State of Europe Open Banking Revolution

While the open banking APIs are being used commonly in the EU, the APIs in Europe still have a long way to go. There are some fragmentation-related challenges that have to be overcome and several challenges around stability and availability. Open Banking payments still have to reach a tipping point, what is required now is regulatory and industry pressure to overcome these challenges in open banking.

A Fragmented Europe

On the issue of SEPA instant adoption, not all banks in Europe support that and support is even inconsistent within the banking groups. For example, between 2-3 regional branches of tier 1 banks in France don’t support SEPA instant. 

This lack of harmony in the bank processes comes from the fact that it wasn’t taken care of in the PSD2. As a result, Europe has a highly fragmented market with different technological standards of APIs and on top of that, we are ignoring the fragmentation of the transaction processing. 

The utilization of SEPA can easily provide an answer to these questions as the payment happens in real-time which eliminates the problem of cut-off times, and the fact it is also instant means predictable statuses and transaction outcomes. These are the major reasons why the European Banking Authority and NCA should focus on SEPA instant adoption. 

As there is not a single pan-European Open Banking API supporting payments, industry initiatives have resulted in API standards for accessing bank accounts. 

However, in terms of variation across banks, there are fewer frameworks. Some banks have also taken and decided to implement their own payment standards. Given the complexities and broken system of Open Banking APIs in Europe, having the right solution to help you overcome fragmentation in the market is vital to delivering value back to your organization. 

While SEPA is part of the solution, customers have to pay a certain charge for these transactions, which could prevent users from adopting it more widely. This is why there need to be other standard solutions for Open Banking.

Unlocking Data Access Across Industries

As the open banking landscape is slowly shifting towards open finance, embedded finance is often highlighted as the ultimate application of open banking technology. An ideal example of how FinTech journeys can boost customer experience.

Convenience is the key to creating superior user experiences, that’s why embedded finance is highly anticipated. It’s this kind of “under-the-hood” thinking that we believe will become the future of finance. But before we can try to perfect embedded finance and prepare for open data economies, we have to level the playing field by providing access to data.

The Future of Open Banking 

Overall, Open Banking APIs offer stability and are improving at a significant rate. The UK has achieved a significant amount of success in embracing Open Banking, and Europe is right on track. But there’s still a long way to go for banks in Europe to embrace Open Banking APIs. If they take the right measures, it can be great for the future of open banking.

Notifications of planned and unplanned downtime are inconsistent, and banks often go offline for hours or even days without notice. The primary question is what banks can do to enhance the industry? It is high time that regulators step in and build regulations. These regulations can lead to better customer-business relationships and reduce the flow of fraud. Some of the basic measures include bank account verification, proof of address verification, and KYC. Admittedly, there’s no real solution here, but the only solution is that regulators need to put their minds together and focus on their projects. 


Open Banking: Global Developments, Current Landscape, and Future

If there’s one core element that can be credited for the surge of digital transformation in the financial industry, it’s the global COVID-19 pandemic. It’s more than clear that banks, credit unions, payment providers, and other financial service providers are looking to take advantage of technologies to gain an upper hand against their counterparts. The adaptation of Open Banking has also seen an upward curve in the last couple of years. According to industry experts, the total number of Open Banking users globally will reach 64 million by 2024. 

While there’s obviously a global development of Open Banking in the industry, it’s still the beginning. If careful measures are taken, Open Banking can take the financial situation to a whole new level for businesses and customers.

Revolution of Open Banking

The gist of Open finance is that it provides customers with complete control over financial data which in turn can change the financial habits of millions of users regarding money and savings. 

In the future, third-party service providers, by gaining customers’ consent, will be able to access mortgage data, investment data, insurance, savings, and pension data. Data is the core element in Open Banking and Open Finance. By leveraging this crucial customer data, existing companies of the future will be able to tailor financial services based on customer needs and interests. 

With access to seemingly endless data about customers’ financial lives and habits, there will be no end to personalized services and products. With every FinTech, Bank, and other financial institution trying to build custom products and services, there will be a surge in innovation throughout the financial industry. Ultimately encouraging businesses to leverage the latest tools and technologies as much as possible to stay relevant in the industry while ensuring the best products and services for existing and potential customers. 

Collaborations for a Better Open Finance

Countless businesses across the globe have their own unique take on Open Finance and their own ideas on how to utilize the data to build better products and services for the customer. To help the Open Banking revolution take a better turn, companies across the world need to move ahead with a centralized approach. Without proper frameworks or the incentives to work on Open Finance, it’s less than likely that the industry will be able to utilize the full benefits of open finance.

There needs to be an untied sense of urgency for open banking to take center stage in the financial industry. FinTechs all over the globe are focused on developing Open Banking APIs that banks can collaborate with to enhance day-to-day workflow. Open Banking APIs like online document verification APIs, online proof of address verification APIs, and online bank account verification APIs can streamline the KYC, KYB, and AML workflows. 

Regulatory bodies will need to be more vigilant as open banking becomes more prevalent in the financial industry. With so much customer data open to access, there will be a need to build strong rules and regulations. If we talk about the situation of open banking in the USA, then President Joe Biden has issued a series of customer-friendly executive orders that are primarily focused on ensuring that the US banking system can transition to open banking as seamlessly as possible. 

Australia’s consumer data right offers Australians the right to access all their financial, utility, and telecom data. While it’s true that the open-by-default approach has taken more time to implement than expected, the country is now well on its way to building a strong and secure open banking infrastructure. Another example of the Open Banking revolution is in Canada, similar to Australia, they’ve built a similar plan of action, and they’re expected to roll out their open banking infrastructure by 2023. 

To successfully deliver open banking to consumers on a large scale, there will be a need for collaboration between banks and the government. As the main regulator for most of the firms that would work on the open banking landscape, the regulatory bodies will have to set forth some key rules and regulations. To successfully deliver innovative open banking products and services to the customers, the Bank-FinTech collaboration will be essential. The primary example of this is Open Banking APIs offered by FinTechs globally that can enhance the day-to-day of banks.

What’s Next for Open Banking?

The next step for global open banking is straightforward, it has to be based on a centralized, top to down approach. There have been some great initial steps from regulatory bodies and government entities, but there needs to be a centralized approach to building a proper Open Banking infrastructure. Only then will companies be able to leave traditional banking behind and transition to open banking. Needless to say, open banking and digital transformation are well on their way, the result is just about time.