—- Despite obstacles, open banking presents an opportunity to revolutionize the country’s financial sector
From Zeeshan Mirza
KARACHI: Pakistan’s economy is not an exception to the disruptive global financial trend known as open banking. Due to technical improvements and legislative actions, Pakistan’s financial environment has gradually shifted towards open banking in recent years.
Through the use of Application Programming Interfaces (APIs), open banking enables financial data from banks to be accessed and utilised by outside financial service providers. The aim is to promote creativity, rivalry, and cooperation in the financial industry. With the State Bank of Pakistan (SBP) launching measures to update the financial ecosystem, the idea gained traction in Pakistan. In Pakistan, SBP has taken the lead in advancing open banking. The Open Banking Framework was unveiled by the SBP in 2019 and provides standards for banks to safely communicate customer-permitted data. The framework sought to stimulate competition, improve financial transparency, and foster innovation in the financial industry.
SBP has introduced several initiatives to promote open banking in the country. To offer principles and rules for the adoption of open banking practices throughout the nation, the State Bank of Pakistan established the Open Banking Framework.
When sharing customer-permitted data with third-party service providers, banks and other financial institutions were obliged to adhere to the criteria and guidelines outlined in this framework.
