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The Birth and Improvement of Open Banking
The concept of Open Banking has first entered into our lives with regulations of the European Union’s PSD (Payment Services Directive) dated 2007 and MiFID II (Markets in Financial Instruments Directives II) dated 2014.
It is understood that the European Union aims a uniformization movement on issues such as making technological creative ideas suitable for economic fields, competition and consumer protection with PSD. The “Law on Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions” dated June 2013 and numbered 6493, which is similar in content to the relevant regulation, has entered into force in Turkish legislation.
With the aim of improving PSD, PSD2 (Payment Services Directive 2) came into force in 2016. This regulation, which paved the way for services related to the open banking model, the European Union obliged its member states to comply until January 2018.
What is Open Banking?
Open banking entered our lives a while ago as one of the biggest steps taken in the digitalization of financial technology services. We can define the UK-based open banking model as a secure method that enables third-party service providers to access financial information and perform transactions within the consent of users. In today’s world, where data means almost everything, in the open banking model where data sharing is completely with the consent of the user, no data that users do not want to be transferred is shared with any other third party by the bank.
Payment Initiation Services (PISP)
Initiating a payment order for the account at another payment institution upon the request of the user.
Account Information Services (AISP)
Online provision of consolidated information regarding one or more of the user’s accounts in other payment institutions.
Digital Banking and Information Systems Requirements
In the calendar about the Economic Reforms Action Plan dated 23.03.2021, it was announced that Digital Banking licensing would be possible. Following this, on 19.08.2021, the Banking Regulation and Supervision Agency (“BDDK”) presented the regulation needed for the realization of digital banking on 31.12.2021 as the Draft Regulation on the Operating Principles of Digital Banks and Service Model Banking. Since there are many resources related to the entire draft, how some concepts are defined within the scope of the regulation and the information systems competencies of the parties who want to obtain this license will be evaluated within this scope.
How Should Banks Handle API Usage?
Banks do not need to start from scratch to take advantage of PSD2. There are tools available for this. If you want to connect with other banks for account consolidation, technology already exists that connects hundreds of banks with a single interface. More than ever, people adapted to the digital age and are looking for new ways to connect with their banks. They need innovative services that can be easily integrated with other services, such as the rapidly growing FinTech applications they use to manage their finances. As a result, customers’ expectations are now rising rapidly.
OPEN BANKING API MANAGEMENT
It is specially produced for the Financial institutions of the Open Banking era.
In fact, they are more effective than web banking and mobile banking combined.
That’s why we created the aplonAPI TM solution with the Financial Institutions of the future in mind. Forward-thinking organizations can now offer Banking as a Service (BaaS) or (BaaP) solutions to their corporate or individual customers. Through an API-connected FinTech ecosystem of AISPs and PISPs, you will open your newest and largest revenue channel and actively participate in the multi-banking movement.
The Need to Alter to an API-Based Business Model
Together with our solution partner PaymentComponents, we are among the first to realize the benefits and true potential of open banking. We have learned a lot by working with leading financial institutions around the world. In order to benefit from this historical transformation, we have grasped the challenges and opportunities faced by those operating in the sector.
Based on this, an award-winning product named aplonAPI was developed by our solution partner PaymentComponents, which represents the best solution available today for financial institutions willing to stay at the top of the competition. With AplonAPI, you will be able to offer Service Model Banking / Platform (BaaS / BaaP) solutions to your customers and earn money from your APIs in the simplest and fastest way possible. The best part is, you’ll get a ready-to-use API sandbox with a FinTech ecosystem of AISPs and PISPs to modernize your payment system quickly so you can generate value from day one.
There are three main subjects in the open banking model. These are; “customer” using open banking service, “payment service provider” with which the customer has a payment account, and “third party providers” with whom the customer’s data is shared.