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No Open Banking

Azerbaijan is bounded by the Caspian Sea and Caucasus Mountains, which span Asia and Europe.

80% of the population of Azerbaijan has access to the internet.

Azerbaijan has published a Roadmap to Open Banking.

The main parts of the project until 2025 are following:
1. Ensuring effective management with the involvement of ecosystem participants for the implementation of Open Banking
2. Creating a legislative framework and recommendations to support Open Banking approach
3. Creating an interoperable technological environment in accordance with the Open Banking approach
4. Accelerating the process of implementation of the Open Banking approach by ecosystem participants and providing monitoring function.

In a survey, Azerbaijan banks mentioned the biggest challenges affecting Open Banking to be a lack of expertise in Open Banking practices and system interoperability.

In 2019, Bank Respublika jointly with INNOLAND – the Incubation and Acceleration Center of the State Agency for Citizen Services and Social Innovations under the President of Azerbaijan, Financial Market Supervisory Authority (FIMSA), for the first time in the country, is launching the Open Banking Lab program for fintech startups, which will provide an open API in test mode (a mechanism that enables bank customers to open their banking data to external services).

According to the bank’s press service, the introduction of innovative technologies, strengthening relations with fintech startups and building relationships with customers in the digital environment are important areas of the bank’s activities in the context of global digitalization of the financial sector.

29% of adults in Azerbaijan had bank accounts in 2020, leaving 71% unbanked.

Azerbaijan lists in its Roadmap creating a competitive market and stimulating innovation in the country as some of the desired outcomes of Open Banking.

The market’s largest segment is Digital Payments with a total transaction value of US$6,816 m in 2022.

In 2020 The Central Bank of Azerbaijan launched a Digital Identification System (DIS), called BankID which allows citizens, as well as legal entities of Azerbaijan to securely use online services provided by the banks. The DIS is an initiative by the Central Bank conducted within the “State Program on expansion of digital payments in the Republic of Azerbaijan in 2018-2020”. The blockchain technology-based system was built by IBM using open source Hyperledger Fabric, a Linux Foundation framework. The use of such technology allows to bring trust, simplicity and enhanced customer experience to financial services.

The system, running on software defined and virtualized infrastructure uses the “Know Your Customer” approach, which ensures that the banks’ clients’ are actually who they claim to be and are compliant with the respective laws. It allows the citizens of Azerbaijan to manage their digital credentials online, ensuring accuracy of data, and minimizing the potential for fraud.

As a result, individuals, independent entrepreneurs and legal entities in Azerbaijan now will be able to remotely open bank accounts and request payment cards, and in the near future, obtain loans, credit cards and access other financial services.
It is expected that the Central Bank’s Digital Identification System will be scaled to embrace not only the banking but other economy sectors as well by expanding the participants’ list to include other government agencies and authorized service providers.

Azerbaijan lists creating a competitive market and stimulating innovation in the country as some of the desired outcomes.

The market’s largest segment is Digital Payments with a total transaction value of US$6,816 m in 2022.

Azerbaijan ranked 31st out of 134 in Wiley’s Digital Skills Gap Index (DSGI) 2021.

Azerbaijan is planning to launch a regulatory sandbox.