The Bank of Israel and the Government ICT Authority in the National Digital Ministry inaugurated new infrastructure for an open financial system – “Open Finance”
A central infrastructure has been launched, which will be at the center of the open financial system in Israel (Open Finance) and will help promote the “Open Banking” revolution.
The infrastructure will allow a third-party provider (e.g. various financial service providers), to receive a customer’s personal financial information from a source of information (e.g. from the bank) in a simple, efficient and secure manner, for the purpose of providing customer value services based on this information and providing access to personal payment account User as performed to date.
The benefits to citizens
The realization of the capabilities of the open financial system will enable third party providers to provide services to their customers whose purpose is better control over their money, both in obtaining reliable and available information and in performing various financial operations.
This innovative process allows banks and other financial entities to develop interfaces that allow them to consume financial information in a uniform and secure manner, in accordance with regulatory guidelines.
So how does this happen?
The customer gives his consent for a third-party provider to access his account and his consent to a source of information to transfer the relevant information that the same financial entity holds for the customer, directly to a third-party provider, through open interfaces managed by the source of information. In the case of initiating payments – the customer’s consent is given to a third party to write a payment order for him, when the customer authorizes the payment account manager to execute the payment order. At the current point in time, the system will allow activity in accordance with Proper Conduct of Banking Business Directive No. 368 only.
The open banking infrastructure has been developed by the “available government” unit at the Government ICT Authority, the National Digital Office, and enables the encryption and signing of communications and the authentication of the original messages and roles permitted to these third-party providers.
The various regulatory teams worked to establish and test the infrastructure. The establishment ceremony was held in the presence of Asher Bitton, Director General of the Digital Ministry, Shahar Bracha, Head of the Government ICT Authority, Lior Georgi, Deputy Governor of the Bank of Israel, Danny Khayashvili, Orly Koren, Leader of the Securities Authority The director of the “Available Government” Unit-Government ICT Authority, Yogev Shemani, and the teams that were involved in the process from all parties, constituted the transition from the period of testing and construction, to operational capability in production.
According to the Bank of Israel, it will be possible to start issuing digital certificates that serve as an identification for the financial body as early as April 2021, after the Passover holiday, when the “Available Government” unit is prepared to begin issuances with the Bank of Israel.
At the ceremony, the goals, expected benefits, work processes and infrastructure established for the purpose of this project were presented to the management of the organizations, in order to enable the regulators to realize the concept of the open financial system (“Open Finance”).
According to Yogev Shemani, director of an available government unit at the Government Information Technology Authority:
“We at the Government Information Technology Authority are proud to be partners in a revolution that will allow citizens more control over their financial information. We have established a secure infrastructure in accordance with international standards to ensure that the process is secure and maintains the privacy of customers.”
Lior Georgi, CEO of the Bank of Israel:
“Open banking is a strategic project for the Bank of Israel and the economy in general. The project included many partners from various ministries, and the available administration, as a body with technological capabilities and strategic concept, was a natural partner in the development of technological and secure infrastructure according to an international standard, which will enable liaison between financial entities. “
Danny Khayashvili, Deputy Supervisor of Banks:
“The development of the new infrastructure by the available government is a necessary step in an open banking project promoted by the Bank of Israel, and connects existing capabilities, knowledge and services in the public sector and those in the private sector. “Will lead to the expansion and improvement of the range of financial services for citizens.”
March 14, 2021