Compliance Regulations for Banks in Turkey: A New Era of Digital Banking
In recent years, customers have become increasingly demanding when it comes to their banking services. They expect a seamless digital experience across all channels, whether they’re purchasing an item online or taking out a loan. Meanwhile, new regulations are placing greater emphasis on security, given the persistent threat of fraud and cyberattacks.
The Revised Law
Amendments to Turkey’s Law on Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions (Law No. 7192) came into effect in January 2020, significantly enhancing the existing law for open banking within the Republic of Turkey. The revised law empowers the Central Bank of the Republic of Turkey to regulate payment services and open banking service providers.
PSD2 Adoption
Turkey is one of the first countries outside the European Union to adopt the revised Payment Services Directive (PSD2), which enables users to query their accounts and initiate payments directly with banks through third-party providers. This move aims to increase competition, innovation, and customer choice in the financial sector.
New Regulations for Banks
The Regulation on Information Systems of Banks and Electronic Banking Services has also been introduced, mandating that banks implement additional security measures to prevent fraud and protect customer data. These measures include:
- End-to-end secure communication
- Authentication and transaction security provisions
- Remote identification methods
In-Country Cloud Hosting Requirements
In-country cloud hosting is now a requirement for third-party software or cloud services providers, with primary systems and data hosted in Turkey.
Electronic Financial Agreements
Electronic financial agreements have also been amended to allow for the use of electronic signatures, enabling customers to:
- Open bank accounts
- Apply for loans and leasing
- Credit cards remotely
Future Regulations
The Financial Action Task Force’s Digital Identity Guidance is expected to influence future regulations, particularly regarding:
- Know Your Customer (KYC)
- Anti-money laundering (AML)
- Counter-terrorist financing
Benefits for Turkish People
While banks will reap rewards in terms of efficiency and cost savings, it is likely that the Turkish people will be the biggest winners of all, benefiting from increased competition, innovation, and customer choice in the financial sector.