New Lab Paves Way for Saudi Arabia’s Open Banking Launch

The Kingdom of Saudi Arabia has launched an Open Banking Lab for banks and FinTechs.

The new lab, announced by the Central Bank of Saudi Arabia (SAMA) earlier this month, will create a technical testing environment for the development of new open banking services ahead of the launch of open banking services in the first quarter of 2023.

This move follows the launch of an open banking framework by SAMA in November, proposing a set of regulatory guidelines and technical standards aimed at supporting banks and FinTechs’ ability to provide open banking services in the country.

The initial rollout, which only facilitated Account Information Services (AIS), has now been expanded to include Payment Initiation Services (PIS) and represents the latest in a series of regulatory initiatives undertaken by SAMA with the purpose of fostering FinTech innovation through experimentation.

Building on Saudi Arabia’s recent history of sandbox-led innovation, the new lab will also create the conditions for firms to run technical tests on their open banking services before they go live on the market — a move which Abdulla Almoayed, CEO at Tarabut Gateway, said represents the next step in the country’s sandbox-powered FinTech journey.

“While SAMA has an active regulatory sandbox for FinTechs to test their products across various verticals, the launch of the Open Banking Lab takes technical testing to a new level,” Almoayed said in a comment emailed to PYMNTS.

Still in the early days of open banking, the central bank initiative promises to accelerate adoption in the kingdom, with important benefits for the wider FinTech ecosystem.

Open Banking Accelerates FinTech Innovation

FinTech innovation represents a key pillar of Saudi Arabia’s Vision 2030 strategy for economic development, playing a central role in reforming and modernizing the kingdom’s financial sector.

Alongside the open banking framework and various regulatory sandboxes, important milestones reached during the past two years include the issuing of licenses for the country’s first fully digital banks and the arrival of regional FinTech players from neighboring GCC nations.

As FinTech executives from other countries in the region have often told to PYMNTS, Saudi Arabia’s large market and increasingly sophisticated regulatory and technical apparatus make it an attractive target for expansion for businesses coming out of Gulf FinTech hubs such as Dubai and Bahrain.

Emblematic of this trend is Tarabut Gateway. After graduating from Bahrain’s regulatory sandbox in 2018, the MENA-focused (Middle East and North Africa) open banking company last month announced that it had received approval from SAMA to begin testing its services in Saudi Arabia’s FinTech sandbox.

As Almoayed told PYMNTS, the firm is now setting up a dedicated operation to cater specifically to the Saudi market.

“We are thrilled about the size of the market and all the possibilities it brings. The team is committed to supporting the kingdom to succeed in open banking and hopes to accomplish that through close collaboration with the entire ecosystem, be it FinTechs, banks, or the regulator,” he noted.

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