Driven by technology, Open Finance and Open Banking have the potential to form the basis of the financial revolution and enhance financial inclusion across the world. In the MENA region, these initiatives are also gaining traction. The last couple of years brought important Open Banking/Finance regulatory developments in the Middle East, with Bahrain and KSA being on the frontline alongside UAE, Jordan, Kuwait and other countries following. The recent Fintech Galaxy research unveils insightful statistics, showing that the MENA region is more than ready to fully welcome Open Banking and Open Finance granting successful and prolific adoption and implementation of these phenomena.

 

Today, we’re excited to present you the first article from the series, exploring the benefits of Open Banking and Open Finance compliance and what going beyond the simple regulatory scope truly means.

But what if Banks had other plans?

Compliance with local regulations is mandatory and must be incorporated into every modern bank strategy. If it is inevitable why not reap all the benefits, it offers? Choosing an innovative, sustainable, and legally correct path is crucial for every bank that want to stay up-to-date and remain relevant.

 

There are several perspectives to address this matter, but we will limit ourselves to two only:

 

- The shareholder approach

- The stakeholder approach

 

The shareholder approach focuses on businesses generating revenue here and now. Well, even if this approach is no longer quite popular, there are still plenty of businesses out there, including financial institutions, following it. If that is the case, including Open Banking/Finance compliance for more than the sake of satisfying the regulator in the business strategy is a good call. Despite compliance being perceived as a cost centre by some banks at a first glance, it does actually present an unprecedented commercial opportunity.

 

On the other hand, in the stakeholder approach, adopting Open Banking/Finance compliance fits logically just like that last piece of a complicated puzzle. In this approach, revenue doesn’t come first, while the stakeholders’ well-being is primary. And when we say stakeholders, we refer to EVERYBODY: starting with the bank’s employees and up to their end-users. Knowing all the perks and high level of security that Open Banking/Finance would bring to the users makes it imperative for a bank or financial institution to become compliant and start building on it.

 

Either way, compliance comes with long-term benefits so it would be nonsense not to make the best out of it.

 

So far, not so many banks have a mature Open Banking system, more than half do not have an open API data strategy at all and are yet to acknowledge all the benefits and take action. Amid the current digital realm, traditional players are compelled to innovate and upgrade to stay relevant.

 

Being compliant with Open Banking/Finance regulations is not only about staying in business and avoiding unnecessary fines and fees but mostly about:

 

. improving profitability and driving additional revenue,

. delivering a streamlined, tailored, and enhanced customer service and

. innovate in tune with the times.

 

Banks + FinTechs = <3

Now that we’ve got that sorted out and it is crystal clear that Open Banking/Finance compliance is good for any bank or FI – be it focused on the shareholders' or stakeholders’ prosperity, let’s see other ways of bringing in that prosperity to banks.

 

Although banks have been the supreme guardians of data up until recently, things have changed and FinTechs have come into the picture. Why hate them when you can work with them and reach your targets together?

 

Collaboration between banks and FinTechs in the Open Banking/Finance realm helps to share and leverage customer-permission data to create new applications and services, thus breaking down financial data silos, and expanding a range of users that get access to data through APIs. Such mutually beneficial relationships help banks to stay ahead of the competition and utilize innovative infrastructures created by FinTech companies, complementing one another, each raising the other’s capabilities beyond their sole ability. Open Banking removes barriers to communication and collaboration not just within a sole company, but across the entire financial industry. As a result, institutions gain access to new talent and skilled partners who empower them to transform their business models with greater prowess. That is why choosing the right partner is important, so all the existing and newly added technology components work together in sweet harmony.

 

A whole new world of endless monetisation opportunities

Banks can create new API products and value-added services on top of the mandatory regulatory requirements scope. Having access with end-customers consents to account’s data on transaction history, balances, and payment initiation, financial institutions can provide tailored solutions for diverse businesses:

 

. Real-time reporting for user verification,

. Fast and painless onboarding,

. Access to payment tracking data to customer service and shipping departments,

. Automating loan granting,

. Identification of sources of funds or income,

. Using data from other banks to verify end users,

. Instant transfer of funds for merchants,

. Low-cost and secure Open Banking payments.

 

And many other extra revenue-generating features. Such APIs hold the promise to help financial institutions access new revenue streams in various areas and bring tangible business value. These APIs enable extra features for wealth management and investment, including access to investment accounts information and trading initiation in a safe and compliant way.

 

Not a problem – but a problem-solver

Rather than looking at the new Open Banking/Finance regulations and sighing in despair, why not look at them as the answer to the existing and potential problems?

 

At the end of the day, banks should remember that compliance is just the first step. Open Banking/Open Finance compliance provides you with a great opportunity to digitally transform your bank. All that banks must do is identify which existing technologies can be re-used, acquire the technology they don’t own and create a technology strategy for digital transformation. This puts your bank in the right place to use Open Banking compliance as a pathway to become a digital bank.

 

Boosting a bank’s digital agility is a cornerstone for success in the current technological era. Additionally, greater agility also provides the necessary support institutions need as Open Banking models continue to expand and flourish. Open Banking/Finance helps financial institutions meet new customers’ demands while also upscaling their business processes to be more foresighted and agile.

 

We’re here for you

Fintech Galaxy offers a full-scale Open Banking/Finance compliance experience. The technical implementation requires minimal resources from the bank’s side, be it for the initial setup or further maintenance. Fintech Galaxy’s primary goal is to deliver a solution that isn’t simply cost-effective, but easily scalable from a technical point of view. Our technically advanced compliance solution helps to promote Open Banking/Finance and offer fresh business opportunities.

 

Drop us a line so that we can have a chat about your business moving forward.