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Open banking creates new avenues for finance

System allows banks to securely share customer financial data with authorised companies

Open banking has the potential to revolutionise the financial ecosystem by fostering collaboration between traditional banks and fintech companies, an expert said.

“For SMEs, it opens up access to a wider range of financial products tailored to their needs, such as instant loans, dynamic cash flow management tools, and competitive lending rates. It also creates a more inclusive financial environment, enabling SMEs with limited credit histories to leverage transactional data to secure better financing options. Furthermore, open banking encourages innovation, with fintechs developing apps and platforms that simplify day-to-day financial tasks for SMEs, from budgeting to expense tracking,” Ayman Kaouri, co-founder & regional director - Middle East, Scope Solutions, told Khaleej Times in an interview.

Open banking is a system that allows banks to securely share customer financial data with authorised companies, provided the customer consents. This sharing enables innovative services, such as personalised budgeting tools, bank transaction feeds and competitive loan offers, while ensuring customers remain in control of their data.

Scope Solutions, founded in 2012, is a leading tech partner and cloud specialist. They provide innovative SaaS solutions for businesses, focusing on data management, strategic decisions, and operational efficiency.

With the shift towards open banking, security and privacy become paramount concerns. “Businesses must ensure that sensitive financial data is protected through robust encryption and secure APIs. Regulatory compliance, such as adhering to the UAE’s data protection laws, is essential to avoid potential fines or reputational damage. Companies should also establish clear protocols for managing access to financial data, including multi-factor authentication and periodic reviews of access permissions. Partnering with credible open banking platforms that prioritise security and transparency will help businesses safeguard their data while reaping the benefits of this new financial model,” Kaouri said.

The integration of open banking with fintech solutions and accounting software offers SMEs a powerful toolkit for managing their finances. For instance, real-time bank feeds can be linked to accounting platforms, enabling automatic reconciliation and reducing manual input. “This integration provides SMEs with up-to-date cash flow insights, helping them make informed financial decisions. Additionally, fintech apps can offer features like invoice financing or expense management, all seamlessly tied to accounting systems. By creating an interconnected financial ecosystem, SMEs can reduce inefficiencies, cut costs, and focus on scaling their operations,” Kaouri said.

For banks, open banking represents an opportunity to stay ahead in an increasingly competitive market. “By sharing data securely and collaborating with fintechs, banks can develop innovative, customer-centric services that enhance loyalty. It also allows banks to tap into new revenue streams, such as partnerships with third-party providers. Open banking fosters transparency, improving trust between banks and their customers. Ultimately, banks that embrace this model are better positioned to meet the needs of tech-savvy customers in a rapidly digitalising world,” Kaouri said.

The key barriers to adopting open banking in the region include regulatory uncertainty, limited infrastructure, and consumer apprehension around sharing financial data. “Addressing these challenges requires governments to establish clear and consistent frameworks that foster trust and innovation. Banks and fintechs must collaborate to create secure, user-friendly systems and invest in public education campaigns to increase awareness of open banking’s benefits. By demonstrating its value through tangible use cases, such as faster loan approvals or better financial insights, adoption rates in the region can be accelerated,” Kaouri said.