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Open banking: Opening up the ‘walled gardens’

Author

Listed:
  • Aytaş, Baran

    (Deputy General Manager of Digital Payment Solutions, Interbank Card Center, Turkey)

  • Öztaner, Serdar Murat

    (Deputy Executive Director, Payment Systems and Financial Technologies at Central Bank of the Republic of Turkey, Turkey)

  • Şener, Emrah

    (Deputy Governor, Central Bank of the Republic of Turkey, Turkey)

Abstract

This paper explores the reasons for differences in open banking systems around the world in order to identify the ideal conditions for open banking. Following an examination of different approaches to open banking, the paper identifies six parameters that are essential for success, and discusses how to optimise these based on the Turkish experience. The findings have important implications for regulators of open banking initiatives. First, the active involvement of the regulator is crucial, especially during the early stages of implementation. More than simply providing the legal framework for open banking, regulators need to participate actively in the design and implementation of such systems, providing guidance for application programming interface standards and efficient infrastructures. Secondly, it is essential to build and maintain a shared platform with standardised infrastructure to foster fast adoption. Finally, the development of an instant payment system is critical to unlocking the full potential of open banking.

Suggested Citation

  • Aytaş, Baran & Öztaner, Serdar Murat & Şener, Emrah, 2021. "Open banking: Opening up the ‘walled gardens’," Journal of Payments Strategy & Systems, Henry Stewart Publications, vol. 15(4), pages 419-431, December.
    • Handle: RePEc:aza:jpss00:y:2021:v:15:i:4:p:419-431
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    More about this item

    Keywords

    optimal design for payment systems; open banking regulation; instant payments; standardised APIs; shared platforms;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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