Abdulla Almoayed is the founder and CEO of Tarabut 

Optimism about improving the ease and speed of approving retail lending abounds in the Middle East and North Africa’s (Mena) financial sector, as open banking demonstrates its visible benefits. With the post-pandemic economic recovery bolstering economic expectations, the inherent nature of open banking, which makes borrowing more attractive and viable, particularly for those previously without access, indicates that the lending sector is poised for sustainable growth.

This is especially good news for underserved customers who can now access more finance options, empowering them to finally bring their entrepreneurial ideas to life and elevate their quality of life - by providing easier and more tailored access to capital. 

Poor financial inclusion has long been a significant barrier to establishing new businesses or making life-changing asset purchases, such as acquiring machinery or renting property. Ironically, obtaining loans for such spending helps generate the credit histories previously absent to make such loans possible. It is the classic chicken and egg problem of - what comes first? Open banking solves this conundrum. 

Tarabut stands at the forefront of this transformative shift in the Mena region. Collaborating with banks, lenders, and fintechs across various product segments has contributed to growth in the lending industry. Open banking empowers the banks to enhance credit risk assessment, streamline loan processing, detect and mitigate fraud, and improve the accessibility of lending services.

Open banking streamlines risk and credit scoring in the lending industry using large data set analysis. Banking reputations depend on their diligence in risk-assessing new customers; and difficulties occur when relying on traditional credit scoring - especially when new customers have not yet attained credit histories.

It is not unusual for individuals across Mena to have little to no existing credit, making even the simple processes - such as getting a credit card - difficult. Open banking tools are changing this by allowing lenders to check financial data and satisfy risk assessments quickly and effortlessly - ensuring financial services become fairer as - at last - modern banking starts to work for everyone.

Open banking provides seamless income verification from transaction histories not previously accessible in closed systems. Likewise, it can confirm identities and provide account verifications to prevent fraud, allowing loan applications to progress. Such open banking solutions exemplifies how financial services are becoming more inclusive.

The latest demonstration of our open banking solutions is enabling a new, rapid minutes loan approval product by the lender, FLOOSS. This includes the first live income verification process providing convenience, real-time accuracy, and reducing fraud risk. FLOOSS is the first Bahrain-based digital lending platform and was recently launched. FLOOSS faced challenges due to limited access to financial data and manual submission of documents like proof of income and employment led to friction, drop-offs, and up to two-week processing times before users had access to funds they had applied for.   

Real-time income information enabled by open banking means streamlined decision-making, so lenders can make faster and more informed lending decisions. Platforms like FLOOSS can now quickly and securely determine a user's salary without the hassle of manual document uploads, reducing their processing times from weeks to just minutes. 

With real-time access to secure and comprehensive financial data, banks can gain valuable insights into its customers' financial position, enabling them to make quicker, safer, and more accurate decisions explicitly tailored to the individual's needs.

Additionally, through open banking fraud risks are greatly reduced - as data is retrieved directly from applicants’ bank accounts via a secure API. This minimises the risk of falsification or working from misleading documentation.

In conclusion, open banking is not just a buzzword; it is a movement changing the way we access financial services and can make modern banking a reality for everyone in the Mena region and beyond.