Hisham Al-Falih's Game Plan for MENA's Open Banking Future
Open banking is rapidly evolving in the Middle East, with preparations and regulatory discussions for implementation taking place in the past year. The success of open banking relies heavily on the availability of dynamic and straightforward regulatory frameworks. In order for fintechs, banks, and third-party service providers (TPPs) to build new products and services without any issues, they must be able to interact seamlessly in the ecosystem.
To better comprehend all the factors that are driving open banking, we spoke with Hisham Al-Falih, CEO and Co-Founder of Lean Technologies, a fintech platform providing a universal API that unlocks critical infrastructure across the MENA region.
Open Banking and Open Finance in the MENA Region: A Rapidly Evolving Landscape
Outside of the GCC, open banking is increasingly high on the agenda. The USA and European Union are far ahead when it comes to open banking and the regulatory frameworks it follows. In the MENA region, according to Hisham, demand is higher than supply, and Lean Technologies is welcoming more competition in the open banking space.
But what is Open Finance? It is an extension of open banking that provides customers with the same freedom and authority to share their data with other types of accounts. With Open Finance, the vision is that customers would be able to share access to their loans, investment accounts, insurance products, and various other financial products that previously were not covered by open banking.
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Unlocking the Power of Open Finance: A Vision for the Future
When Hisham came back to the MENA region from the USA, he noticed that it was one of the least penetrated FinTech regions in the world. People from the MENA region are very aware of their financial data and the sanctity of their data. They are not as comfortable sharing it with third parties as people in the West who have been more accustomed to doing so. That's why Lean Technologies had to embed stronger security fundamentals and foundations and data privacy fundamentals and foundations that enabled them to gain the trust of merchants and those early end-users and to really grow with the ecosystem.
With more and more fintechs adopting an “Open Data mentality,” we are seeing major moves towards open banking in the region, especially in Saudi Arabia. To continue this trend, Hisham highlights the importance of regulatory frameworks that need to differentiate between banks and fintechs and offer solutions that will serve both banks and fintechs but also SMEs, which are the major driving force in the MENA.
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Collaboration and Regulation: The Key to Driving Open Banking Forward
Hisham also extended an invitation to banks and underlined the importance of collaboration between all players in the finance sector. Open banking, open finance, and eventually open data are coming. They will make financial transactions frictionless and easy, like Apple Pay is today. When will this happen? Hisham believes that we are only at the beginning of this cycle, and true innovation will come when Open Data becomes embedded into our daily lives.
Conclusion
In conclusion, the implementation of open banking in the Middle East is gaining momentum, with a growing number of fintechs and banks adopting an "Open Data mentality" and seeking to collaborate to drive innovation. However, regulatory frameworks must keep pace with this evolution to ensure a dynamic and frictionless ecosystem for all players, including SMEs, and to build trust among end-users. With the right regulatory environment and a commitment to data privacy and security, the potential for open banking, open finance, and eventually open data to transform the financial landscape in the MENA region is immense, and the possibilities for growth and innovation are endless.
Learn more about open banking and open finance by checking out this exciting episode of Couchonomics with Arjun. Join us as we chat with Hisham Al-Falih, Co-Founder & CEO of Lean Technologies, about the future of finance. So, if you're interested in staying up to date with the latest trends in fintech and finance, be sure to listen to the latest episode of Couchonomics with Arjun today!