The Central Bank of the UAE (CBUAE) has issued the Open Finance Regulation, a significant component of its financial infrastructure transformation programme.
This regulation aims to ensure the soundness and efficiency of open finance services, promote innovation, enhance competitiveness and bolster the UAE’s status as a financial technology hub.
The new regulation mandates that all financial institutions supervised by the CBUAE must participate in the open finance framework concerning their products as well as services.
Licensed financial institutions (LFIs), as data holders and service owners, must provide access to customer data and the ability to initiate transactions, contingent on the express consent of users. This provision also aims to align services with consumer needs.
The regulation
The framework is designed to facilitate LFIs in accessing and utilising consumer financial data to create personalised experiences and tailored offerings. This regulation also enables consumers to consolidate their financial information through seamless data sharing across platforms.
The regulation encompasses a trust framework, an application programming interface (API) hub, as well as a common infrastructural services. These elements collectively support the cross-sectoral sharing of data and the initiation of transactions on behalf of users.The open finance platform also includes a consumer consent model for sharing financial data with trusted third parties within an integrated business system.
H.E. Khaled Mohamed Balama, governor of the CBUAE, said: “The introduction of open finance regulation establishes global standards for open finance and accelerates the adoption of digital financial services. This
initiative enables licensed financial institutions to harness consumer financial data.
“On the other hand, it empowers consumers to obtain the best financial solutions, which will drive competition and innovation. We will continue our efforts to develop the financial services sector in the UAE and support its competitiveness globally.”
The regulation, published in the Official Gazette, will also come into effect in phases, as notified by the CBUAE.
Source: thefintechtimes