The Central Bank of the UAE has launched a regulatory framework, the Open Finance Regulation, as part of its Financial Infrastructure Transformation programme.
This new regulation mandates that all financial institutions under the CBUAE’s supervision participate in the open finance framework. This includes ensuring that the financial products and services they offer align with the stipulated guidelines.
Under this new regulation, licensed financial institutions (LFIs), acting as data holders and service owners, are compelled to grant access to customer data and transaction initiation capabilities to participants in the Open Finance Framework. This access is contingent on obtaining explicit consent from users, prioritising their needs and security in financial transactions.
The Open Finance Framework is designed to enhance the consumer experience by enabling LFIs to personalise financial services based on accessible consumer financial data. This framework facilitates seamless data sharing across platforms, allowing consumers to amalgamate their financial information conveniently. Key components of the regulation include a Trust Framework, an Application Planning Interface (API) Hub, and Common Infrastructural Services, all of which aim to provide comprehensive access to open finance for cross-sectoral data sharing and transaction initiation.
Governor of the CBUAE, H.E. Khaled Mohamed Balama, highlighted the significance of this regulation, saying, “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 implementation of the Open Finance Regulation will occur in phases, as specified by the CBUAE, following its publication in the Official Gazette. This regulation marks a pivotal amendment to the existing Retail Payment Services and Card Schemes Regulation, promising a transformative impact on the financial services sector in the UAE.
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