Open Banking Use-Cases: Going Beyond the Vanilla

There are Open Banking led use cases in the hundreds out there as we know it today. While these have come into fruition across multiple geographies globally, it is important to note that they are continuously being developed across regulated as well as market-led jurisdictions. Embedded finance, as defined by OpenPayd, is simply using API driven banking or payment services to integrate financial services within other environments and ecosystems.

Among those in MENA that have adopted regulations, includes Bahrain who has fully implemented a framework, Saudi Arabia with their recent issuance of a circular to go live with regulated Open Banking, Oman with an Open API strategy, and UAE in discovery phase. While observing these developments, it can be said with confidence that the region is still in its nascency. We are setting up the foundation with what are commonly known as ‘Vanilla APIs’ that are being phased out in the stipulated regulations, such as but not limited to accounts, balances, beneficiaries, and transactions on the AIS side. On the other hand, for PIS, single domestic payment, scheduled payments, and single international payments.

While we have experienced implementation on the retail end of the spectrum so far, we have keenly observed a growing appetite from corporate as well. For example, one may presume that it is more complicated to factor in the required fields from a corporate as though they were an individual account holder in a data-based call, which would require more than just name, account type, balance, currency, customer ID, account scheme & identification, and transactions- but also authorized signatory, party details, parent company, and commercial registration. Even more pressing on the corporate side are optimization of cash flow for immediate access to funds, frictionless payments, and enhanced account functions governing hierarchical access.

Imagine a world where you can do business across borders and ease reconciliation pains by holding, receiving, and sending money in multiple currencies with unlimited access to virtual accounts. Furthermore, converting funds through multiple currencies in real-time and a developer-first approach to standardize the experience across borders with Third Party Providers (TPPs) is the key to bridging this market gap.

Let’s look at one of the biggest e-commerce platforms, Shopify, that offers tons of features and tools to their customers to build online businesses. At the front-end, by building passive data models upon transactions to analyze financial health and credit, they currently offer their merchants and shopkeepers financing as well as lending through their Shopify Capital entity in the USA. As a non-bank, they have embedded Finance into their service by leveraging TPPs and banking license holders to construct the value chain.

There will be complex variations from region to region that will perhaps speed up or hinder the pace of adoption. The regulatory landscape in MENA, and readiness of customers play a critical role in the appetite of Third Party financial service providers to create new and innovative tech solutions. A further consideration for the Arab region is the passporting of open-banking licenses across countries, which will bring us closer to a unified zone of embedded finance (MENA Fintech Association).

There is a $7.2 trillion dollar (Business Insider) Embedded Finance market in the making globally. API services built leveraging third-party services with hyper-parameterized product ranges will give birth to the best of breed solutions and in turn high-growth market verticals in MENA.


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