personal finance management apps to stand-alone specialists developing innovative digital payment tools, open banking has rightly emerged as a catalyst for the next generation of financial innovation.
Here in the Middle East, open banking is relatively nascent. However, last year, research from Finastra, one of the largest fintechs in the world, found that 88 percent of UAE banks were planning to enable open banking by the end of 2021. The MFTA report highlights the top tool they would like to see created is a personal finance manager that aggregates customer accounts.
We already have examples of cooperation models in action within DIFC’s Innovation Hub ecosystem, which brings over 60 percent of the region’s fintech and innovation businesses together with the world’s leading financial brands.
Beyond open banking to an open economy
The opportunity to accelerate from open banking to open finance and beyond is enormous. We are already seeing the expansion of open banking benefitting the wider finance industry.
To realise its full potential across the region, collaboration across the ecosystem is key. As the MFTA report highlighted, forming industry working groups was ranked as the number one success factor for an effective ecosystem by those surveyed.
This is not simply in terms of the banks and fintechs themselves, but also from regulatory bodies and industry organisations, which must provide enabling frameworks.
This is why the Dubai Financial Services Authority (DFSA) now grants specific licenses to spearhead the UAE’s involvement in open banking for Account Information Service Providers (AISP) and Payment Initiation Service Providers (PISP).
Dubai is also looking to strengthen its cross-border collaborative approach with other markets by exploring open banking frameworks and building relationships with multiple jurisdictions to facilitate the safe, seamless transfer of data internationally.
Most recently, this has been demonstrated in an announcement from DIFC (pictured above) and the UK Government’s Department of Digital, Culture, Media and Sport on an Adequacy Assessment. If agreed, it will help ensure Dubai further capitalises on its position as a global financial centre of choice for innovative fintech firms.
So, while open banking and open finance already represent a key catalyst for the banking industry’s innovation journey, its application across the wider financial industry and indeed, across other sectors such as government, e-commerce, telecoms and healthcare, offers even more potential as a driver of broader innovation.
Bringing together financial solutions could unlock radical collaboration and combinations to develop a frictionless experience for customers. In fact, according to McKinsey in June this year, economies that embrace data sharing for finance could see GDP gains of up to 5 percent by 2030.
As people from around the world visit the World Expo, in which is a festival of human ingenuity, this huge opportunity for innovation is one which Dubai is poised to capitalise on.
Arif Amiri, CEO of DIFC Authority.
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