A data revolution is sweeping through the financial services sector. Regulators around the world are now requiring banks to make account data available to licensed third parties. The aim is to trigger new competition in the industry, encourage innovation and give consumers and businesses access to better deals.
One of the main poster boys for this new paradigm is the Kingdom Bahrain in the Middle East. As in more established financial centres such as Singapore and London, authorities in Bahrain are working closely with fintech providers and startups to develop a data-fuelled model of banking that is transparent, efficient and secure.
Fintech infrastructure provider Almoayed Technologies and subsidiary Tarabut Gateway are the key technology providers to the Central Bank of Bahrain’s groundbreaking open banking initiative.
Buzz spoke to CEO Abdulla Almoayed about Bahrain’s implementation of open banking and discussed how Almoayed Technologies can help fintechs across the region and benefit from the financial services revolution.
Why is Bahrain pursuing Open Banking so ambitiously?
People in the Middle East typically have more than one bank account. Open banking will help customers make price comparisons based on analysis of all their account data and become more financially literate. The regulators here want to create a more competitive, robust infrastructure which allows consumers to make better decisions.
Open banking is one pillar of a much wider vision of digitization and of a paperless economy in Bahrain. We are now leveraging the identity frameworks for open banking in healthcare, so that patients can give consent to doctors and nurses to access your records.
Your data should follow you based on your consent, and you should be able to grant, revoke and give access to any third party you want.
How will bank consumers benefit from this innovation?
The idea of open banking is to help banks leverage the data they have and to help fintech businesses leverage the data from banks to customize products. For example, Amazon and YouTube already make suggestions for you based on your activities. But while your bank knows where you drink your coffee or how much you spend on rent or on your mortgage, it still treats you like someone it has never met before.
That will change under open banking. Today, banks sell generic products. In open banking, banks will be able to push products to the customers that need when they need them. Instead of looking only at assets a bank can look at a customer’s behaviour, which is a better indicator of repayment history. As a customer, you can give a mortgage lender access to your records and they will then give you customized suggestions based on that data. Open banking will create banks that focus on customers, not just on selling generic products.
“If data is the new oil, then we are building the modern day pipelines for the region”
Abdulla Almoayed, CEO, Almoayed Technologies
There is so much data out there and so many potential propositions to deliver value to consumers. Any technology company that runs mortgage comparisons only needs to know how much a person is paying vs. the products available in the market to tell you if you are overpaying.
How does open banking in Bahrain differ from the European model?
Bahrain has learnt a lot from the EU experience. The Central Bank of Bahrain (CBB) felt mandating open banking was the way to go. CBB actually gave banks six months to comply and they have now gone live. In contrast to other jurisdictions, every bank in the country has had to open up their APIs. CBB required banks to publish every piece of data they hold on a customer through these APIs.
Bahrain has a powerful value proposition in its ability to legislate as fast as it does. Our speed to market creates an opportunity for us to accelerate adoption. It took us just one month from the consultation to the implementation of open banking within the entire ecosystem. The banks were given six months to comply with the deadline. Once the regulator likes an idea, they can drive it forward quickly.
What is the role of Tarabut Gateway?
Tarabut Gateway is an open banking infrastructure provider. It is the first and only licensed open banking provider in the Middle East and North Africa. We built it to create the fastest go-to-market strategy for any fintech that wants to integrate with banks.
Our business model is partnership-led. We are working with companies in London and Singapore to integrate their value propositions into ours. We give fintechs the opportunity to sell their proposition to existing bank customers directly. It will take one-tenth of the time it takes in any other market to integrate.
What is the outlook for the fintech sector in Bahrain and the Middle East in general?
I am very bullish on this part of the world. Regulation is leading innovation here and I think we will see fast adoption of technology. I think fintech businesses should look seriously at this region. There is a ripe ecosystem waiting for digital transformation. You can feel the excitement. Every regulator in the GCC has fintech as the top agenda item.
The smart phone penetration is the highest in the world, we have a large population below the age of 30, we have the technical infrastructure and we have legislators that are willing to move fast
