EXCLUSIVE: “Reaching that API place: Opening up the Saudi market” – Grant Niven and Milon Veasey, Banque Saudi Fransi (BSF) in ‘The Fintech Magazine’
As Saudi Arabia starts its open banking journey, Grant Niven and Milon Veasey from Banque Saudi Fransi (BSF) reflect on what’s shaped the Kingdom’s approach and reveal the bank’s own pioneering BaaS strategy
Open banking is ramping up across the world’s markets, with different countries adopting different approaches that are typically either regulator-driven, as in the UK, or market-driven, like in the US.Saudi Arabia, officially the Kingdom of Saudi Arabia (KSA), is one market to keep a close eye on. The Saudi Arabian Monetary Authority (SAMA) has announced the launch of its open banking framework, which is expected to go live in Q4 2022 with the release of account information services. The initiative underlines the country’s commitment to diversifying its financial services sector, which is a primary objective of Saudi Vision 2030, a transformative economic and social reform blueprint that’s opening Saudi Arabia up to the wider world.
It’s seen as a significant step towards making the country a regional and global fintech hub.Open banking will cover all banking customers in Saudi Arabia, including individuals, SMEs and corporates. SAMA is now mandating all banks operating in the Kingdom to implement and support the initiative in compliance with the new KSA Open Banking standards. Banque Saudi Fransi (BSF), which has its head office in Riyadh and regional offices in Jeddah, Riyadh and Al-Khobar, was more ready than most to take advantage of the new regime. It had already positioned itself as the go-to digital bank in Saudi Arabia, offering a comprehensive service to both domestic and international customers.
LEARNING LESSONS FROM GLOBAL PEERS
“I think even without the central bank mandating it, open banking would still have happened over time as influences from some of the other markets within the Gulf Cooperation Council (GCC) countries would have made their way into the KSA,” says Milon Veasey, head of open banking at BSF. “But what SAMA, and the government in general, are doing very well is accelerating the development of the fintech ecosystem and evolving the banking infrastructure to support it – this is super-positive and means open banking is another facet that becomes a catalyst for the market in general.
“In a regulatory-driven environment, you reduce barriers to entry for fintechs because you’ve standardised your application programming interfaces (APIs). So you develop once and it’s 95 per cent the same across all the different banks, and all the fintechs, the aggregators and all the players within the ecosystem can develop to that – that’s a massive advantage. The other big advantage is that when it’s mandated, all the banks have to participate. It ensures you have account information available from all the different banks.”As well as taking on board learnings from others in the region, such as Bahrain, the first country in the Middle East and North Africa (MENA) region to adopt an open banking framework, SAMA has drawn inspiration from Europe.
“They’ve been looking at the UK in particular, as a bastion for being around the longest,” says Grant Niven, Head of Group Digital for BSF.
“In the Kingdom, open banking is a genuine catalyst for the fintech community, and enabler for banks to quickly and securely launch new propositions directly or via partnerships”
“From a technical perspective, the UK Open Banking standards are probably the most robust and provide the greatest amount of flexibility in terms of developing new propositions. SAMA has taken that as a baseline and is building on it for the KSA. They’re getting an early API specification-driven enablement and framework in place that should lead to a more robust environment going forward.”Saudi Arabia is also taking notes on what others perhaps didn’t do so well – such as failing to engage in effective and comprehensive stakeholder communication programmes.
“In the UK, the regulator didn’t initially take a proactive approach in terms of an awareness campaign and just left the banks to start promoting it – not an ideal scenario and a big learning,” says Niven.
There are currently six million consumers and small businesses regularly using open banking in the UK, according to the Open Banking Implementation Entity – that’s a long way off the potential 40 million account holders who could, ultimately, benefit. But some surveys show only 14 per cent are confident they completely understand what open banking means – and what it can deliver for them.
“In Saudi Arabia, we’re looking at doing a broad awareness campaign about what open banking is, and what the benefits are; a centrally-led campaign across the market, backed by each bank’s own campaign to its own customers directly,” says Niven. “This full-market approach, supported by all the key players, is crucial to providing consumers, who may be worried about their information and data, with a higher level of comfort.
“The exciting thing for the KSA is that the banks all have their head and heart behind open banking. In terms of a technology and readiness perspective, the banks are all there or thereabouts. At BSF, we’re very proactive in open banking and the banking-as-a-service (BaaS) sectors – it’s part of our overall strategy to lead in the digital space as best we can.”
REFINING A BEST-IN-CLASS API STRATEGY
BSF has invested heavily in technology and infrastructure that can be leveraged by fintechs and other third-party providers (TPPs) that are keen to play in the financial services arena. Earlier this year, the bank designed its market strategy to ensure it will be a local leader when it comes to open banking and BaaS propositions, implementing its API Gateway via Cloud-native host Kong to create a scalable platform for its services. In September, BSF launched APIZone within its Open Banking Technical Sandbox. In a move that aligns the bank nicely with SAMA’s timeline, APIZone facilitates fintech partnerships that will create new API-enabled products and services that can both be rolled out by the bank directly or as a BaaS proposition for brands wanting to offer financial services.“We are encapsulating our API strategy within APIZone,” says Veasey.
“And that clearly focusses on open banking and BaaS – eventually, APIZone will become a comprehensive catalogue of APIs that support different services we can provide through the bank. It’s really about exploring the different ways to launch secure, speedy new propositions into the market, either for direct customer acquisition or acquisition through partners, by leveraging our core infrastructure.“
We’re also enabling both local and global fintechs to provide their services in Saudi Arabia using our licence, infrastructure and technology. The KSA is one of the most attractive jurisdictions for fintechs, specifically for remittance services, due to underlying demographics and untapped market potential. Ultimately, our aim is to bring global best practice propositions and competitive prices to Saudi customers – there’s a lot of opportunity for fintechs to enter the country in partnership with regulated entities like BSF. Fintechs should see banks like us as a partner rather than a competitor.”
“The exciting thing for the Kingdom of Saudi Arabia is that the banks all have their head and heart behind open banking”
To refine its proposition, BSF is working closely with open banking platform Tarabut Gateway, which provides platform-agnostic solutions to financial institutions and fintechs, allowing them to build their own apps to provide financial services. Tarabut Gateway has a presence in the UK, Bahrain and the United Arab Emirates as well as in the KSA, and works with regulators to enable data flow between banks and fintechs.
“Tarabut Gateway has a number of strategic arms to it, but we’re specifically focussed on working with them for the implementation of our compliance platform,” explains Niven. “That’s, basically, all of the key modules required by a bank to support open banking in the marketplace, and we’re backing that with our own API Gateway that we’re developing all of the core services on.“What we like about Tarabut is that it’s brought together a really talented team from various geographies to focus their skills on the MENA region. It’s good for us as a Middle East bank to be investing in a partnership with a Middle East fintech that’s really bought into the vision – its head hub is in the UAE, but the team has entered Saudi Arabia, done its research, got set up with the regulator and made it very easy for us to engage with them. It’s a nice story to see play out.”
EYES ON THE PRIZE
BSF is starting small with embedded finance propositions to ensure it is ‘laser-focussed’ on excellent delivery. The end game is the creation of a white-label, plug-and-play banking solution, powered by BSF, similar to the Nexus BaaS solution that Standard Chartered has rolled out in Asia. “Initially, our BaaS adventure will see us working with a select number of fintechs, and we have a roadmap that runs through remittances, foreign exchange, credit card and buy now, pay later (BNPL) propositions that we’ve identified as being central to our strategy, but also in demand in the market right now,” says Niven. “But as our infrastructure and operating models build out across open banking and BaaS, our longer-term vision is providing a full-stack white-label portfolio to e-commerce and retail providers, encompassing current accounts, savings accounts, mortgages and so on. That’s the big bang for us, but first we test, learn and get our API structure spot on.”
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