UAE Central Bank Unveils Open Finance Regulation to Transform Financial Services

The Central Bank of the UAE has introduced a significant regulatory framework called the Open Finance Regulation as part of its Financial Infrastructure Transformation programme. This new regulation mandates that all financial institutions under its supervision must participate in the open finance framework. These institutions are required to ensure their financial products and services comply with the specified guidelines of the regulation.

The core of the Open Finance Regulation is the requirement for licensed financial institutions (LFIs) to grant access to customer data and transaction initiation capabilities to participants within the Open Finance Framework. This access must be provided with the explicit consent of users, highlighting the importance of prioritising their needs and ensuring the security of their financial transactions.

Designed to enhance the consumer experience, the Open Finance Framework enables LFIs to personalise financial services by leveraging accessible consumer financial data. It facilitates seamless data sharing across different platforms, allowing consumers to consolidate their financial information in one place. The regulation includes key components such as a Trust Framework, an Application Programming Interface (API) Hub, and Common Infrastructural Services. These elements collectively support comprehensive access to open finance, promoting efficient cross-sector data sharing and transaction initiation.

The implementation of this regulation will occur in phases, according to the Central Bank's plans. This marks a substantial amendment to the existing Retail Payment Services and Card Schemes Regulation. The new regulation is expected to bring transformative changes to the UAE's financial services sector. It sets a precedent for open finance, aiming to accelerate the adoption of digital financial services, enhance competition, and drive innovation within the industry.

By establishing global standards for open finance, the regulation not only allows licensed financial institutions to better utilise consumer financial data but also empowers consumers to access superior financial solutions. The overarching goal is to foster a more competitive and innovative financial environment in the UAE, supporting its global competitiveness in the financial services sector.