What Yolt’s Exit Means for B2Bs in Europe’s Competitive Open Banking Market

At the end of August, the Dutch banking group ING announced that it would be phasing out its open banking platform Yolt, citing a “rapidly evolving and changing market” as the main factor behind the decision.

Having launched Yolt as a personal financial management app in 2017, last year ING shuttered the consumer-facing side of the business to focus on its business-to-business (B2B) open banking solution. But the latest news suggests that even the B2B side of things wasn’t delivering a worthwhile return on investment.

In a statement announcing its decision, ING stated that it was “not feasible to achieve its ambitions” with Yolt and that “the aim is to complete the phase-out process by the end of April 2023.”

In light of a highly competitive market, Yolt’s exit may not surprise people familiar with the wider landscape of European open banking.

Although Yolt played its part in the unfolding of the contemporary open banking ecosystem, and ING claims to have made the first open banking application programming interface (API) call in the U.K. in 2019, the platform initially suffered from a split personality of sorts.

As a B2B payments solution, Yolt had to compete with Bud, Tink, Truelayer and others, which have continued to expand bank coverage and develop their product offering in the last few years.

Meanwhile, as a money management tool, not only has ING faced stiff competition from other bank-led initiatives, but innovative FinTechs like Moneyhub have also thrown their hats into the ring, developing open banking solutions that help people gain an overview of their spending.

Related: Nationwide Selects Moneyhub for Savings Account Sweeping

While ING shut down the Yolt personal finance app last year, the move may have come too late. By that point, pivoting into the B2B open banking space meant coming up against some formidable opponents,

For example, today the API of Visa-owned open banking provider Tink connects to over 90% of bank accounts in 13 European countries, a figure that rises to 95% in the U.K., France, and Germany.

That level of connectivity has helped Tink pick up some big-name clients, including ABN Amro, Natwest and Revolut.

More on this: Tink and Revolut Team on Open Banking Tech Expansion

It seems likely that Tink’s impressive European coverage was also a factor contributing toward Visa’s $2 billion acquisition of the company in March.

Read on Visa Closes Deal to Acquire European Open Banking Platform Tink for $2B

With one less horse in the race, the remaining open banking platforms are looking to the next big thing as Europe’s payment landscape evolves.

Specifically, variable recurring payments (VRP), are a type of payment instruction that allows customers to safely connect authorized payments service providers (PISPs) to their bank account. Providers can then make multiple payments of different values on a customer’s behalf without needing further authentication.

As Tom Pope, Tink’s head of payments and platforms, told PYMNTS in an interview, VRP transactions can potentially displace the roughly one billion recurring card transactions and 4.6 billion direct debit transactions made in the U.K. every year.

Watch the interview: Open Banking to Play Key Role in Accelerating Invisible Payments Trend

“You’ve got a sizable amount of volume to go after and that’s where VRPs are going to come into their own. I would think of them as a next generation direct debit, a way of allowing an open banking transaction to take place,” Pope said.

Certainly, VRP payments are on the rise in the U.K. and as of July, the nine largest banks in the country have been mandated by the Competition and Markets Authority (CMA) to support VRP for sweeping, that is, “me-to-me” payments.

See more: U.K.’s CMA Clarifies Variable Recurring Payments to Foster Open Banking

Following the CMA deadline for banks to implement APIs for sweeping, throughout August both Plaid and Yapily launched their respective VRP offerings.

Read more: Plaid Pilots Payments Tool to Streamline Recurring Payments

As more open banking providers launch VRP services, the race is on to roll out more VRP use cases beyond sweeping.

Related: Europe Gives Glimpse Into the Future of Open Finance

Already, NatWest has claimed the title of making the first non-sweeping VRP payments in the U.K. In April the bank started using VRP to make transfers from NatWest customers to the international charity Charity Right and the lettings software developer Pink Chilli, using their respective integrations with the open banking platforms GoCardless and TrueLayer.

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