EghtesadOnline: The Central Bank of Iran has developed a new platform, Diba, to supervise open banking operations, says Aboutaleb Najafi, CEO of Informatics Services Corporation, noting that regulated forex market is also planned to function on this platform.
"Diba is a regulatory platform like Shaparak, which was developed to regulate the operation of payment service provider companies. Banks have started to offer open banking services, allowing developers to create applications and offer innovative financial services," he was quoted as saying by IBENA.
Banks will be required to get their open banking platforms connected to Diba, so that the CBI can supervise account-based transactions (as opposed to card-based transactions), Financial Tribune quoted him as saying.
Najafi stressed that the platform is not intended to stop development of open banking services, as claimed by some experts. "Banks will make progress with their own open banking plans…Diba only aims to help the CBI supervise transactions that take place on these platforms."
Open banking enables personal customers and small businesses to share data securely with other banks and with third parties, enabling them to manage their accounts with multiple providers through a single digital app, to better control of their funds (for example avoid overdraft charges and manage cash flow) and compare products on the basis of their own requirements.
Iran’s banking sector, for a variety of reasons, has failed to keep up with the technological advancement in most countries nearly two decades ago. However, lenders have resorted to some new approaches towards banking and financial technology in the quest to not be left far behind.
However, much more needs to be done. Open banking is one of the areas experts believe that must be addressed by Iranian lenders sooner rather than later.
Keeping Eyes Open
According to the official, Diba will also be used for processing transactions of the planned regulated forex market.
"Due to the sensitivity of foreign exchange transactions and the importance of CBI supervision on the market, Diba will be used mainly to help the central bank keep “both eyes on the market.”
The regulated market was set up after the CBI decided to restore stability to the chaotic forex market. It will function as an intermediary between money changers and currency buyers.
Despite several deadlines, the long-awaited forex market has not opened yet, apparently due to failures to meet CBI obligations and preconditions set for its commencement.
The CBI has postponed the initiative several times due mainly to the complexities involved in launching the market and concerns over the potential negative impact it may have on the already fragile currency market.
The regulator says it wants to create an open and transparent system where foreign currency will be traded on an electronic platform.
The market will deal in wholesale currency in cash while large volumes will be offered on a base price set by the regulator.