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Compliance Checklist for Financial Institutions in Jordan

As part of its efforts to enhance financial services and customer experience, the Central Bank of Jordan has launched the Open Finance initiative. The move aims to position Jordan as a regional hub for Fintech and progress towards a digital cashless society.

Key Pillars of Open Finance in Jordan

Financial institutions in Jordan must comply with the following key pillars:

Target Financial Institutions

  • All licensed banks and Payment Service Providers (PSPs) are required to participate.

Enforceability

  • Financial institutions must allow Third-Party Providers (TPPs) access to customer data via APIs after obtaining customer consent.

API Scope

  • TPPs can access various types of customer account data, including:
    • Transaction data
    • Account information
    • Other relevant data

Target TPPs

  • Both Account Information Service Providers (AISPs) and Payment Initiation Service Providers (PISPs) are included.

Technical and Security Requirements

  • Financial institutions must establish and document technical and security standards for Open Finance services based on best practices.

Open Finance Policy

  • A comprehensive policy addressing:
    • Security aspects
    • Data sharing
    • Contracting with TPPs is required.

Risk Management

  • Financial institutions must identify, manage, and monitor risks associated with TPP contracts and provide Open Finance services.

Challenges

Despite the efforts to implement Open Finance in Jordan, several challenges remain. These include:

  • Lack of knowledge and culture about open banking services
  • Technical know-how among financial institutions
  • Guidance needed on implementing technical standards that facilitate secure data-sharing

Initiatives

To address these challenges, Jordan has initiated several steps:

Open Finance Incubator

  • An incubator is being created to nurture collaboration and provide a fertile environment for fintech startups.

Task Force

  • A task force has been formed to collaborate with the market and establish clear objectives for technical standards.

Regulatory Expertise

  • Building regulatory expertise can foster stronger partnerships between financial institutions and TPPs.

What’s Next?

By the end of 2023, all banks in Jordan will be required to open Account Information and Payment Initiation services to authorized third-party providers. The Central Bank of Jordan plans to collaborate with the private sector to define and establish an API standard, which will simplify the process for TPPs to access customer data.

In the future, the ecosystem is expected to expand to include more players such as:

  • Insurance
  • Microfinance
  • Exchange services

This expansion will usher in a new era of innovation and accessibility in Jordan’s financial sector.