Open banking in Europe — where do we stand? Panel discussion at Paris Fintech Forum 2020
The Panelists
Our CEO, Christoffer Andvig, was recently invited to attend an Open Banking panel at Paris Fintech Forum. The panel was chaired by Jason Bates (11:FS), and focussed on understanding the status of PSD2 across Europe, and what was in store for 2020. Jason posed some pretty tough questions, however, Chris had a lot of fun.
Christoffer was joined by Imran Gulamhuseinwala, who is the Implementation Trustee for Open Banking Ltd, making him responsible for leading the Open Banking Implementation Entity. Joan Burkovic is the CEO & Co-founder of Bankin’ and Bridge based in France. Liliana Fratin Passi is the CEO of CBI S.c.p.a, providing the Italian financial industry with payment services.
3 Key Takeaways:
- 2020 will be the year for growth in Open Banking
It was extremely interesting to hear from Imran that they have now ticked over 1m users of Open Banking services in the UK. It sounds impressive, but given the size of the population in the UK, it shows there is still a long way to go. The majority of the traffic has been using the AIS (Account Information) APIs, showing the transition to payments through PSD2 still has some way to go. More interestingly, Imran noted that over 50% of the 1m users were gained in the past 6 months. If we continue on this trend, expect the numbers to increase over the next few weeks. This is a trend that we are following closely here at Neonomics, ahead of our UK market launch in Q2 of this year.
Over in France, it also appears momentum for PSD2 services has been building. Joan was quick to add that the French market had processed over €8 million in payments to date through PSD2 APIs, a number he expects to increase significantly over the course of this year. Moreover, Joan felt 2020 was their year where the conversation would shift from one of compliance to a discussion around open banking business models — a topic that we are pretty passionate about here at Neonomics!
2. We need help from the regulator to push banks to shoot for the stars
The challenge that banks have had in implementing the APIs is one that is well understood. However, Imran stressed the point that given banks have done all this work in building out the infrastructure and hosting, why build only a basic set of APIs (i.e., if you have built a foundation for a house, why are they only building the first floor?)
Chris went a little further and argued that the banks themselves need to open their eyes and understand the opportunities that open banking can bring, in opening new distribution channels and revenue streams. If they don’t, Chris felt it would be left to the regulator to enhance the API offering of banks.
3. Should we be talking about Open Finance, rather than Open Banking
Imran argued that the time had come for Open Banking to evolve into open finance. The number of accounts across Europe that are under the scope of PSD2 is still up for debate, but estimates put the number somewhere between 20–30%. This means that over 70% of the financial accounts out there aren’t even available through PSD2 APIs. This is something that we at Neonomics are certainly pushing for, and are currently working on a couple of proof of concepts that sit outside of the standard PSD2 sphere. Keep your eyes peeled over the next few months for some exciting product news.
So what did we takeaway?
For us at Neonomics, it was great to get a new perspective from some of the other markets in Europe. It was particularly interesting to hear that the UK, often considered the most advanced market in terms of PSD2 and Open Banking maturity, is seeing most of the traffic processed through the Account Information (or AIS) APIs.
Here at Neonomics we are already working with clients across the Nordics on solutions that span both data and payments (AIS and PIS). We are already working with the leading e-invoice provider in Nordics, where we have delivered a solution to support payments directly through PSD2 APIs — keep your eyes peeled over the new few weeks for an exciting announcement regarding this partnership.
Although we are only scratching the surface on what’s to come with Open Banking here, it will be interesting to see how these fast-growing and changing trends will unfold over 2020.
See you at Paris Fintech Forum next year!
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