Open Banking Weekly: Europe Gives Glimpse Into the Future of Open Finance

open banking

The phrase open finance refers to a broadening of the original remit of open banking to include a greater range of services. In the context of accessing account data, broadening the scope of access means redefining what type of organization is allowed to make access requests.

As EU legislators prepare to revise the open banking framework known as PSD2 (Payment Services Directive II), many in the industry expect that the coming legislation will redefine the rules to allow a greater range of service providers to request access to bank account information.

More on this: PSD3 Set to Mandate API Standardization

For example, in its response to the European Commission’s call for advice on the upcoming review, the European Banking Authority (EBA) was supportive of the proposal to extend account access provisions to cover “non-payment accounts and banking products and subsequently extend to other financial products,” but cautioned that a phased approach would be needed in practice.

Yet while they await changes to the law, Europe’s FinTechs aren’t sitting on their laurels. In fact, many of them have already begun to usher in the new dawn of open finance.

Three recent news items indicate the overall health of Europe’s open banking ecosystem and give us a glimpse of what the future of open finance might look like.

Paytrail-Mastercard Linkup Processes Over 1M Open Banking Payments a Month

Paytrail and Mastercard-owned Aiia announced this week that their collaboration now facilitates more than one million open banking payments every month.

More here: Paytrail, Mastercard Partnership Boosts Open Banking in eCommerce

Launched in 2019, the Paytrail-Aiia collaboration is accelerating open banking payments in the eCommerce checkout flow, helping merchants to get paid faster and bringing one-click solutions to customers.

Although in general eCommerce payments have increased by leaps and bounds in recent years, meeting the needs of sellers and buyers at the same time remains a challenge.

For example, PayPal’s one-click checkout solution, while popular with shoppers, can leave sellers waiting several days before they can access the funds.

Meanwhile, the first generation of real-time transfers mean merchants can get paid instantly but are considered too cumbersome in an eCommerce environment where consumers want frictionless checkout with their chosen payment method.

Chip Taps Truelayer for Open Banking 

Savings and investment platform Chip announced this week that it will be collaborating with Truelayer to bring open banking functionality to its wealth building app.

Related: TrueLayer, Thunes Team on Open Banking Payments in Europe, UK

The Truelayer integration will streamline account funding for Chip’s customers, who will be able to quickly and securely deposit money without the need for slow, cumbersome bank transfers.

The interbank connectivity provided by Truelayer will also enhance Chip’s data analytics capacity. This will allow the company to offer more intelligent, customized savings and investment advice to its customers thanks to the greater insight the app will be able to glean into their overall financial health and habits.

You may like: TrueLayer Introduces Variable Recurring Payments

GoCardless Goes Open with Nordigen Acquisition

Digital payment solution GoCardless is set to acquire the open banking data specialist Nordigen. The deal will allow GoCardless to plug the 2,300+ banks connected to Nordigen into its account-to-account payment network, PYMNTS reported.

See also: GoCardless Secures Open Banking With Nordigen Buy

The acquisition signals that open banking is increasingly seen as an essential technology for payments in multiple sectors. Whether they be business-to-business (B2B), peer-to-peer (P2P) or retail payments, open banking has already driven an increase in speed and efficiency, a trend which is set to continue.

GoCardless helps businesses collect payments with as little friction as possible. By bolstering its in-house open banking connectivity, the new deal will allow the company to introduce variable recurring payments and extend its existing instant-pay products to yet underserved European businesses.

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