Dylan May 9, 2023 Middle East Open Banking in Oman Fintech Framework and Roadmap Fintech Regulation The Financial Consumer Protection Regulatory Framework The Personal Data and Protection Law The New Securities Law The Legal Framework of the National Payment Systems Fintech Regulatory Sandbox Oman’s open banking development started with a call from local banks themselves. Indeed, the Oman Banks Association (OBA) warned financial players in October 2020 at the New Age Banking Summit, not to ignore fintech firms, pointing out that all lenders around the world are now considering them in their strategies. The idea of open banking became even more pregnant in the Sultanate as, like everywhere else, the sector had to face the consequences of the coronavirus pandemic: a growing demand for mobile banking apps, contactless credit card services, and e-commerce. The call was well received by the Central Bank of Oman (CBO) which was very probably already working on the topic seeing as December 10th 2020 marked the launch of the Fintech Regulatory Sandbox (FRS). Now, it is clear that transforming local financial services through open banking is seen as a key development goal which is part of the Oman Vision 2040 governamental plan. Fintech Framework and Roadmap The Central Bank of Oman has been working on issuing a Fintech Framework and Roadmap in the past years, which includes a variety of different components detailed below. For the most part, it is still work in progress. The Open Banking API Strategy forms part of the wider fintech framework and roadmap for Oman. This comprises various initiatives to mature the ecosystem such as: regulation in fintech, a regulatory sandbox, release of a cloud computing framework for the financial and banking sector, initiatives to boost electronic know-your-customers (eKYC), virtual asses and fintech education. Fintech Regulation Fintechs have disrupted the traditional banking regulation landscape everywhere, and Oman is not an exception to the rule. The previous banking law which governed the sector until now was issued in 2000, but has very recently been revised to adapt to the structural changes that the market is experiencing. A whole suite of new laws have therefore been passed between 2021 and 2022. The Financial Consumer Protection Regulatory Framework The CBO issued the FCPRF on the 29th of December 2021 in order to improve the local’s consumer protection when it comes to using financial services. The idea is to mandate all licensed institutions in the Sultanate to comply with the best international standards in terms of consumer protection as well as to promote healthy competition in the financial sector. The framework is based on five main principles : the Principle of Disclosure and Transparency, the Principle of Unfair Terms and Conditions, Data Protection and Privacy, the Principle of Dispute Resolution mechanisms, and Principle of Financial Education & Financial Capability. These different components were key in laying off a solid foundation for a successful future growth of the fintech ecosystem. The Personal Data and Protection Law The PDPL touches on topics like data processing, transfers, notification, and record-keeping requirements, and makes Oman’s Ministry of Transport, Communications and Information Technology the regulatory enforcer of the law. The new regulation offers a broader definition of “Personal Data” compared to the previous ones which should improve the consumer’s protection and privacy. It also gives a clear definition of the parties involved in the collection of data and their respective responsibilities. Ultimately, this law should lead to more transparency and privacy. The New Securities Law Entered into force on the 20th of June 2022, the new Securities Law enabled the Capital Markets Authority (CMA) to approve fintech apps as well as to regulate innovative financing solutions and virtual investments. The goal being to help the regulation for the fintech sector become more mature and help the ecosystem grow in a safe and controlled manner. Combined with the CMA’s active work in the field of virtual assets in order to potentially implement a regulatory framework for them, the law will certainly contribute to the development of innovation in financial services in Oman. The Legal Framework of the National Payment Systems Although it was developed before 2021, this framework has been very important for the development of financial services in the Sultanate. The main law, which represents the CBO’s national payment strategy, is the National Payment Systems Law (NPSL) and was promulgated in 2018. Key components of this law include the mandatory licensing for all companies involved in activities related to payments, the oversight and supervision of the national payments systems and enabling the development of innovative ideas to provide payment services. Fintech Regulatory Sandbox The CBO seeked to harness the opportunities arising from technological transformation in the finance sector – including economic growth and financial inclusion – whilst mitigating the associated risks. As a result, like its neighbors in Saudi Arabia and Bahrain, the CBO proposed the Fintech Regulatory Sandbox framework and opened applications to Fintechs in October 2020. Oman’s initiatives present an opportunity for fintech to grow and will help in the country’s journey towards economic development and diversification. 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 contact@tesobe.com.