Open Banking is fast becoming a worldwide phenomenon. Whether regulator-driven or industry-led, it empowers consumers and businesses to take control of their financial data and their financial futures while stimulating competition and innovation among financial service providers.
Widespread benefits for all
In the European Union (EU), the revised Payment Services Directive (PSD2) has been driving what we believe will bring a revolution in European retail banking.
But 18 months since Open Banking regulation came into effect, market readiness varies across the region.
Recognising the commonalities and differences between countries – their different strengths and weaknesses – is essential to help financial institutions, third party providers (TPP) and technology providers such as Mastercard make best use of the opportunity to lead our industry into its next generation, according to OPEN BANKING READINESS INDEX – THE FUTURE OF OPEN BANKING IN EUROPE.
Market readiness has resulting implications for the number and type of services that are becoming available across the region.
Mastercard and its partners have been tracking the progress of Open Banking as a measure of the number and type of TPP by country every quarter since 2019.
Our data shows that the UK continues to lead the way – not unexpectedly, given its domestic Open Banking initiative preceded that of the EU by more than a year – while western European markets follow most closely behind.
Most providers are registered to deliver account information services, such as account aggregation and credit decisioning, while provision of payment initiation services lags behind.
Our annual research among consumers and small businesses, meanwhile, provides a barometer on attitudes toward the permissioned sharing of bank account data and the types of services people are most interested in.
Appetite for payment initiation services is growing across the region as a means to make the experience of paying bills, sending money to other people and making online purchases more seamless and secure. We are excited to see how the market responds.
Elsewhere around the world, we are seeing a mix of approaches that all suggest open banking is set to become globally ubiquitous.
At the time of publication, 36 countries and the EU are now host to Open Banking initiatives, with PSD2 serving as either a blueprint or inspiration.
The insights from Europe that follow in this report are sure to prove useful to regulators and market participants alike.
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