National Bank of Georgia approves Open Banking rules

The rule specifies the enrolment method and assures the accuracy, dependability, and security of the enrolled businesses' services.

Non-banking institutions, if they fulfil the regulatory criteria, are permitted to participate in Open Banking as providers of both account information and payment initiation services. Open Banking may encompass any firm regulated by the National Bank of Georgia.

It is worth noting that the National Bank of Georgia adopted the Regulation on Registration and Regulation of Payment Service Providers on May 1, 2023. The Regulation permits any firm, including those previously unregulated by the NBG, to register as a service provider for new business operations, account information access, and payment initiation.

The updated regulation also defines a significant provider's status, eligibility criteria for the provider's administrators, notification of changes in shareholding of both direct and indirect owners of a significant share and ultimate beneficial owners, and other important obligations towards registered providers.

Open Banking in Georgia

Non-banking institutions will also have access to Open Banking provided the National Bank's prerequisites are satisfied, according to the guidelines. In this situation, the link will be available for any subject that meets the criteria.

The National Bank of Georgia began talks with the banking sector on the implementation of Open Banking in Georgia in the summer of 2019, followed by monthly working group meetings. The Open Banking Working Group includes officials from the National Bank of Georgia, the Georgia Bankers' Association, and commercial banks. The Open Banking Committee, formed in collaboration with the Bankers' Association, is tasked with developing the standards required for the implementation of Open Banking in Georgia and promoting the initiative further.

With the assistance of the Bankers' Association of Georgia, commercial banks, and the National Bank of Georgia, the Open Banking Committee prepared the first edition of the Open Banking Implementation Framework in September 2020. This framework paper establishes the regulations and criteria that commercial banks must follow when initially exchanging client data, such as bank account balances and transaction information, with one another.

The Open Banking opportunity

Open Banking technology is already in use in countries such as the UK, Australia, and European Union member states. The exchange of user data through such channels is required for EU member states under the amended PSD2 payment services legislation.

Open Banking offers tremendous prospects for both commercial banks and fintech firms. Georgia anticipates the emergence of new business models as a result of the complete adoption of Open Banking, as banks will be able to establish open APIs for all sorts of services and products, which may be incorporated into various types of fintech enterprises. Indeed, the bank's services and products will be distributed through numerous digital channels, which will contribute to market development and innovation. Furthermore, it will provide more potential to grow collaboration with fintech organisations, which will create more opportunities for tapping into new business categories.