Era Of Open Banking Expansion In Saudi Arabia

Open banking has gathered a lot of hype in Saudi Arabia and is seen as a major disruptor of the whole financial industry's landscape.

It is transforming Saudi Arabia's financial services sector by encouraging competition and introducing new services, allowing fintech's direct access to the pool of bank customers' data. That, in its own right, is a disruptive process.

Open banking will impose consequences on the current financial system in the KSA and, more specifically, on member deposit-bearing banks, which, as in other regions, monopolized the money management and payment services for years.

The conventional paradigm on which a bank is a one-stop shop for all your financial services is no longer sustainable, and the services that plug into it : e.g., card services, custody, clearing, insurance, wealth management, and financial investment, are to be rethought.

They are currently considering moving from the traditional sectional/departmental optimization to a small private ecosystem that mimics a fintech platform and would encompass subcategories of financial services (Micro-FinTech).

This will create a sort of mutated bank that has been historically an incumbent bank encompassing archaic services.

Take, for example, microfinancing, a growing part of personal finance. It is a challenge for a financial institution…