Open Banking in the EAEU: prospects and barriers

The concept of Open Banking represents a new paradigm of interaction in the financial market. Its essence is to provide third-party certified companies with secure access to the banking data of customers with their explicit consent. This information exchange does not take place directly, but through special programming interfaces – the API (Application Programming Interface). Such an approach creates the basis for a competitive and innovative financial environment. Instead of a closed ecosystem of a certain bank, the client gets the opportunity to manage their accounts opened in different organizations through a single application, as well as receive personalized offers from various financial service providers. 

Potential of open finance for the Eurasian Economic Union

For the Eurasian Economic Union, the introduction of open banking principles is a strategic step towards creating a single financial market. This initiative is fully consistent with the global trend towards deep digitalization of banking. The harmonization of approaches in this area significantly simplifies cross-border payments and transfers, as well as increases the availability of financial services for citizens and businesses in all participating countries. 

The experience of the European Union, where the PSD2 directive was implemented, demonstrates how such changes stimulate the emergence of new services and increase the overall efficiency of the economy. For the EAEU countries, this is an opportunity not just to copy successful achievements, but to adapt best practices to their own realities, which can contribute to strengthening economic ties within the Union. 

Benefits for consumers and businesses

The transition to an open finance model has tangible benefits for all market participants. End-users receive more convenient and functional tools for managing their personal finances. Businesses, in turn, get new opportunities for process optimization and growth. 

For citizens and private clients, the main advantages are as follows:

·      Ability to check the balance and transaction history of all existing accounts from different banks in one mobile application.

·      Obtaining more profitable and personalized offers for loans, deposits or investment products on the basis of the analysis of the overall financial behavior.

·      Simplification of the process of paying for goods and services, as one can initiate payments directly from an account through a third-party application, bypassing the entering of bank card data. 

The benefits for entrepreneurs and the corporate sector are no less significant. New technologies simplify accounting by automatically synchronizing bank statements with accounting systems. The procedure of getting loans for small and medium-sized businesses is becoming more transparent and faster, as the creditor bank can quickly obtain reliable information about the borrower’s financial flows from other credit institutions. In addition, a favorable environment is being created for the development of fintech startups that offer innovative solutions to the market. 

Current stage of implementation in the participating countries

At present, the degree of readiness for the introduction of open banking in the EAEU countries is not similar. The greatest progress can be observed in the Russian Federation, where the Central Bank is actively developing the concept and standards of open APIs. Pilot projects involving major banks and technology companies have already been launched.

There is also a high level of interest from the regulator and market participants in the Republic of Kazakhstan, and work is underway to create a national open finance platform. In the other countries of the Union – Belarus, Armenia and Kyrgyzstan – the process is at an early stage. Regulators in these countries mostly take an observant position, studying the experience of their neighbors and world leaders. This asynchrony in development causes certain difficulties for the formation of a unified approach across the entire economic space.

Main obstacles to integration

Despite the obvious prospects, there are a number of serious barriers to the full-scale implementation of Open Bankingin the EAEU. Overcoming them will be a determining factor for the success of the entire initiative. Potential difficulties can be grouped into several key areas. The main obstacles include:

·      Regulatory fragmentation. The lack of unified legislation and regulatory standards in the countries of the Union. Each state moves at its own pace, which makes it more difficult to create compatible cross-border services.

·      Technological unavailability. The IT infrastructure of many banks is built on outdated systems, upgrading which to support open APIs is a complex and expensive process.

·      Cybersecurity issues. Ensuring reliable protection of personal and financial data of clients is a top priority. Any leaks or fraudulent actions can undermine trust in the new system from both consumers and banks themselves.

·      Lack of a clear business model. Banks do not always see an economic interest in investing in the opening of their data. One needs clear monetization mechanisms that would encourage credit institutions to actively participate in the process. 

These problems are complex and require coordinated efforts to solve them. Without a common vision and coordinated steps, the risks of market fragmentation and innovation slowdown remain high. 

Ways to overcome existing difficulties

A systematic approach is needed for the successful implementation of the concept of open finance in the EAEU space. The most important step should be the harmonization of legislation. The development of supranational recommendations or model laws under the auspices of the Eurasian Economic Commission could set a common vector of development for all participating countries. This concerns both API technical standards and licensing rules for third-party service providers.

At the same time, close attention should be paid to the creation of unified safety standards. The development of common authentication protocols, data encryption, and incident response mechanisms will help create a trusting environment. Equally significant is the educational work with the public and business, explaining the principles of operation and advantages of the new system, as well as ways to protect against fraud. Stimulating pilot projects and creating “regulatory sandboxes” will help accelerate the testing of new ideas and fine-tuning of interaction between banks and fintech companies. 

Conclusion: the future belongs to coordinated actions

The transition to the Open Banking model is not just a technological upgrade, but a fundamental change in the philosophy of the financial market towards greater openness, competition and customer orientation. This is a unique opportunity for the Eurasian Economic Union to make a qualitative leap in the development of the financial sector and strengthen internal economic integration.

However, the success of this initiative directly depends on the ability of regulators, banks, and technology companies from all participating countries to work out common rules of the game and act in concert. Overcoming existing barriers through collaboration will pave the way for the creation of a truly unified and modern digital financial space.