Promising potential for Open Banking in Oman

5 Major benefits: Besides igniting new investment opportunities, Open Banking has the potential to create employment, advance financial inclusion and support economic growth: OBA

Open Banking — a tech-driven service that is transforming the banking and financial services industry globally — will soon become a reality in the Sultanate of Oman.

Last week, the Executive President of the Central Bank of Oman (CBO), Tahir Salim al Amri, confirmed that Open Banking is among a raft of landmark initiatives that are currently ‘works in progress’ in preparation or their formal roll-out as part of ongoing efforts to modernise the country’s banking industry.

The announcement was hailed by Oman Banks Association (OBA), the representative grouping of licensed banks operating in the Sultanate of Oman. Speaking soon after Al Amri made the announcement at the New Age Banking Summit, hosted by UMS Events last week, OBA’s CEO, Ali Hassan Moosa (pictured), said Open Banking — when eventually introduced in the Sultanate of Oman — will unleash a plethora of benefits for the wider national economy.

“Open Banking promotes the value chain in the financial services industry because it not only makes use of banks but also third party platforms to provide services. Consequently, it creates new companies and new jobs, opens up investment opportunities and advances financial inclusion — thereby supporting economic growth when it reaches its full potential'', he said.

A rapidly expanding multi-billion dollar industry globally, Open Banking enables banks to collaborate with third-party payment service and financial service providers to create a smoother user experience for consumers. This is made possible through the use of application programming interfaces (APIs). Given its exponential growth, Open Banking is projected to reach a market value of over $43 billion by 2026, say experts.

“Customers expect seamless integration between devices, channels and services'', said Ali Hassan Moosa. “A good API strategy will help banks to create a first class customer experience and enhance revenues'', he noted, cited in this regard examples of international banks that have seen their customer portfolios balloon following the adoption of Open Banking.

In the Gulf region, a number of GCC states have already made headway in the roll-out of Open Banking, says Moosa. The Central Bank of Bahrain, for example, is due to complete later this month the roll-out of a two-phase framework for Open Banking, which will enable additional payment services, such as local and international standing orders, future dated payments and batch payments.

Saudi Arabia is witnessing a “breakout year” with the launch of a number of fintech Open Banking applications. As many as 35 fintech companies have so far been licensed by the Saudi Central Bank as part of its fintech regulatory sandbox, he said.

In neighbouring UAE, the Dubai Financial Services Authority recently licensed Tarabut Gateway to provide the first regulated Open Banking platform with account Initiation and payment services, he said.

Earlier, Moosa welcomed the Omani Central Bank’s initiative to enable digital onboarding of customers — an online or virtual process of opening accounts without requiring clients to be physically present.

Digital onboarding, while complex from the legal and regulatory standpoints, is nonetheless achievable, he noted. The efficiency of various processes underpinning digital onboarding, such as Real Time ID Verification, Selfie Capture and Verification, Device Verification, Facial and Fingerprint Biometrics, Omnichannel Integration, Interactive Forms, eSignatures and Instant Approvals, is vital for its successful adoption, he added.