The Banking Supervision Department is leading the regulation of an Open Banking standard in Israel
Open banking will enable third parties to receive a customer’s financial information from the banks with the customer’s consent. The sharing of the information should lead to an improvement of the services provided to the customer, encourage the entry of new financial players, and increase competition over financial services. In order to enjoy the many benefits that can be provided by the open banking ecosystem, an API standard must be regulated for the financial system, through which it will be possible to transfer information between financial entities and third parties, including fintech companies.
The open banking standard will include a broad banking data dictionary, API services, system rules, information security, and privacy protection. The customer’s financial information will include information such as: current account balance, current account transactions, fees and interest, information on credit the customer has taken from the bank, information on the customer’s deposits and savings at the bank, and more. Based on this information, various services may be developed, including: data aggregation from the customer’s accounts at various banks, cost comparison of financial services, offering financial value to the customer and financial intermediation, consulting regarding financial behavior, initiated financial actions (payments, savings, and so forth), and more.
In this measure, the Bank of Israel joins a series of leading regulators from abroad, including from the UK, Australia, and others, who are publishing open banking principles for the financial systems in their countries.
As part of the open banking regulation process, the Bank of Israel is holding an on-going conversation with the relevant government ministries and regulators, as well as with the banking system and new service providers (fintech companies). In order to strengthen this conversation and adjust the emerging standard to the needs of these companies, the Bank of Israel is today publishing a consultation to the fintech companies in which they are called on to raise various issues with the Bank of Israel that are relevant to the project.