February 13, 2023

The Bahrain Open Banking Landscape

Bahrain’s open banking journey started back in 2018 when the Central Bank of Bahrain (CBB) launched a regulatory sandbox. It has since then been the first country of the MENA region to implement technical standards for the market and, although recent years have distinguished the emergence of new actors such as Saudi Arabia, the United Arab Emirates and Qatar, many experts still consider it to be the local leader in financial services transformation.

Despite its relatively small size, the Bahraini market benefits from a well-established banking sector and a carefully thought open banking regulation mixing considerations from the EU’s PSD2 regulation, Australia’s Open Banking rules and the UK’s Open Banking Standard. Since 2018, the Central Bank of Bahrain has been progressing in the development of its open banking ecosystem and is now heading towards open finance.


The Roadmap


The CBB started by onboarding the first company on its regulatory sandbox in April to test an Account Information Service Providers (AISP) open banking solution. That enabled the regulator to identify the important aspects to take into consideration and issue a draft open banking regulation for industry consultation by November. After the end of the month-period the sector was given to reflect and provide feedback, the Central Bank of Bahrain has then been able to build on all this information in order to issue a final open banking regulation in early December. The December 11th date marked the end of an era and the beginning of a new one with the first open banking regulatory sandbox graduate.




The regulation issued at the end of 2018 only focused on the retail banking market and retail banks in the country were given until the 30th of June 2019 to comply with the new rules. Not including wholesale and corporate use cases in the regulation certainly made the job simpler but it left companies, banks and fintechs to decide among themselves how these should be handled. However, the CBB kept this in mind since the industry now expects it to extend the open banking framework to wholesale banks. By June 30th, retail banks had to open the access to their data from a number of different types of accounts such as savings and current accounts or foreign currency and restricted investment accounts. 12 months of transaction history will have to be made available. Finally, an Open Banking Committee was created in July at the Central Bank of Bahrain in order to formalise the regulator’s vision.



This is probably the most important year for the country’s open banking journey as the CBB issued on the 28th of October the Bahrain Open Banking Framework (“BOBF”) version 1.0.0 after holding a market consultation in collaboration with Deloitte. The BOBF aims at complementing the existing open banking rules to ensure more consistency in their implementation and provide a common set of technical Application Programming Interface (API) specifications which adhere to RESTful API design principles, as well as security and customer experience guidelines.

Moreover the BOBF v1.0.0 sets out 8 use cases that have been developed by evaluating Bahrain’s business opportunities in accordance with global best practices. Among the eight use cases, 4 pertain to Payment initiation Services (PIS) such as initiating payments for customer through their ASPSP accounts, 2 pertain to Account Information Services (AIS) such as sharing of account information of customers by ASPSPs and 2 pertain to Essential Services such as consent and notification mechanisms applicable to both AIS and PIS. All in all, the Open Banking Framework has the final objective of facilitating better services at lower costs for banking customers in Bahrain and reinforcing the Kingdom’s position as a pioneer in financial services innovation.

Still in 2020, the Central Bank of Bahrain announced the launch of the first Digital Fintech Lab in the region: FinHub 973. This new platform includes an open banking API sandbox for fintech startups to use by developing, testing and deploying their solutions in a safe and regulated environment. FinHub 973 also enables financial institutions from the region to connect with fintechs from around the world through a global marketplace. The end goal of the initiative is to develop the fintech ecosystem in Bahrain and the region and contribute to the transformation of the financial services industry.



The beginning of 2021 was the time to reflect on the progress made until then and adapt the pace to let the market keep up with the regulation. The CBB published a commentary on the implementation of necessary infrastructure in retail banks and the compliance rate in the country. Based on these results, it was decided to extend the compliance deadline from the 28th of October 2020 to the 30th of April 2021.

After this little setback, the Central Bank of Bahrain issued the second phase of the Bahrain Open Banking Framework in September enjoining retail banks and financial institutions to open access to more data and comply with new requirements and guidelines. The new deadline for compliance is set on June 30th 2022. The idea is to let actors on the market provide a wider range of services to customers with greater efficiency.

Finally, December witnesses the announcement by the CBB of a new revised Regulatory Sandbox Framework which should allow fintechs to experiment their ideas and solutions in a more efficient and effective environment. The revision focuses specifically on the onboarding process and eligibility criteria for financial technology firms to participate in the regulatory sandbox program. It also modifies the program by adding different objectives to specific phases to ensure the best possible results at the end of the 12-month period. Any CBB-licensed financial institution or fintech start-up can be accepted in the regulatory sandbox as long as it fulfills the eligibility criteria among which can be found the compliance with the regulator’s Customer Due Diligence (CDD) and Anti-money Laundering/Combating the Financing of Terrorism (AML/CFT) Requirements.



The Central Bank of Bahrain has focused on transitioning from open banking to open finance by thinking about how third-party providers (TPPs) could access customer’s financial data beyond banking. This would for example include pensionsinsurance and investments data. It should ultimately empower customers by giving them the control over their financial data and help them make better informed decisions as well as proposing them innovative products and services.

It was to align with this vision that the CBB granted the first open finance license in Bahrain to the firm Fintech Galaxy. This license will allow the platform to operate as a regulated third-party provider and more specifically as an AISP in order to integrate with bank APIs.

In the meantime, the open banking ecosystem kept developing itself throughout the year with for example the Bahrain Open Banking Supernova 2022 (also Supernova 2022). This fintech challenge organised by the central bank used the CBB’s Digital Lab to foster new innovations. Concretely, Bahrain-based financial institutions were asked to present real market challenges around open banking use cases so that fintech start-ups could work on them in a safe API sandbox composed of more than 330 APIs as well as simulated datasets from local and regional banks. The end goal was to enable rapid and seamless proofs of concepts (PoCs).



From 300 million dollars in 2022, the open banking market in the MENA region is expected to reach 1.1 billion dollars by 2027 with the different regulations helping the ecosystem develop and mature. The Central Bank of Bahrain’s open banking strategy is very well-aligned with the Kingdom’s vision and objective to transition towards a true digital economy. Yesterday it was about open banking. Today’s talks revolve around open finance. Tomorrow’s discussions will certainly be centred on open data.

Main takeaways for regulators

Bahrain’s successful implementation of open banking should be used as an inspiration by other regulators around the world willing to start their journey too. Things should not be copied since all regulations and strategies must be adapted to the local markets but there are certain takeaways that could be used everywhere.

The three most important considerations from the CBB’s strategy:

  • Regulators should listen to and observe their supervised market in order to adapt their open banking regulations.
  • Deploying a regulatory sandbox is the first step before releasing a draft regulation.
  • Hackathons or fintech challenges are a great way for regulators to boost industry engagement and foster innovation in a supervised way.

For a more comprehensive analysis of the regulation and to learn how the Open Bank Project can help you launch your open banking initiative, contact arthur@tesobe.com.