Getting started with PSD2 open banking
As Punk Rock Dev is doing more and more work in the FinTech sector, I decided to write up a short overview of Payment Services Directive (PSD2) open banking from a developer’s perspective. You probably know that the new European standard kicked in on September 14th 2019. By now most banks have rolled out some form of open banking support (though it was a slow start), so with wider adoption things are bound to get interesting in the European FinTech apps space in 2020.
Different banks — different PSD2 implementations
There are a lot of banks in Europe — 6,088 banks operating in the European Union 28 at the end of 2018 according to Statista. Now, since the PSD2 standard wasn’t specified in enough technical details (for better or worse), all these banks have implemented slightly different APIs (application programming interfaces). Two main implementations have emerged — the Berlin Group and the UK Open Banking (though there are further differences within the groups). Hopefully in the future one of these implementations will gain dominance and become the de facto standard — perhaps through a common open source project such as the Open Bank Project.
Until the different PSD2 implementations converge, however, it’s unfeasible for a startup that’s developing a FinTech app to go out and start implementing interfaces with all the banks individually. It would take too long and the cost of such an effort wouldn’t be justified.
So what can we do?
As a result of this fragmentation, a whole ecosystem of 3rd party API aggregators has emerged. They implement interfaces to as many banks as possible and then provide a single unified interface to common PSD2 features such as gathering account information or initiating payments. This article has a very detailed overview of the different aggregators and their level of support. As you’ll see, certain aggregators like Open Payments only provide access to a few countries (Sweden and Finland in their case). Mid-range players like Kontomatik support ~100 banks. Most likely more focused regional providers will have tighter integration, which might be better for you depending on your target market. For the widest support possible support, however, the key players are:
- Salt Edge — 3,793 financial institutions supported out of which 628 are banks integrated through PSD2. Their developer documentation comes with curl and Postman examples and seems easy enough to get started with.
- Token — 3,341 banks supported (as of writing this article) with documentation based on JavaScript, C# and Java SDKs that leaves a lot to be desired.
Our clear favourite so far is Salt Edge with good support across the EU (and wider). To test it in practice I’ve tried their financial assistant app Fentury and I can report that they still have some production errors (at least when connecting to an n26 account), but that might be the bank’s problem (apparently n26’s PSD2 support could be better).
When can we start?
The ecosystem is strong enough to start experimenting now for sure. Let’s say that we’re in the real PSD2 sandbox phase just now. I’m sure there’ll be a wide variety of cool new apps developed as the European market catches up with the US FinTech innovations. Expect bugs, however, and possible changes as the aggregator APIs and PSD2 implementations reshuffle to accommodate real usage. We probably have a way to go before serious production usage. All in all, exciting times for the FinTech sector are ahead of us in 2020!
Do let us know in the comments what are your PSD2 experiences (or expectations) and feel free to contact us if you are interested in working on a FinTech project together.
