Oman’s banking sector is undergoing a significant transformation, driven by the introduction of the new Oman Banking Law under Royal Decree No. 2 of 2025 and a regulatory framework for open banking. These initiatives reflect a proactive shift towards modernisation, aligning the sector with global standards and fostering a more dynamic, innovative financial landscape.
Accelerating Modernisation
The new Oman Banking Law, effective from January 1, 2025, replaces the longstanding 2000 framework and ushers in a series of progressive reforms designed to enhance regulatory oversight and promote technological innovation. By expanding the authority of the Central Bank of Oman (CBO), the law equips regulators with greater autonomy to supervise digital and investment banks while also allowing the CBO to establish and own companies exempt from various forms of taxation.
This empowerment creates a more agile regulatory environment capable of responding swiftly to market developments. The law’s provisions mandate that banks transition to a public joint-stock company structure before applying for licensing, with at least one-third of board seats occupied by independent directors to ensure corporate governance and accountability. One provision that engenders an open, competitive and global dynamic is the inclusion of licensing opportunities for foreign banks to create representative offices.
Third-Party Lending
Open banking, which allows third-party providers to access consumer financial data through application programming interfaces (APIs), has emerged as a catalyst for innovation, competition and an enhanced customer experience. In Oman, the framework introduces licensing requirements for service providers, establishing protocols for data exchange and reinforcing consumer protection measures.
The regulatory objectives include fostering innovation, stimulating competition and empowering consumers by granting them control over their financial data. By enabling seamless collaboration between banks and financial technology (fintech) firms, Oman is creating an environment conducive to the development of modern financial products and services. The integration of the 2023 electronic-know-your-customer circular, which streamlines digital onboarding processes through biometric verification, highlights a commitment to reducing costs and facilitating broader access, particularly for small and medium-sized enterprises (SMEs).
Regional Trends
Benchmarking the open banking framework against regional counterparts reveals a distinctive focus on domestic market consolidation. While Oman’s regulatory structure mirrors Bahrain’s pioneering approach, it introduces stricter data localisation requirements, mandating that consumer data be processed within Omani borders. Compared to Saudi Arabia’s API-centric model, Oman’s emphasis on contractual governance and stringent liability coverage for third-party providers highlights a prudent, security-focused stance. Although the UAE’s Open Finance Framework integrates insurance products, Oman stands out for its targeted support of SMEs through initiatives such as the National ePayment Gateway.
Impact
The potential impact of these reforms on Oman’s banking sector is multifaceted. Open banking is projected to boost banks’ revenue from digital services by a 22.4% compound annual growth rate between 2025 and 2030. This is expected to be driven by the development of personalised financial products and finance partnerships. Early signs of this transformation are already evident, with institutions such as Bank Muscat leveraging collaboration with fintech platforms to offer real-time SME credit scoring, reducing loan approval times. The framework also addresses the SME financing gap by enabling lenders to assess creditworthiness based on a more comprehensive analysis of financial data. Consumers stand to benefit from improved financial management tools, such as unified dashboards and dynamic currency conversion services, which enhance user experience and cost efficiency.
