Exploring Saudi Arabia’s Open Banking Hackathon with Ozone API’s Chris Michael

The Financial Academy in the Kingdom of Saudi Arabia is an academic institution offering financial related courses on all things tech – think cybersecurity, economics and cryptocurrency – and often partnering with various institutions to support the courses, including Ozone API and LAU.

I caught up with Ozone API’s Co-CEO Chris Michael to chat about the Financial Academy’s recent Open Banking Hackathon, to find out why Ozone API were involved, the revolutionary fintech ideas that stood out, and why the event is such an important milestone in the Kingdom of Saudi Arabia’s open banking journey. 

The driving force behind the Open Banking Hackathon

“We were originally approached because The Financial Academy wanted us to do some open banking related training to improve the technical understanding of open banking,” Chris explained.

“In the kingdom there’s an initiative called Saudi Vision 2030 – Saudi Arabia’s ambitious roadmap for economic diversification, global engagement, and enhanced quality of life. This is a bold vision for the kingdom, including the Financial Sector Development Program as one of its key pillars, which will play a crucial role in shaping the future of Saudi Arabia’s financial sector to promote income diversification, boost savings, and offer various financing and investment opportunities.

Open banking is just one part of this pillar, but there is a huge driver, with a target of 230 emerging fintechs and a growth rate of 70% in digital payments.

We had identified that there was a significant lack of knowledge and understanding about open banking in the kingdom, specifically the kind of technical skills that are needed to implement open banking. If we could help people understand open banking concepts and technologies through a Hackathon, we could help speed up the implementation in the kingdom.”

And so came the Open Banking Hackathon. Two weeks of innovation, knowledge sharing and empowering the next generation of fintech entrepreneurs. 

The upcoming entrepreneurs in Saudi Arabia’s Fintech industry

“The concept of this hackathon was to empower teams of people, each with different skills coming together,” explained Chris, “developing not only a product concept, but also a working application, together with a strong business model and a go-to-market strategy. We were looking for something very special and quite unique. Each team needed a mix of product management, UI design, front end development, back end development, and business planning skills.”

Six teams participated in the Hackathon this year, Naqd, Lenday, EZcard, QR-BAN, FinTrack and CashMe, and they all developed impressive fintech applications. All of the teams impressed Chris, but two were really special, the first one being the winners of the Open Banking Hackathon, Lenday.

“Lenday is a lending marketplace. On the one hand, it serves small businesses who are looking for a loan. The app allows these businesses to connect to their bank accounts, to validate the business’s financial standing, their income, and their expenditure. It’ll help in the credit scoring process, and in turn help them get a loan because they can apply through the platform.

This is solving a big problem in Saudi Arabia at the moment, because it’s really painful to try and get a business loan. You have to fill out loads and loads of documents. It often takes several months. Lenday’s solution enables a small business to apply for a loan and get a decision almost instantly. And that’s a huge benefit.” Chris said.

But Lenday’s Fintech app won’t just help small businesses, lenders will benefit too: “It also allows lenders to put offers onto the platform, either generic offers, or bespoke, personalised products. It then allows these lenders to find suitable SME’s, and promote targeted offers to them.

So it’s almost like a financial ‘dating’ platform, matchmaking small businesses and lenders. And that’s a really nice concept.”

Lenday developed the app in some detail, offering powerful tools to transform how loans are given. “The platform is set up to allow large amounts of money to be borrowed, but lenders can also decide to provide funding in stages, using open banking to power ongoing cash flow analysis and credit risk assessment which will enable the provision of more funds over time as businesses hit certain milestones. This was one of the reasons Lenday won the award.

Lenday also won because of their strong business model, “The teams also had to develop a financial plan and go to market strategy. They had to develop their branding, explain where the revenue was going to come from, how they were going to go to market, who they wanted to target – and they did a really good job of explaining all of this.”

While Lenday won, FinTrack was another of Chris’s favourites: ”The overall FinTrack application was perhaps not as polished, because the team was very small, with only three members, but their idea was absolutely brilliant.

Again it was a marketplace, but this time it was a personal finance management application, with a really interesting twist. FinTrack helps individuals understand their money and borrowing, whether they should be saving more, or whether they should be reducing their cost of borrowing. Lots of financial management platforms try to do this but most don’t do it very well and, and often people want to talk to a human.

FinTrack connects to a user’s account and then searches for a financial advisor from a marketplace of experts, allowing them to have video session with them inside the platform.” 

Monetisation was also at the forefront of FinTack’s app, where users pay a fee for each session, with 30% going to the platform, and 70% to the advisor. A very interesting and scalable business model, especially when it can be scaled across borders. 

What does the Open Banking Hackathon mean for Saudi Arabia? 

All the ideas created during this initial 2024 Open Banking Hackathon were based on Account Information Services (AIS) functionality currently available from banks in the kingdom. This means that each app has a very strong potential: “If the teams had funding tomorrow, they’d be able to take their proposition into the first stage, get the regulatory sandbox approval, go through the technical sandbox, obtain a licence and go to market.” said Chris.

The Hackathon was a great first step in pathing the way for new fintechs to emerge, supporting Vision 2030 and putting Saudi Arabia on the trajectory for global success. Future iterations of this Hackathon will be further enhanced by the inclusion of Payment Initiation Services (PIS), which will add even more value. Watch this space as Ozone API continues to support this brilliant initiative.