Banks don’t like sharing financial information about their clients, as they should, but what if clients want their data shared in order for them to attract the best deals possible, be it for car or home loans, insurance, and other services?
Yes, this will put banks in direct competition with service providers but that’s the beauty of it because it’s a win-win across the board. Clients are attracted to banks who are zealous about providing the best deals possible, and who through open APIs enable third-party developers to build applications and services around the financial institution.
It’s no easy task but one which fintech Tarabut Gateway has taken upon itself to achieve, and achieve it did, first in Bahrain and now as the UAE market begins to take serious notice.
Open APIs (application programming interfaces) provide a computing interface to a software component enabling the secure sharing of data with authorized third parties and facilitates partnerships between financial institutions and technology providers that can help improve the customer experience with new apps and services. Open APIs could allow customers to pay for purchases at retailers using their bank loyalty points, for example. Open APIs also facilitate the creation of mobile wallets, where customers can view all their financial activity through a single interface.
“Open Banking requires the consent of customers to share their data. It puts the control of data into the hands of the consumer,” Abdulla Almoayed, CEO and founder of Tarabut Gateway, wrote to AMEinfo.
“Imagine all of your financial services in one easy to use dashboard or platform that advises you on products and services and will help you manage your money better, or allow you to invest in areas of interest to grow your wealth. Open Banking technology can provide users with platforms that offer them personalized products and services rather than getting cold calls offering them products that aren’t particularly helpful.”
Open Banking Bahrain
Bahrain was the first to set up an Open Banking regulatory framework in the Middle East and launched these services in November 2019 with the National Bank of Bahrain (NBB) using Fintech Tarabut Gateway’s Open Banking infrastructure. Tarabut Gateway was the first company to graduate from the Central Bank of Bahrain’s (CBB) Regulatory Sandbox.
Already a partner with multiple retail banks in the MENA, Tarabut Gateway creates opportunities and fosters collaboration between financial institutions and fintechs.
UAE Open Banking
According to Finastra’s recent survey of financial institutions, ‘Banking and collaboration: State of the nation survey 2020’, the main driver for banks for tech-driven innovations like Open Banking in the UAE is to cut costs or improve efficiency, a factor cited by 59% of respondents. Implementing ‘digital transformation” was cited by 47% of respondents.
Almost 90% of UAE bank executives surveyed by Finastra say their organization is adopting or looking to adopt open APIs in the next 12 months, the June survey revealed.
47% of UAE respondents believed complex regulations are a barrier to collaboration with third-party providers.
Tarabut Gateway UAE
On the 27th of October, Tarabut Gateway simultaneously opened two UAE offices, one each at Abu Dhabi’s global tech ecosystem, Hub71 and Dubai’s DIFC FinTech Hive.
Almoayed said Open Banking is a growing industry and the UAE, where 46% of MENA’s fintech start-ups are already based, can be a leader in an industry set to reach $43 billion by 2026, fueling job opportunities, particularly in data science and technology development, and supporting fintech entrepreneurship.
“Open Banking creates a community for innovation between banks and fintechs, allowing banks to address their legacy infrastructures and for fintechs to access a larger base of user-permissioned financial information. Through collaboration rather than competition, and through access and sharing of data rather than restriction, these institutions can generate greater profits and better serve their stakeholders,” he said.
According to an Accenture survey of bankers, 90% believe Open Banking will boost organic growth by up to 10%. Already, over 10,000 global financial institutions, including those with regional presence like HSBC and Standard Chartered, are implementing Open Banking.
Open Banking safety and security
Cybersecurity and data privacy have always been critical facets of open banking regulations as fraud tends to increase alongside growing online transaction volumes.
Data breaches now cost Saudi and UAE companies about $188 for each stolen personal detail.
A May 2020 survey of UAE consumers found that 84% tried to remove private details from online websites or their social media, and 31% stated that their personal data had been shared or made available to others without their explicit consent.
The UAE is the third-most attractive target for cybercriminals according to the Cyber Risk Index released by NordVPN.
“The idea of sharing data can seem daunting to those of us who have been told since a young age never to reveal our private information. Actually, Open Banking offers the highest levels of security and rigorous standards,” said Almoayed.
He explained that Open Banking utilizes advanced technologies like biometrics to ensure safe and secure sharing of data.
For banks and financial institutions, the transparent sharing of customer data between licensed/regulated entities “can also enhance Know Your Customer (KYC) and Customer Due Diligence (CDD) checks.”
“It can help screen customers more efficiently, reduce the volumes of false-positive alerts, and automate anti-money laundering monitoring controls to help prevent, detect and respond to suspicious transactions,” Almoayed clarified.
Tarabut Service lines
We asked the company about what services the business offers.
“Our main current service lines are ‘Account Aggregation’ and ‘Open Banking Compliance’, while payment initiation and data enrichment are also in progress and we will soon add further opportunities,” said a company email to AMEinfo.
“As for TG’s regional expansion plans, the company is exploring the biggest regional business market; Saudi, where it sees many opportunities for Open Banking growth.”