Open Finance in the UAE: A Strategic Inflection Point for Financial Institutions and Investors

The United Arab Emirates (UAE) is undergoing a transformative shift in its financial ecosystem, driven by the rapid adoption of Open Finance-a framework that extends Open Banking principles to include data sharing across a broader range of financial services. For investors, this evolution represents a strategic inflection point, offering opportunities to capitalize on early-mover banks like Commercial Bank of Dubai (CBD) while navigating the regulatory and competitive dynamics reshaping the sector.

The UAE's Open Finance Ecosystem: A Regulatory and Market Catalyst

The UAE's Central Bank of the UAE (CBUAE) has been instrumental in fostering Open Finance through initiatives like the AlTareq framework, which mandates secure, consent-based data sharing between banks and third-party providers. In 2025, the CBUAE introduced Federal Decree-Law No. 6 of 2025, expanding its regulatory oversight to include virtual assets and decentralized technologies, while imposing stricter penalties for non-compliance, including fines of up to AED 1 billion for licensed institutions. These measures signal a commitment to balancing innovation with consumer protection, creating a fertile ground for banks that can navigate the evolving compliance landscape.

The market response has been robust. According to a report by 6W Research, the UAE's Open Banking market is projected to grow from USD 3.16 billion in 2024 to USD 5.71 billion by 2029, driven by increasing consumer adoption of digital-first services. With 89% of UAE consumers now using digital bank accounts, the demand for seamless, interoperable financial solutions is accelerating.

Commercial Bank of Dubai: A Pioneer in Open Finance

CBD has positioned itself at the forefront of this transformation. In 2025, it became the first UAE bank to fully activate Open Finance under the AlTareq Initiative, collaborating with CBUAE-licensed providers like Pay10 and Lean Technologies to enable customers to securely share financial data and initiate payments. This move aligns with CBD's broader digital-first strategy, which includes upgrading to Ethix Core Banking and leveraging Microsoft Azure to enhance operational efficiency.

Financially, CBD has demonstrated resilience and growth. In 2024, the bank reported total assets of AED 140.2 billion and a net profit of AED 3.03 billion, with 96% of its customers utilizing digital banking services. Its leadership, including CEO Dr. Bernd van Linder, has emphasized expanding Open Finance use cases, such as trade finance and cross-border transactions, to drive ecosystem growth.

Competitive Landscape: Navigating Rivals and Market Share

While CBD is a trailblazer, it faces stiff competition from peers like Emirates NBD, First Abu Dhabi Bank (FAB), and Abu Dhabi Commercial Bank (ADCB). FAB, the UAE's largest bank by assets, reported a net profit of AED 10.63 billion in H1 2025, driven by its AI-led client servicing and diversified revenue streams. ADCB, meanwhile, boasts a cost-to-income ratio of 26.4% and a growing current account and savings account (CASA) base, reflecting its efficiency in digital banking. Emirates NBD has also strengthened its position with a balance sheet exceeding AED 1 trillion and a 56% quarter-on-quarter increase in pre-tax profit in Q1 2025.

CBD's competitive edge lies in its early adoption of Open Finance and its focus on localized, customer-centric solutions. While larger banks may have broader digital innovation portfolios, CBD's agility and strategic partnerships-such as its collaboration with Visa and du-position it as a reliable alternative for businesses and individuals seeking tailored financial services.

Regulatory Risks and Operational Costs

The new regulatory environment, however, introduces challenges. The CBUAE's expanded oversight under Law No. 6 of 2025 requires banks to invest in enhanced compliance frameworks, potentially increasing operational costs. For CBD, this includes revising governance structures and risk management protocols to meet stricter licensing requirements. Additionally, the law criminalizes unlicensed financial activities, with penalties including imprisonment and fines up to AED 500 million. These developments underscore the importance of robust compliance for CBD and its peers.

Investment Rationale: Balancing Innovation and Risk

For investors, CBD's early adoption of Open Finance and its strong financial performance present compelling opportunities. The bank's AED 3.03 billion net profit in 2024 and its leadership in digital transformation-evidenced by its Ethix Core Banking upgrade-highlight its capacity to thrive in a competitive, regulated environment. Moreover, the UAE's National Investment Strategy, which aims to double foreign direct investment by 2031, further bolsters the case for investing in banks aligned with the country's digital and economic diversification goals.

However, risks remain. The rising compliance costs and the need to compete with larger banks like FAB and Emirates NBD could pressure CBD's margins. Investors must also consider the broader market dynamics, including the projected growth of the UAE's Open Finance sector and the potential for increased competition as more players enter the ecosystem.

Conclusion

The UAE's Open Finance ecosystem is at a pivotal juncture, offering both opportunities and challenges for financial institutions and investors. Early-adopters like CBD are well-positioned to capitalize on this shift, provided they can navigate regulatory complexities and sustain their digital innovation momentum. As the sector evolves, investors should closely monitor CBD's ability to expand its Open Finance use cases, manage compliance costs, and maintain its competitive differentiation in a rapidly maturing market.