Saudi Central Bank (SAMA) has published the second release under its Open Banking Framework, which is focused on payment initiation services (PIS).
Banks and fintechs in the Kingdom of Saudi Arabia (KSA) were required to be ready to launch Open Banking services within the first quarter of 2023.
The second major release of the framework is intended to standardise how participants can offer PIS “reliably and securely”, while the framework also clarifies the responsibilities of all stakeholders involved in the provision of PIS.
In a statement, SAMA said the new release has been issued as part of its efforts to further strengthen the Saudi Arabian Fintech ecosystem and that “it is anticipated that the change will enhance overall consumer experience and transaction efficiency as well as opening new opportunities for the Kingdom’s fintech sector to offer expanded products and solutions to customers”.
The framework offers a set of guidelines and technical standards based on international best practices to facilitate the provision of Open Banking-enabled services in KSA.
The central bank’s Open Banking Program comes under the country’s National Fintech Strategy which, in turn, is one of the “pillars” of the Financial Sector Development Program under Saudi Vision 2030.
The aim of the Fintech Strategy, which was approved by the Council of Ministers in 2022, is to make the Kingdom “a global fintech hub to enhance the economic empowerment of individuals and society”, according to SAMA.
“The PIS, as part of the Open Banking Framework, helps deliver the Strategy by enhancing the efficiency and security of payment services in the Kingdom,” SAMA stated.
“Under PIS guidelines, consumers can initiate payment transactions from within third-party applications in a secure manner and the new release builds on previous guidance which covered Account Information Service (AIS).”
In January 2023, SAMA launched the Open Banking Lab, a technical testing environment to enable banks and fintechs to develop, test, and certify their Open Banking services, to ensure compatibility with the Kingdom’s Open Banking Framework.
Yesterday (2 September) SAMA announced it has permitted three new fintech startups to test their solutions in its regulatory sandbox, with XSquare and NeotTek authorised to launch an Open Banking platform, and MoneyMoon to launch a peer-to-peer lending platform.
It takes the total number of fintech companies currently operating under SAMA’s Regulatory Sandbox to 19.
