The State Bank of Pakistan (SBP) is working to establish an open banking ecosystem aimed at improving digital payments, expanding access to financial services and giving customers greater control over their financial data.
Under the proposed regulations, customer data obtained through the framework will be stored and processed within Pakistan, unless it is handled through a cloud service provider in accordance with the SBP’s Framework on Outsourcing to Cloud Service Providers.
The draft regulations aim to enable customers to securely share their financial information through a consent-based mechanism and initiate business payments using authorised Third Party Providers (TPPs).
The central bank said the proposed framework has been developed to establish a secure and reliable open banking ecosystem while addressing the potential risks associated with data sharing and digital financial services.
Under the regulations, all Account Holding Institutions (AHIs) will be required to provide consent-based access to customer data and payment initiation services while maintaining strict standards of cybersecurity, data protection and consumer safety.
The proposed framework is expected to make digital payments more efficient and improve access to financial services across Pakistan.
It will particularly facilitate business-to-business (B2B) and consumer-to-business (C2B) transactions. It will also allow financial institutions to use customers’ financial information and transaction histories for alternative credit assessments, potentially improving access to financing for merchants and small and medium-sized enterprises (SMEs).
According to the SBP, the initiative is expected to accelerate the digitisation of financial services by encouraging secure data sharing, strengthening credit assessments and enabling financial institutions to develop customised products and services.
The draft regulations have been designed in line with international best practices and incorporate findings from the first cohort of the SBP’s Regulatory Sandbox on Open Banking.
The proposed framework also includes safeguards covering data privacy, cybersecurity, fraud prevention and consumer protection.
The initiative supports the SBP’s broader strategy to promote digital financial services through a more connected, inclusive and efficient financial system.
As part of the consultation process, the central bank has invited feedback from relevant stakeholders, including financial institutions, fintech companies, technology providers, consumer organisations, academic institutions and the general public, to help improve the proposed regulations.
