The Financial Services Regulatory of Abu Dhabi’s Global Market presented latest framework for supervising FinTech firms that offer third-party services to clients.
The ADGM stated on Thursday, the Third-Party providers are firms that act as intermediaries between clients and financial institutions to aid users manage their data more excellently when carrying out financial transactions.
The Emmanuel Givanakis, chief executive of the regulatory authority stated that: “It will help TPPs and financial institutions collaborate in order to serve their customers more efficiently, and it lays the ground for the development and growth of open finance in the region.”
He stated that “The new framework will ensure the financial companies and customers’ interests are protected as it requires TPPs to take appropriate care of the data.”
ADGM stated that “The new framework will regulate how TPPs gain access to, process and transfer customer data.”
Globally, lenders have contained open banking to revolutionize the conventional banking model and enhancement their balance sheets as the pandemic led to record low interest rates and gentler loan progress.
However, privacy worries persist as open banking permits lenders to share client data, such as business history and expenditure patterns, with regulated third-party providers after locating the account holder’s consent.
The new framework will confirm the financial firms and clients’ interests are threatened as it necessitates TPPs to take fitting care of the data, he said.
Before the Covid-19 outbreak, 88 percent of UAE banks anticipated to empower open banking in the forthcoming 12 months, according to a survey fixed by FinTech company Finastra in January the preceding year.
The system will permit TPPs to operate along with financial institutions in a “secure and effective manner that simplifies transactions, while defending the data and benefits of clients.”
In addition, there will be monitoring necessities for TPPs in areas such as data fortification and privacy of data, manner of business, technology risk, anti-money cleaning and disputing terrorist financing, the ADGM stated.
The ADGM outline will also offer a foundation to provision the progress of open banking, with the effort on giving clients and industries more control over their financial data.
“This is all part of ADGM’s ongoing efforts to develop a sound and progressive FinTech ecosystem that fosters innovation and new models to deliver financial services,” the free zone stated. The latest system will furnish to a range of FinTech services that fall under the auspices of the FSRA.
