Rise of Open Banking in MENA: A customer-centric financial ecosystem

Leveraging fintech agility and banks’ scope to drive scalable products
Rise of Open Banking in MENA: A customer-centric financial ecosystem
Abdulla Almoayed, Founder & CEO, Tarabut Gateway

Tarabut Gateway made history in December 2019 as the first regulated Open Banking platform to go live in Bahrain with its API infrastructure in the MENA region. Since then, the company has been making waves in the industry, earning significant media attention for its accomplishments.

In 2021, the firm secured a record-breaking $13 million in fintech seed funding, followed by another $12 million later in the year. Notably, Tarabut Gateway became the first open banking platform to obtain both account information services and payment initiation services licenses from the Dubai Financial Services Authority (DFSA) in 2022.

Today, the company has offices in Bahrain, the UAE, and Saudi Arabia. Founder & CEO, Abdulla Almoayed, credits the company’s success to its commitment to Open Banking and the appeal of the sector, which prioritizes giving control back to the customer. In this article, we explore the key strategies behind Tarabut Gateway’s growth and success in the Open Banking space.

What is open banking really about?


At its core, open banking creates a more connected, customer-centric financial ecosystem by leveraging technology that allows customers to regain control of their financial data. With customers’ consent to securely share regulated financial data between banks and approved third-party providers, it enables innovative services, including personal finance management tools, investment apps, and peer-to-peer lending platforms.

Open banking enables banks to provide more personalized services, improve customer experiences, add revenue streams and enhance risk management. For fintech, open banking aids in developing fast, efficient, and scalable products.

Consumers benefit from greater ease in moving their money, doing it more quickly (mostly in real-time) and securely.

What are the emerging trends that are changing the global open-banking market?


One of the most significant trends is API standardization. Standardization provides a common language for banks and third-party providers to communicate, reducing development costs and simplifying compliance requirements. This is crucial as the open-banking ecosystem expands to include a broader range of stakeholders, such as non-bank financial institutions, fintech startups, and other third-party providers.

Secondly, regulatory developments are driving adoption of open banking worldwide. Europe’s revised Payment Services Directive (PSD2) has mandated banks to open their APIs to third-party providers. Central Banks across MENA have introduced open banking frameworks to promote competition and innovation in the financial industry.

Finally, AI-powered systems can analyze large volumes of data in real time to detect and prevent fraudulent transactions and provide personalized product recommendations and financial planning tools.

OPen Banking

What are the key elements for financial institutions to achieve a successful open-banking system?


Establishing successful open banking is as much psychology as technology. Financial institutions must adopt a mindset embracing change and innovation and prioritize allocating budgets toward regulation and compliance. This includes exploring the use of APIs beyond compliance checkpoints and providing strong API architecture and new premium APIs.

Technical implementation is essential, starting with a public-facing API that offers various services using defined protocols. Financial institutions need to establish isolated testing environments (or “sandboxes”) in which developers can test new code without affecting live platforms.

A developer portal also serves as a central information hub that details API products, documentation, and microservices for design teams. A consent management system and a robust customer verification method are essential to ensuring customer data privacy and security.

What is driving the development of open banking in the Middle East? And how strong is this trend in our region?


The Middle East’s open banking market is mainly driven by regulation, similar to Europe. The region’s forward-thinking regulators constantly learn from other markets and support fintech growth. The MENA region has demographic advantages, historically strong entrepreneurialism, a business-friendly environment, and impressive internet connectivity. Nearly 93 percent or 580 million people have access to mobile telecommunications, and by 2025, smartphone penetration is forecast to reach 80 percent in MENA and over 90 percent in the GCC.

Open banking aligns with many MENA countries’ 2030 Economic Visions aiming to diversify away from oil and gas reliance. Financial institutions in the region view open banking as an opportunity rather than a threat and understand its potential. There are over 800 fintech start-ups with a total value of $15.5 billion, according to Dealroom.

Open Banking

How important are innovation and technology to the development of the finance industry?


Open banking is a prime example of how new technologies like APIs, data analytics and machine learning create a more connected and efficient financial ecosystem. Open banking is already driving better services and encouraging greater competition in MENA’s financial sector.

Despite substantial progress, there are still gaps in the region’s financial services industry. Standardization and interoperability between different financial systems are lacking. Some communities have imperfect access to financial services and poor financial literacy. Banks, regulators, and fintechs must collaborate to address these gaps.

Read more: What does Open Banking mean for the MENA?

How does Tarabut Gateway ensure security and protection against fraud?


Our consent management system allows users to consent to share their data with regulated and approved entities, and this can be revoked at any time. We adhere to customer data protection laws in every jurisdiction where we operate and continuously monitor and strengthen our security measures.

Our consent management system uses end-to-end encryption with modern ciphers to ensure data is protected both in transit and at rest. All requests are cryptographically signed and chained using a “public key/private key” framework.

Tarabut Gateway enables direct bank-to-bank payments, removing intermediaries and mitigating the risk of credit/debit card data theft.

Can you tell us more about your key achievements and what is next in your business plan?


We were the first licensed open-banking platform both in Bahrain and Dubai. We are grateful for the opportunity to be among the first fintechs to test in the Saudi Central Bank’s sandbox, cementing our position as a leader in the field.

Last year, we were selected as the technology platform partner for DIFC’s Open Finance Lab. We have also established partnerships with leading banks and fintechs across the Kingdom of Saudi Arabia and Bahrain, including Alinma Bank, Riyad Bank, Rain, and Tamam.

With a particular focus on the KSA, our mission is to provide MENA’s open-banking infrastructure and build a collaborative ecosystem that benefits everyone from banks and fintechs to merchants and consumers.

For more on open banking, click here.