All Bank Accounts in One App: What You Need to Know About Open Banking

The finance sector continues to undergo a major transformation influenced by advancing technology and digitalization, with Open Banking being a vital component of this change. Open Banking is a system that allows banks and electronic money institutions to securely share their customers' financial data with third parties, fundamentally relying on Application Programming Interfaces (APIs).

Thanks to APIs, banks and fintech institutions can share their customers' financial data with third-party providers safely and swiftly. So, why has Open Banking become so crucial both globally and in Turkey? The primary reason is to improve customer experience. For example;Your salary is deposited into your account at Bank A, while your home loan is with Bank B. You also have an investment account with Bank C, and due to previous employment, you have accounts with Banks D and E. You have a Papel account for advantages such as cashback and free money transfers, too. In this scenario, you have accounts with a total of 6 different financial institutions, each requiring a separate app and password. Open Banking offers a precise solution to this issue. You can securely, quickly, and conveniently access all your financial data using the Papel app, licensed by the Central Bank of the Republic of Turkey.

Foundations of Open Banking

Open Banking is built on API (Application Programming Interface) technology. APIs are tools that allow software to communicate with each other. Banks with open banking licenses and compliance provide APIs to third parties who wish to access their customers' financial data. In short, open banking is based on two main elements:Customer consent: Customers must explicitly consent to share their financial data with third parties.Security: The open banking system has robust security measures to protect customer data.

Advantages of Open Banking

As summarized in the example above, open banking fulfills many essential functions for users and is equally beneficial for banks and other financial institutions. Open banking offers the following advantages for customers and financial institutions:

Benefits for Customers:

• Faster, Simpler Payment Systems
• Better Financial Management
• More Choices

Benefits for Financial Institutions:

• More Competition
• Customer Loyalty
• New Product and Service Development
• Lower Costs

Benefits for Customers:

Easier Access to Credit: Open banking allows users to have a more comprehensive view of their financial situations, which can facilitate access to credit.Faster, Simpler Payment Systems: Facilitates direct payments and fund transfers from third-party apps, making payment processes quicker and less expensive.Better Financial Management: Customers can gather their financial data in one place for better financial management through open banking. For example, they can monitor accounts from different banks in one app, making investment and spending decisions more quickly and easily.More Choices: Customers can choose from a broader range of banking and financial services providers thanks to open banking. For instance, they can manage an investment account from one bank using another bank's credit card.

Benefits for Financial Institutions:

More Competition: Open banking increases the competitiveness of financial institutions, enabling them to offer better services to their customers.New Product and Service Development: Through open banking, financial institutions can gain a competitive edge by developing new products and services, such as personalized financial recommendations.Customer Loyalty: Open banking helps financial institutions increase customer loyalty and revenues.Lower Costs: Open banking enables financial institutions to operate more efficiently by reducing costs.

Open Banking allows customers to share their financial data with other banks and financial institutions with their consent, aiming to make banking services more accessible and effective. This enables customers to track account information from different banks in one place, save time, and improve their financial experiences.

Is Open Banking Safe?

In Turkey, providing open banking services requires a license from the Central Bank of the Republic of Turkey (CBRT), with all regulations also made by the CBRT. The Central Bank announced the availability of open banking services on December 1, 2022. The announcement introduced the 'Open Banking Gateway' (GEÇİT) infrastructure developed by the Interbank Card Center (BKM), which provides parties with standard open banking transactions. Open Banking services should be used through applications with specific permissions and documents to ensure the security of customers' financial data sharing. This way, the data security of customers will be protected.

Papel was authorized with an Open Banking license by the decision of the Central Bank of the Republic of Turkey dated 07.07.2023.

The Future of Open Banking

Open Banking has the potential to revolutionize the financial sector. With the widespread adoption of open banking, financial services will become more personalized, efficient, and accessible.

Frequently Asked Questions About Open Banking

Is there a fee for Open Banking?

Generally, no. Many financial institutions, including Papel, do not charge for open banking services.

What transactions can be done with Open Banking?

Open banking allows for balance inquiries, listing account transactions, or facilitating money transfers via mobile and internet channels efficiently, enabling you to control all bank accounts through one app.

How long can accounts from other banks be viewed with Open Banking?

You can grant permission to view your accounts at other banks for up to 6 months. At the end of this period, you can continue viewing your accounts at other banks by granting permission again.

How can I access open banking services?

You can access Open Banking services through various mobile applications or internet banking.