Open banking is the new era of banking which puts the customers in the driving seat of their data, giving them the opportunity to choose the parties they want to share their financial data with. This new era will lead the way to higher competition between banks and Fintechs which will result in more innovative solutions that the banking customers will benefit from.
Traditionally banks have been reluctant to let other companies to access their customers’ information justifiably as there has not been much incentive for a bank to do so.
Due to the reluctance of banks, some countries address open banking issue by enforcing banks with regulations such as EU, India, Turkey or Australia. Some others let this issue to be solved on the market with some encouragement and coordination guidelines such as USA, Japan, Singapore and finally some countries such as Canada, Brazil, Russia let the industry initiatives handle the matter.
Figure 1: Implementation Types of Open Banking Around The World
Turkey joined the bandwagon of European countries by adopting the strict regulation option. At the start of 2020, an amendment on the “Payments Law, #6493” which has a full caption of “Law on Payment and Securities Settlement Systems, Payment Systems and Electronic Money Institutions” has become enacted by the Central Bank of Turkey. With that amendment, two new concepts of AISP and PISP which we are familiar from PSD2 regulations of Europe, are defined. Also with that amendment, these two type of service providers can only operate under the licence granted by Central Bank of Turkey. Amendment also defines an exception for currently operating firms to operate without a licence limited to one year after the date of enactment of secondary regulations which is expected to be announced at the end of 2020.
Though the term of “open banking” implies a broader scope, current initiative of regulators only address payments and letting access to bank account data. However, BRSA, another regulatory body for banking industry made a definition of open banking in its latest regulation regarding the IT systems of banks which is much broader than that of central bank, which really understandably focuses on payments as this is one of the main functions of the central bank.
Another point that should be remarked is that Turkish authorities follow a unique path by locating the Interbank Card Center (ICC) as the middle man technically. This means any licensed firm should first call the APIs of ICC and ICC calls the API of service providers. It’s expected that ICC will also play a role technical regulatory which might solve some technical problems occurred in EU with PSD2.
As one can see, open banking is new kind of breed for Turkey however the unique approach might speed up the adoption of the open banking. In the next couple of years we will just see how accurate this assumption is.