Bahrain's Open Banking Framework Enters Force, Mandating Compliance for All Licensees
The Central Bank of Bahrain (CBB) has confirmed that all licensed financial and banking institutions in the Kingdom are required to comply with its updated Open Banking regulations from 1 September 2024, marking a significant step in the country's push to embed open finance across the sector.
The framework requires institutions to provide standardised APIs to authorised third-party providers, enabling customers to share their financial data securely. Bahrain becomes one of the first countries in the GCC to make open banking compliance mandatory across its entire banking sector, building on the foundations of the original Bahrain Open Banking Framework launched by the CBB in October 2020.
Under the updated rules, licensees must obtain explicit customer authorisation before sharing account information, implement robust authentication procedures, disclose API performance metrics to relevant parties, and establish standardised API specifications with service providers. Coverage has also been extended beyond individual customers to legal entities such as companies and institutions.
A central operational requirement involves implementing an integrated cash flow model for obtaining initial customer consent and authentication during the onboarding process. Licensed banks are expected to collaborate with Benefit Company on this implementation, while information and payment service providers must agree with banks on standard API specifications and service standards aligned with the security guidelines under the Bahrain Open Banking framework.
The amendments follow CBB consultations held in March and October 2023, with the regulator setting compliance deadlines for all financial institutions in the jurisdiction. The CBB anticipates the framework will accelerate fintech innovation in Bahrain, supporting the development of new applications across budgeting, personalised lending and investment platforms powered by open banking data access.
