PYMNTS GCC Series: Bahrain Drives Open Banking Adoption in MENA

FinTech, GCC Series, Bahrain, open banking

In the second installment of this series on the state of FinTech ecosystems in the Gulf Cooperation Council (GCC), PYMNTS will be taking a look at Bahrain, one of six Arab States in the union that consists of Kuwait, Oman, Qatar, Kingdom of Saudi Arabia (KSA) and the United Arab Emirates (UAE).

Despite its relatively small size compared to its neighbors, the country is increasingly becoming an important center of international trade and commerce in the region, helped by an established banking sector and a proactive stance taken by the Central Bank of Bahrain (CBB) to create a thriving innovation hub for FinTech startups.

See Part 1: PYMNTS GCC Series: High Smartphone Penetration, Govt Support Boosts UAE’s FinTech Growth

Alongside the UAE, the country was several years ahead of its GCC peers in launching a regulatory sandbox for FinTech experimentation.

And to address cross-border inefficiencies, CBB announced earlier this year that it had completed a test of the JPM Coin with Onyx by J.P. Morgan, which allowed Bahrain-headquartered Bank ABC to launch real-time payment for Aluminium Bahrain (ALBA) — considered the first aluminum smelter in the Middle East — in the U.S.

“Through our work with ALBA, Bank ABC and Onyx by J.P. Morgan, we aspire to address and eliminate the inefficiencies and pain points which exist today in the traditional cross-border payments arena,” Central Bank of Bahrain Governor Rasheed Al Maraj said in the January 5 press release.

Read more: Bahrain Central Bank Completes JPM Coin System Test

Open Banking

Since 2019, Bahrain has had a legislative framework in place to facilitate open banking, combining aspects of the European Union’s PSD2 regulation, the U.K.’s Open Banking Implementation Entity (OBIE) and Australia’s Open Banking rules, all built on top of the globally-recognized ISO 20022 standard.

And thanks to its early lead to promote open banking, the very first graduate of its regulatory sandbox, Tarabut Gateway, has gone on to become a household name and the go-to open banking platform for many banks and FinTechs in the region, with clients including HSBC Saudi Arabia and Kuwait Finance House.

Related: Open Banking Firm Tarabut Gateway Partners With Four Saudi Banks

Today, the firm, which has offices across Bahrain, the UAE and KSA, is the first and largest regulated open banking platform in the Middle East and North Africa (MENA) region, as well as the first open banking platform to secure a license from the Dubai Financial Services Authority.

The company is also staking a claim as the GCC’s open finance specialist and was selected by the Dubai International Finance Center as the platform partner for its new open finance lab. Additionally, apart from banks, Tarabut Gateway has brokered partnerships with telecoms services, merchants, eCommerce platforms and payment processors.

See also: DIFC Selects Tarabut Gateway for MENA’s First Open Finance Lab Partner

Another local open banking player and a subsidiary of Aion Digital, Spire Tech, recently graduated from the CBB’s regulatory sandbox and is looking to leverage Aion’s existing international partnerships, which include bank clients in the UAE, the KSA and Kuwait, plus a number of strategic partnerships that give the company a GCC-wide footprint.

Related: Mastercard, Open Banking Firm Spire Team on Middle East Digital Banking

The Bahrain-based FinTech recently announced a partnership with Mastercard that will allow the company to integrate Mastercard data into its ‘Ingage’ financial well-being and money management platform.

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