CBK launches regulatory framework to advance open banking and digital innovation

In a progressive move to support digital transformation and economic development, the Central Bank of Kuwait (CBK) has launched a comprehensive regulatory framework aimed at balancing competition between technology companies and the banking sector.

This framework is designed to provide the necessary infrastructure for the financial and banking industry in Kuwait, encouraging collaboration between traditional banks and financial technology companies. The goal is to enhance financial services, accelerate innovation, and align with the objectives of Kuwait’s Vision 2035, reports Al-Jarida daily.

A key element of this initiative is the adoption of Open Banking (OB), which is emerging as a transformative force within Kuwait’s financial ecosystem. Open Banking enables banks and fintechs to offer secure, consent-driven, data-rich, and customer-centric digital banking services.

The Kuwait Open Banking Framework (OBF) was developed to help financial institutions implement such services based on core principles of data openness and customer control. This framework is expected to reshape the banking environment by creating new value for regulators, banks, Open Banking Service Providers (OBSPs), and customers alike.

The CBK’s approach emphasizes delivering meaningful value to all stakeholders without imposing unnecessary burdens, ensuring that customers are well-informed about their rights regarding data use and transfer, maintaining a high level of safety and comfort, and achieving a balance between economic impact, speed to market, and scalability of services.

To support the implementation of Open Banking, the framework includes a comprehensive set of guidelines and documents covering regulatory instructions, directives for OBSPs, procedures for claims and dispute management, customer experience protocols for account information and payments, consent management processes, technical specifications including API design and Swagger Codes, as well as security, operational, and monetization instructions.

In a notable development, the Central Bank has approved a financial technology company to pilot Open Banking services within its regulatory sandbox, Wolooj. This pilot program runs alongside the drafting of formal legislation, allowing the CBK to refine the regulatory framework by drawing insights from practical business models.

This strategic step positions Kuwait to lead in digital financial innovation while ensuring that its regulatory landscape remains robust, secure, and adaptive to future needs.