July 29, 2023

Moldova’s Leap into Financial Innovation

In a bold move towards modernising its payment industry, the National Bank of Moldova (NBM) has embarked on a series of initiatives, positioning itself as a driving force for financial innovations in the country.

The focal points of their development strategy include prioritising Instant Payments and implementing Open Banking with the aim of fostering innovative and efficient payment solutions, including mobile payments, for the nation.

This blog post explores the key developments and the transformative impact they are expected to have on Moldova’s financial landscape.

Instant Payments – A Top Priority: The NBM’s immediate focus is on Instant Payments, set to be operational in February 2024. These payments, based on the ISO 20022 standard, will enable real-time settlement and immediate reuse of funds. By introducing this efficient payment system, Moldova aims to create a conducive environment for innovative payment solutions, including seamless mobile payments.

Open Banking to Revolutionize the Financial Sector: In parallel to Instant Payments, the NBM is working on implementing Open Banking, which will extend beyond traditional banks and include certain Payment Service Providers (PSPs). Open Banking will bring about a significant shift in the financial landscape, promoting transparency, competition, and customer-centric services.

Extending Regulatory Scope: The NBM has recently expanded its regulatory responsibilities to include credit and insurance companies, alongside banks and payment service providers. This move aligns with Moldova’s ambitious plan to venture into Open Finance, fostering innovation in both the credit and insurance sectors.

Fintech as a Key Driver

Recognising the crucial role of Fintech in shaping the future of finance, the NBM has outlined Fintech as a key aspect of its 3-year strategy. The focus is on fostering a thriving Fintech community, supporting startups, and introducing cutting-edge technologies to the financial sector. Vadim Jeleascov, the head of the Fintech Department at NBM, plays a pivotal role in spearheading the implementation of Instant Payments and Open Banking projects.

The Moldovan Law: Transposing PSD2 Directive:

Moldova has aligned its payment services and electronic money regulations with the European PSD2 Directive through Law No. 209/2022 rolled out in 3 stages

  1. A few rules aimed at prudential supervision of non-bank PSPs and some responsibilities of NBM came into force in August 2022.
  2. Most rules that did not aim to introduce new services or innovations, but rather adjusted already existing processes to the provisions of PSD2, are due to come into force in August 2023.
  3. All rules related to new obligations: strong customer authentication, open banking, and new services will come into force in August 2024.

The Blueprint for Open Banking Implementation

The NBM has carefully planned the technical aspects of Open Banking, aiming for seamless interoperability and easy integration for all stakeholders. Key components of their implementation plan include:

  1. National API Standardisation: Utilising the Berlin Group Standard 2.0 as a basis, Moldova aims to streamline connections for banks, payment services, and startups. This approach facilitates efficient and cost-effective access to the entire system through a single connection.
  2. UX Standardisation: Inspired by successful examples from the UK and Saudi Arabia, the NBM plans to establish a set of UX requirements that all participants must implement. This will ensure a consistent user experience across different applications, fostering customer satisfaction.
  3. Centralised Certificate Registry: A real-time validation mechanism involving data control and certification by the NBM will guarantee the security and trustworthiness of all participants in the Open Banking system.
  4. Technical Sandbox: A technical sandbox for Open Banking is set to launch in September 2023, enabling experimentation with fake data in a non-licensed environment. Any company or startup can access technical documentation without the need of a license, and develop solutions. In parallel the TPPs can apply for a licence, for instance, ASPSP or PISP which will speed up the process and contribute to increasing the number of new start-ups. This encourages innovation and accelerates the entry of startups into the market.
  5. Collaborative Spirit: The Key to Success: Implementation of Instant Payments and Open Banking in Moldova represents not only a technical transformation but also a cultural shift in the financial sector. By fostering collaboration among regulators, government, banks, fintechs, startups, and the wider community, Moldova is well-positioned to thrive in this era of financial innovation.

For a more specific and in-depth analysis, reach out to contact@openbankproject.com and our experts will be happy to explain how the regulation impacts your organisation and what you can do.