As the window for banks in Bahrain to adopt open banking expires, local Islamic banks are engaged in what seems to be a show of one-upmanship with the leading Shariah banks publicly embracing open banking and engaging fintech companies to adapt to an evolving landscape.
In the span of two weeks in July, three Islamic banks have vocalized their readiness to share information and technology as mandated by the Central Bank of Bahrain which introduced a regulation last November calling upon the 114 banks in the Kingdom, including 21 Islamic banks, to adopt open banking by the 30th June 2019. Ithmaar Bank, Al Baraka Bank and Bahrain Islamic Bank (BisB) have tapped the media engine to amplify their willingness.
The open banking services cover two dimensions: first, an Account Information Service, which comprises granting customers access to their bank account data from different banks through a single unified platform; while the second entails the ability of customers to easily and effectively make payments and transfers between different accounts through a single application. This would reduce cost and turnaround time for customers.
“Open banking is a game-changer, it broadens the horizons for our customers, offering new online payment channels without the need for credit cards or debit cards, as well as providing access to their different bank accounts through a single digital platform,” said BisB CEO Hassan Jarrar.
Ithmaar Bank confirmed that it has started reaching out to fintech companies and other CBB-licensed entities to explore potential consumer-centric collaborations, with CEO Ahmed Abdul Rahim commenting that the new CBB rules open up opportunities to involve companies that were previously not involved in banking.
Al Baraka Bank, on the other hand, is taking one step further by offering application programming interfaces (APIs) to third parties through its Al BarakaGlobal API marketplace which hosts over 25 APIs across six main categories: accounts, money transfers, financings, credit cards, information services and investment products.
“This is a testament of the proactive approach of Al Baraka’s open banking strategy instead of a reactive approach — by going beyond mere compliance with the open banking regulations of the Kingdom of Bahrain that require banks to open specific APIs to third parties,” explained the Islamic bank, which through its Turkish unit, launched the first digital Islamic bank in Europe, Insha.
More Islamic banks are expected to follow suit as the digital race becomes more competitive.