The financial landscape in the Middle East and North Africa (MENA) region is undergoing a transformative shift, driven by the rapid adoption of Banking-as-a-Service (BaaS) and Open Banking. These innovative technologies are empowering businesses of all sizes, particularly FinTech companies and traditional banks, to seamlessly incorporate financial features into their existing value propositions.
Empowering Businesses with BaaS
Several leading companies in the MENA region are at the forefront of the BaaS revolution. This includes BKN301’s BaaS Orchestrator solution and Tarabut Gateway, a Bahrain-based Open Banking platform.
BKN301’s BaaS Orchestrator platform connects different core banking systems, payment processors, and third-party services, allowing organisations to tailor the banking and payment experience to their specific needs. This modular design principle provides companies with the freedom to choose and integrate the features they require, offering a scalable and cost-effective solution for market expansion.
On the other hand, Tarabut Gateway has established partnerships with over 30 banks across the MENA region, enabling them to offer Open Banking services to their customers. The company has also launched its BaaS platform, which allows businesses to embed financial services into their offerings.
The Open Banking Momentum in MENA
Alongside the rise of BaaS, the MENA region is also witnessing a surge in Open Banking adoption. According to a recent whitepaper by Arab Financial Services (AFS) and Brankas, the MENA region is poised for an Open Banking breakout period in 2023-2025, with countries like Bahrain, Saudi Arabia, and the UAE leading the charge.
The Kingdom of Saudi Arabia, in particular, has taken a proactive approach to Open Banking. The Saudi Central Bank (SAMA) has published an Open Banking Framework, mandating banks to make their account information APIs available by the end of 2022 and the payment initiation APIs by the end of March 2023. As a result, the number of participants in SAMA’s Regulatory Sandbox has increased, with 11 out of 42 registered participants being Open Banking Permitted Fintechs.
Unlocking New Opportunities
The convergence of BaaS and Open Banking in the MENA region is unlocking a wealth of opportunities for financial institutions and FinTech innovators. According to the AFS and Brankas whitepaper, the global Open Banking market is expected to grow from $13.9 billion in 2020 to $123.7 billion by 2031.
Banks in the MENA region are exploring various monetisation strategies, including premium APIs, BaaS APIs, and cutting-edge marketplaces. For example, Emirates NBD offers a top API banking service, while Banque Saudi Fransi provides financial services through BaaS APIs, and Mashreq Bank has partnered with fintechs and startups to create a dynamic marketplace.
Fostering Trust and Collaboration
As the MENA region embraces BaaS and Open Banking, the importance of trust and collaboration within the financial ecosystem cannot be overstated. The AFS and Brankas whitepaper highlights the crucial levers for building a trust-centric Open Banking ecosystem, including authentication, API security, and privacy standards.
In fact, the Statista survey from 2023 ranked the Kingdom of Saudi Arabia, Qatar, and the United Arab Emirates among the top 10 most trusted financial sectors globally, underscoring the strong rapport banks have cultivated with their customers in the region.
Way forward
The MENA region is at the forefront of the BaaS and Open Banking revolution, leveraging these transformative technologies to drive financial innovation, enhance customer experiences, and unlock new business opportunities. As the industry continues to evolve, the collaboration between financial institutions, FinTech companies, and regulatory bodies will be crucial in shaping the future of the MENA’s financial landscape.
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