As part of this directive, the banks and credit card companies will be required to enable licensed and supervised third parties to gain access to a customer’s account, with the customer’s explicit consent, in order to obtain information or execute transactions. This regulation is another step being taken by the Bank of Israel to advance competition and innovation in the Israeli banking system. With this step, the Bank of Israel joins a number of regulators and entities in the world (such as in the UK, Australia, Singapore, the EBA, and others) who have published Open Banking principles for the financial system.
Customer accounts will be opened to third-party access in stages. In the first stage, access will be provided to information on balances and transactions in the customer’s current account, within one year from the publication of this directive. In the second stage, access will be provided to information on bank and non-bank payment card transactions, and to initiate payments in the customer’s bank account, within one-and-a-half years from the publication of this directive. The third stage will include access to additional customer information on the customer’s credit and loans, on the customer’s deposits and savings, and on the customer’s securities portfolio, all within two years from the publication of this directive.
Open Banking will enable and encourage the development of new services and products in the areas of payments and analysis of the customer’s banking information that could increase competition in financial services. This is expected to be reflected in lower prices and offerings of innovative products and services to customers. For instance: in the area of financial information, a service to consolidate information, which would allow the customer to see all banking information from all of the accounts he manages, in a consolidated format in one place. Based on this collection of information, it will be possible to offer the customer consultation regarding his financial behaviour and to offer him financial products including credit, deposits, and securities. In the area of payments, we can see, for instance, that some merchants are offering clients the option of paying directly from their account through a designated mobile application, without a payment card and without providing account details.