By mid-2024, commercial banks in Montenegro will complete their alignment with new regulations, facilitating the implementation of open banking for institutions that offer online payment account services like e-banking and m-banking, according to the Central Bank of Montenegro (CBCG).
Andrija Jovović, the director of the CBCG’s Payment Transactions Department, announced that the first providers of payment initiation and account information services are expected to launch soon, marking a significant step for open banking in Montenegro.
Understanding open banking
Open banking allows banks and financial service providers to securely share customers’ financial data with authorized third parties through application programming interfaces (APIs). This initiative aims to foster competition and innovation in the financial sector, making financial services more accessible and personalized.
The legal foundation for open banking in Montenegro was established with the adoption of the Law on Amendments to the Law on Payment Transactions in September 2022, aligning with the EU’s PSD2 directive (Payment Services Directive). This law enhances competition in payment services.
Security and user data protection
The CBCG has worked with the World Bank to organize workshops for banks and IT companies to clarify the benefits and applications of open banking. Throughout the harmonization process, the CBCG has maintained communication with banks to address compliance questions and prepare for the regulatory changes.
Access to APIs is restricted to those authorized by the Central Bank, ensuring that only certified payment service providers can interact with bank systems. The Central Bank emphasizes the importance of robust security protocols to protect user data and reduce fraud risks.
Challenges and educational efforts
One major challenge to open banking in Montenegro is the general population’s financial literacy. Research shows a significant gap in understanding concepts like FinTech and open banking, highlighting the need for enhanced educational initiatives.
To address this, the CBCG, in partnership with the Government of Montenegro, has launched a Financial Education Program for 2023–2027. This initiative aims to improve public knowledge about digital payments and open banking.
The Central Bank also runs annual financial education campaigns and has established the CBCG FinTech Hub, an online platform for inquiries about regulatory issues in banking and payment services.
Conclusion
As Montenegro gears up for the full implementation of open banking, efforts are underway to ensure security, educate the public, and facilitate a smoother transition to this innovative financial model. The CBCG remains committed to fostering a secure and informed environment for digital banking in the country.
