Page 35 - FintechAtlas2019

Kosovo
From disruptors to enablers, the perception of fintechs
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Kosovo, one of Europe’s smallest countries, has seen tremendous economic growth in the past few years. It has a very stable financial and banking system and, although Kosovo has yet to join the European Union, the Central Bank of Kosovo (CBK) has done much to ensure that legal and regulatory frameworks are aligned with European Union directives, including PSD2. To learn more on how Kosovo deals with such directives, an interview was conducted with the Director of the Licensing and Standardisation Department of the CBK, Albulena Xhelili.
How does the CBK view PSD2 in the context of Kosovo and what is its long-term strategy regarding the implementation of PSD2 for the banking/financial industry in the country?
Xhelili: In its role as a catalyst, regulator and supervisor of a stable and efficient financial system, the CBK is continually revising its legal and regulatory framework in order to align it with EU directives and the best international standards. During 2019, the CBK took an important step in the reform of its legal framework by drafting a new banking law that incorporates several EU directives such as the Bank Recovery and Resolution Directive (BRRD). The new draft law has not yet entered into
force, but its ratification will significantly improve the legal and regulatory framework of banks in line with international best practice. The CBK is currently in the initial phase of drafting a
new law on the payment system that will align this with the EU’s PSD2, second Electronic Money Directive (EMD2) and Settlement Finality Directive. The objective of this is to support technological and business model neutrality and allow for the development of new types of payment services while ensuring that both new and existing services enjoy equivalent operating conditions.
How would PSD2 help startups/fintechs in Kosovo?
Do you see this as an opportunity for increased competition and innovation in the banking/financial industry?
Xhelili: PSD2 is expected to simplify and increase transparency and competition and, hence, drive innovation in the banking/ financial industry. We believe that it will facilitate innovative
Albulena Xhelili, Director of the Licensing and Standardisation Department of the Central Bank of Kosovo
business models, ensure adequate consumer protection mechanisms, ease further market entrance and ensure a
level playing field for competition and innovation, while also addressing the risk of such innovation. These are the underlying reasons why we are revising our relatively new law on payment systems.
Are there any plans for regulating startups and fintechs that develop products and services for the banking/ financial industry?
Xhelili: Whilst fintechs were initially seen as disruptors by the financial industry, we believe that they are now seen
as potential facilitators or enablers. Hence, even financial regulators are considering the role of regulatory sandboxes or innovation hubs as means of overseeing both cooperation and coexistence. The CBK is closely following such developments in similar jurisdictions.
The current legal and regulatory framework in the Republic of Kosovo obliges the CBK to regulate all financial activities and
no one can engage in providing financial or finance-related products without a proper license/authorisation from the CBK. The CBK analyses every new development in the banking/ financial industry and considers the potential effects of these new business models and technologies, especially from a consumer protection and financial stability perspective.
Country data
Population 2019 (M)
GDP total 2019 (€ Bn)
GDP per capita 2019 (€, at PPP)
GDP growth 2019 (% yoy)
GDP growth 2020 (% yoy)
Official currency
1.8
7.1
7,900
4.1
-3.5
EUR
Total bank assets 2019 (€ Bn) 4.5 Total bank assets (% of GDP) 63 Account ownership 2020 (% of population) 57 Debit card ownership 2020 (% of population) 42 Internet usage 2018/2019 (% of population) 90 Usage of internet to pay bills 2020 (% of population) 35 Sent/received digital payments 2020 (% of population) 50 Source: national sources, ECB, ITU, World Bank, RBI/Raiffeisen RESEARCH; estimates for 2020 penetration ratios
Source: IMF, ITU, World Bank, RBI/Raiffeisen RESEARCH, data for 2019 and estimates for GDP growth 2020