Opening the Gateway to Open Banking
Hassle-free payments, seamless investment services and improved loyalty offers: all benefits of open banking, which is rapidly taking off around the world.
Open banking involves the use of Application Programming Interfaces (APIs) to share consumers’ financial data, in real time, with third parties that offer financial products and services. Importantly, customers always remain in control of their own data.
Unsurprisingly, open banking is popular with both consumers and financial institutions alike. And while Europe and the US were first to adopt it on a large scale, the Central Europe Middle East and Africa (CEMEA) region is starting to catch up. Indeed, according to a recent report from Research and Markets, Africa and the Middle East are expected to show the biggest growth in open banking from 2021 to 2026, at CAGRs of 34.8% and 31.3% respectively1.
This growth is being fuelled by regulatory changes, such as the introduction of the Saudi Central Bank OB framework. This consists of a comprehensive set of legislation, regulatory guidelines and technical standards, with a recently opened Open Banking Lab enabling banks and fintechs to develop, test, and certify their open banking services.
Other banks in the region, too, such as the Central Bank of Nigeria and the National Bank of Ukraine, are working to introduce open banking services.
Visa Partners With Tarabut Gateway
Meanwhile, fintechs are starting to take advantage of the new opportunities. Recently, for example, MENA's leading, regulated open banking platform – Tarabut Gateway – announced a strategic partnership with Visa2, aiming to merge the two companies’ capabilities and launch innovative products for the market. Tarabut Gateway has also recently completed a US$32M fundraise in which Visa participated as an investor3.
Visa’s partnership with Tarabut Gateway, which handled $11.6 trillion worth of payments in 2022, is focused on expanding market reach, elevating product offerings through technology and expertise collaboration, enhancing the customer experience, streamlining cross-border transactions, and fostering innovation and cooperation across the financial ecosystem.
“Together with Visa, we will leverage our data infrastructure to bring new and improved products to customers. As a visionary in the payments industry, Visa's solutions will support innovation and collaboration across the MENA financial sector, and our strategic alignment will strengthen this partnership”, says Abdulla Almoayed, founder and CEO of Tarabut Gateway.
Building an Open Banking Infrastructure
Tarabut Gateway is building an open banking infrastructure across the Kingdom of Saudi Arabia (KSA), the UAE and Bahrain, with plans to expand further across the MENA region. The company is one of the first participants in the Saudi Central Bank's Regulatory Sandbox, a key component of the open banking framework rollout. And through platform-agnostic solutions allowing banks and fintechs to build their own apps, its APIs enable services such as lending, personal finance, and payments.
“The future of financial services is being shaped by next-gen digital innovation, with open banking and data sharing serving as a significant driver to help consumers better manage and access their finances. As we look to the future of digital financial services, it is clear that the key drivers of growth will be innovation and openness. By partnering with Tarabut Gateway and integrating our global payments network with their open banking platform, we are poised to deliver innovative financial services that cater to the unique needs of the MENA region. Our shared commitment to next-generation solutions will enable us to transform the financial landscape and offer cutting-edge services to our customers”, Otto Williams, Senior Vice-President and Head of Product, Partnerships, and Digital Solutions at Visa CEMEA, says.
Visa Helps Knit Ecosystems Together
As open banking takes off, customers should see more effective competition - and thus, better services - along with a range of new, innovative financial options. Meanwhile, financial services companies can benefit from streamlined customer identity verification and credit profile analysis, along with improved data and analytics.
And Visa is helping to facilitate these benefits. Its Tink platform, for example, connects to more than 3,400 banks with a single API, enabling money movement, financial data aggregation and services such as risk insight and account verification. Meanwhile, the cloud-native platform Yellow Pepper facilitates payment flows through multiple rails via a single connection.
Thanks in part to initiatives like these, open banking has a big future - according to Research and Markets, it's set to grow from U$15.3 billion in 2021 to US$48.1 billion by 2026 - a compound annual growth rate of 25.9%4.
Growth will be fuelled, says the firm, by a surge in usage of online platforms, rising urbanization and an increase in younger populations, along with an increase in mergers and acquisitions and more widespread adoption of financial technology for payment.
This new way of banking is set to play a transformative part in the future of fintech, with many of the biggest benefits only starting to emerge. Visa will be at the heart of this transformation, helping to unify the financial ecosystem and help every consumer and business reap the rewards.
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1Open Banking Global Market Opportunities And Strategies To 2031, Research and Markets, January 2023, https://www.researchandmarkets.com/reports/5721011/open-banking-global-market-opportunities-and
2Tarabut Gateway Partners With Visa To Accelerate Growth And Redefine Open Banking in MENA, Tarabut Gateway, 9 May 2023, https://tarabutgateway.com/tarabut-gateway-partners-with-visa-to-accelerate-growth-and-redefine-open-banking-in-mena/#:~:text=Dubai%2C%20United%20Arab%20Emirates%2C%209,solutions%20using%20open%20banking%20capabilities.
3Visa makes first Mena open banking investment | AGBI
4Open Banking Global Market Opportunities And Strategies To 2031, Research and Markets, January 2023, https://www.researchandmarkets.com/reports/5721011/open-banking-global-market-opportunities-and