Dylan October 29, 2024 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 Fintech Regulatory Sandbox API Standards & Technology Framework Unveiling the Draft Open Banking Framework Updated 29 October 2024 Oman’s open banking development started with a call from local banks themselves. At the New Age Banking Summit in 2020, the Oman Banks Association (OBA) warned financial players not to ignore fintech firms, pointing out that all lenders around the world are now considering them in their strategies. The concept of open banking became more tangible and essential in the Sultanate as the sector faced 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 already had plans to address the topic – 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 governmental plan. Fintech Framework and Roadmap Over the past few years, the Central Bank of Oman developed a Fintech Framework and Roadmap which includes a variety of different components detailed below. 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 assets 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 Issued in February 2022, the PDPL touches on topics such as 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. The law came into force in February 2024 and 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 is 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 effort to implement a regulatory framework for digital assets, the law is likely to contribute to the development of innovation in financial services in Oman. Fintech Regulatory Sandbox The CBO sought 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 neighbours in Saudi Arabia and Bahrain, the CBO proposed the Fintech Regulatory Sandbox framework and opened applications to Fintechs in October 2020. API Standards & Technology Framework In April 2023, The Central Bank of Oman published a document containing API specifications to be used as reference for developing and managing Open Banking APIs in Oman. This was followed in December by Security Specifications, which focused on providing guidance regarding data and information security in the context of Open Banking. Soon after in 2024, the regulator published the Technology Framework to provide an “overview of the technology architecture of open banking and underlying systems”. In May 2024, Sohar International launched the first API portal in Oman, kicking off the race to become an industry leader in Omani fintech innovation. Unveiling the Draft Open Banking Framework By July 2024, the Central Bank of Oman released a draft regulatory framework and launched the consultation process to collect feedback from the local ecosystem. In the document, the CBO addresses key themes including data standards and governance, consent management, data security, cybersecurity and technical specifications. Open Banking in Oman presents an opportunity for local financial institutions to innovate and deliver both new services and enhanced customer experiences. To find out how to prepare for regulatory compliance and design a comprehensive API strategy, contact us.