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Compliance Regulations for Financial Institutions in Jordan: Understanding the Key Pillars of Open Finance

Jordan’s Central Bank has launched an open finance initiative aimed at enhancing financial services and customer experience, positioning the country as a regional hub for fintech. The regulator aims to support innovation, enhance financial services, and foster a digital cashless society.

Key Requirements of Open Finance in Jordan

The Open Finance instructions apply to all banks and Payment Service Providers (PSPs) holding licenses in Jordan, mandating them to allow third-party providers (TPPs) access to customer data via APIs after obtaining customer consent. TPPs can access various types of customer account data, including:

  • Transaction data
  • Account information
  • Other relevant data

Key Pillars of Open Finance in Jordan

The key pillars of Open Finance in Jordan include:

Technical and Security Requirements

  • Banks and PSPs are responsible for ensuring technical and security requirements are met.
  • Comprehensive documented policies addressing:
    • Security aspects
    • Data sharing
    • Contracting with TPPs

Risk Management

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

Implementation Challenges

However, the implementation of Open Finance in Jordan faces challenges, including:

  • Lack of knowledge and culture about open banking services among banks and PSPs.
  • Limited technical knowledge required to meet requirements and expose APIs.

To address these challenges, Jordan has initiated several steps, including:

Support Measures

  • An Open Finance incubator to provide guidance and support.
  • Task force to promote collaboration and information sharing.
  • Regulatory expertise to ensure smooth implementation.

Future Plans and Expansion

By the end of 2023, all banks will be required to open Account Information and Payment Initiation services to authorized TPPs. The Central Bank plans to collaborate with the private sector to define and establish a unified API standard, simplifying the process for TPPs to access customer data and promoting further innovation in the financial sector.

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

  • Insurance
  • Microfinance
  • Exchange services

Broadening the scope of Open Finance beyond banks and PSPs will usher in a new era of innovation and accessibility in Jordan’s financial sector.

For More Information

Check out our latest webinar: “Open Finance in the Middle East” for more information on the Jordanian framework, challenges, and opportunities in the region.