The Journey from Open Banking to Open Finance

Aion Digital
4 min readDec 17, 2020


Written by Sumeet Kulshreshth, Head of Open Banking

Open Banking originated as one of the measures that were imposed on the largest banks in the United Kingdom by the “UK Competition and Markets Authority”. This was done to increase competition in the retail banking sector and allow customers to benefit from technological advances.

Open Banking enables customers to share their data with third party providers through secure APIs and in doing so, have more control of their money. Customers are then better equipped to compare products according to their personal preferences. The solution allows customers to authorize third party service providers to access their payment account information (account information services) and to make payments on their behalf (payment initiation services).

Since its introduction only a few years ago, and like any other technology, Open Banking has evolved. It has been steadily moving from just a payment account solution to all types of asset solutions like savings accounts, cards, loans, investments, insurance, etc. Now, the offerings are broadening into business-based use cases such as liquidity and cash management, loan applications, and asset factoring. However, it has been noted that the delay in implementing strong customer authentication requirements to facilitate user journeys has slowed adoption of Open Banking.

Despite its potential, Open Banking is currently limited in its scope. As a result, the UK is now heading towards what is known as an “Open Finance” initiative. This initiative is based on the foundations established by the Open Banking directive, to fuel further innovation, competition, and add another step towards building a data led digital economy. Sheldon Mills, Director of CMA believes the following about the Open Finance initiative:

  • Open Finance has the potential to improve access within Financial Services and could substantively change the nature of its historic competition.
  • Open Finance is part of a broader data-sharing initiative and will require coordination and consistency across sectors.
  • We want Open Finance to develop in a competitive environment where the right incentives exist for all players to participate, and which delivers good outcomes for consumers.

What does this mean for us in the GCC region?

Open Banking presents a systemic and far-reaching change for our industry across the GCC region. It has the potential to transform not only how banks operate, but how and even why consumers and businesses choose to work with them. As the fundamentals of open data start to flow across industries, customer expectations and needs evolve, banks in the GCC region will start to unearth entirely new areas of opportunity for future growth and value. Open banking, particularly when extended to open finance, involves a multitude of data used in numerous ways. Open Finance, like Open Banking, is built on the concept that data provided by customers should be controlled by them. It takes this idea and seeks to apply it far more widely. Third party providers would be able to access the same information and perform the same functions as made available online to the relevant customer.

To support an open-banking network, it requires powerful infrastructure for it to run on. The GCC would also benefit from establishing a common framework that outlines API and licensing standards as a foundation for innovation. Furthermore, the region would also see benefit to have passporting of open-banking licenses across countries as is currently possible in the EU. As a recent development in the region, Bahrain has developed an Open Banking Framework (OBF) that includes a set of guidelines and standards. Released in October 2020, the framework ensures consistency in implementation and guidelines that support an increase in adoption of Open Banking initiates in the country. Like the previous framework, it will take banks 6 months to enable licensed AISPs and PISPs to connect and adopt.

To ensure the journey from Open Banking to Open Finance is achieved with the least possible resistance, the GCC region requires an adaptable collaboration between regulators, banks, fintech’s and third parties. The growth of open banking relies on innovation which can be achieved using an involved approach in the region where banks and fintech’s move cohesively. This will garner innovation and better position the end users to reap the benefits that open data brings.



Aion Digital

Aion is a financial technology company specializing in digital banking platforms. It is headquartered in Bahrain with business presence across the GCC.