CIS countries to launch open banking. Why and how read below.
Today hard to find someone in fintech industry who is not talking about open banking. The technology has gained momentum and is attracting unprecedented attention. For Europe, it offers a range of previously unavailable advantages: fast, hassle-free payments, no need to enter an IBAN number for transfers (which not everyone can remember or enter correctly), and a secure environment with a minimum fraud risk. For many other countries, it provides the opportunity to join the global trend and align with the European Union tendencies.
Among these jurisdictions are Moldova, Ukraine, and Georgia, which recently announced their intention to comply with EU directives and adopt open banking. Ukraine was one of the first to declare start of its work on the first open banking platform by the country's main processing center. The National Bank and several major commercial banks are already working on implementing payment method, and it will soon appear in banking applications. However, for the local population, payment method will not be something new or revolutionary, as Ukraine is one of the most developed countries in the CIS region. Instant interbank transfers have long been in place, IBAN payments are not popular within the country (they are much simpler), and financial services for general public are convenient and accessible. The motivation for launching payment method is likely associated with European trend, expanding available payment methods, and providing choices, rather than a "payment revolution."
The same cannot be said about Georgia, which also recently announced interest in open banking solution and develops it within new fintech company, Keepz. Georgian banking for individuals leaves not that good impression in terms of convenience. Although it cannot be compared to European banking, but compared to Ukraine and Kazakhstan, where flagship products have advanced significantly, Georgian banking services are at a lower level. Interbank payments take from several hours to a day, made only during working hours; transfers within the country use IBAN, and due to frequent errors, they often do not go through on the first attempt. Therefore, implementation of open banking will allow for more convenient receipt and sending of transfers and offer new opportunities for businesses.
Moldova and its main Victoriabank are working on launching the technology together with SaltEdge, a British fintech with significant experience in the field. The UK, as the pioneer and creator of open banking, is indeed the best advisor on this matter, and securing the support of such expertise is a very good idea.
Why the rush to Open Banking?
As we have previously discussed in our articles, it is a way to simplify the payment experience, thereby increasing financial flows and involving more citizens. A two-click payment will improve approval rates on websites, and absence of chargeback option will minimize the risk of fraud and potential influx of scammers.
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