Bahrain's Open Banking Framework Enters Force, Mandating Compliance for All Licensed Banks

The Central Bank of Bahrain's Open Banking Framework has entered into force, requiring all licensed banks and finance companies in the kingdom to comply with standardised data-sharing and API connectivity requirements.

The framework, effective from 1 September 2024, mandates that financial institutions provide standardised APIs to authorised third-party providers, enabling customers to securely share their financial data with fintech applications and services of their choosing. Compliance is mandatory across Bahrain's entire banking sector, making it one of the most comprehensive open banking mandates in the Gulf region.

The regulation establishes rules for data access, consent management, and security standards that all participants must follow. Banks are required to provide account information services through their APIs, allowing customers to view balances and transaction history from multiple banks through a single third-party app. Payment initiation services, which enable fintechs to trigger bank transfers on behalf of customers, are also covered by the framework.

Bahrain has been building toward mandatory open banking over several years, with the Central Bank establishing the regulatory framework in phases. The country's fintech-friendly regulatory environment, including its pioneering regulatory sandbox, has attracted open banking infrastructure providers and fintech companies that are now positioned to build services on the newly mandated API infrastructure.

The framework positions Bahrain alongside the UK and EU as a market with mandatory open banking compliance, and ahead of most Gulf neighbours where open banking initiatives remain in earlier stages of development or operate on a voluntary basis.