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The Central Bank of Oman (CBO) has announced that it has embarked on a number of far-reaching initiatives that will add new momentum to the pace of digitalisation under way in the nation’s banking and financial services industry.
CBO Executive President Tahir bin Salim al Amri said the initiatives will enable the roll-out of Central Bank Digital Currency, Open Banking and Digital Onboarding in the Sultanate of Oman.
He made the announcement while delivering the keynote address at the New Age Banking Summit 2022, which was held at Al Bustan Palace — A Ritz Carlton Hotel Muscat on Tuesday, May 31, 2022. The daylong forum, organised by UMS Events, was hosted by Shaikh Salim bin Mustahail al Mashani and supported by Oman Banks Association.
Experts describe Central Bank digital currencies (CBDCs) as digital tokens issued by a central bank that are pegged to the value of that country's fiat currency. A number of advanced economies have already embraced CBDCs, while others are weighing plans to introduce such government-backed digital currencies as a means to implement monetary policies to provide fiscal stability and control inflation.
Al Amri also recalled the CBO’s recent efforts to enable the introduction of virtual currencies and fintech solutions as part of the sector’s ongoing digitalisation strategy. He cited in this regard the apex bank’s decision, announced last year, to set up a high-level task force to study the pros and cons of authorising the use of cryptocurrencies in the Sultanate of Oman. Studies conducted by the task force, comprising members of the financial sector regulator, will help the CBO firm up its policy response to the possible use of virtual assets in the country.
Also in the Central Bank’s sights are plans to enable the introduction of Open Banking — an increasingly popular system under which banks open up their application programming interfaces (APIs) for third parties, chiefly fintech service providers, to develop new apps and services.
Thus, instead of competing with fintechs, traditional banks partner with them to remain competitive in the rapidly evolving financial technology space. The Open Banking system has thrived in Europe and the United States, with some countries in the GCC granting licenses for the first Open Banking in their respective jurisdictions.
In his keynote address, the Executive President also revealed that a new banking law will be issued shortly. Accredited to international standards and best central banking practices, the new law has been designed to support the evolving needs of the banking and financial services sector in the Sultanate of Oman, he said.
Al Amri also commended the robust uptake of digital channels for making payments in the country. Point-of-Sale (PoS) transactions soared over 500 per cent to 115 million transactions in 2021, up from around 24 million transactions in 2017, he said. Likewise, e-commerce transaction surged to 32 million last year, up from around 300,000 in 2017.
The Executive President cautioned about the grave peril posed by cyber attacks on the country’s banking and financial sector, warning that the threat not only has the potential to unleash losses for victims, but worse, it could damage public trust in digital services. In this regard, he stressed the need for continued investment in cybersecurity tools, alongside the suitable development of talent to employ these tools.
He also affirmed the Central Bank’s pledge to be mindful of the importance of “speed” in the roll-out of regulations, licensing procedures and adoption of modernisation and technology.
In concluding, he urged the banking sector not to make technological advancement as a goal in itself, but as an enabler to achieve financial inclusion, improve customer experiences, boost efficiency of financial services and cater to the needs of the economy and the people. Market stakeholders should also be wary of the potential impact of climate change on the future of banking and financial services, he added.
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