The Central Bank this week kicked off a wide-scale stakeholder consultation process in a bid to assess the possibility of introducing open banking to Sri Lanka, a move where financial data can be given upon customer consent to third party service providers to obtain value-added financial services.
The Payment and Settlement Department (PSD) of the Central Bank in paper advertisements yesterday invited entrepreneurs, academics, investors, government, non-government and multi-lateral agencies, banks, non-banks, payment service providers, financial technology companies (fintech) and experts in information technology to share their knowledge and experience in setting up an open banking framework to Sri Lanka.
The move coincides with the Central Bank’s move to name 2020 as the year of digital transactions.
“Open banking is the process of customers giving the consent to third party service providers to access their financial data held in financial institutions in order to obtain value-added services. It uses Internet-based technology, namely Open Application Programming Interfaces (APIs), to enable third parties, including fintech companies, to connect with banks or other financial institutions,” the advertisement said.
The interface will guarantee the security of the data that is provided.
Open banking is one of many tools that the Central Bank intends to launch in a bid to promote digital payment mechanisms and instruments in its effort to minimise the use of cash in circulation. “It s expected that an Open Banking Framework in Sri Lanka would increase competition, financial inclusion, enable innovations in financial and other related services as well as enable the public to better manage their finances.
There is an increasing international trend towards open banking in the world. Countries such as the UK, members of the European Union, Japan, Hong Kong and Australia have been moving towards introducing open banking due to the benefits that they provide customers,” the advertisement added.
As part of its regular public seminar series, the Central Bank last week held its first such seminar for this year under the title ‘Digital Transformation of Sri Lanka; Further of Banking’, delivered by Dr. C.N. Wickramasinghe of the University of Kelaniya.
Stakeholder submissions can be lodged with the Central Bank until April 3, 2020.