Data Republic website

Open banking essentials: what you need to know

[vc_row][vc_column][vc_column_text]Open banking gives the financial landscape the opportunity to form collaborations between traditional players and innovative companies, stimulate underserved markets and create consumer driven services. This article provides a general understanding of the topic as well as its implications and the market’s sentiment.

What is open banking?

Open banking entails a collaborative banking framework, in which bank products, services and functions are shared through application programming interfaces (APIs) between a bank and third parties. It is aimed at adding additional value and creating new business models at the consumer’s benefit.

Why does it matter?

Open banking has many potential benefits to offer, including improved customer experience, new revenue streams and sustainable service models for underserved markets. By introducing more consumers to the formal financial system through giving access to non-traditional players, open banking allows for more market opportunity by levelling the playing field. Thus, the potential to deliver more efficient and competitive services in the future is created.

The shift towards open banking impacts all aspects of involved organisations’ business and operating models enabling, for instance, the addressing of new markets and implementation of new propositions.

As a result, banks face the risk of losing their current monopoly on customer interaction as third-party players (TPPs) are introduced. The introduction of the role of TPPs opens up access to banking data for additional players such as fintechs, telcos, social networks and retailers.

Looking forward, the open banking model can facilitate a series of services integrated in all-in-one commerce apps, providing value to both ends of the market. The key question, however, is who will take ownership of the platform, orchestrate the platform and take charge of customer interaction?[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column width=”1/2″][vc_column_text]


  • Improved consumer experience
  • Better consumer protection
  • New revenue streams
  • Sustainable service models for underserved markets
  • Fostered innovation and competition between banks and nonbanks
  • Fully integrated, efficient and fast payment services
  • Access to better financial management
  • Improved identity verification

[/vc_column_text][/vc_column][vc_column width=”1/2″][vc_column_text]


  • Regulation compliancy issues
  • Different regulations across jurisdictions
  • Data privacy issues
  • Risk strategies for unknown fraud
  • Non-performing APIs
  • Slow customer adaption
  • Less control over money and data for consumers
  • More layers in payment verification


Segments (Potential) Roles / Implications
Aggregators (AISPs) Give an overview of available accounts and balances to their customers
Banking Institutions Redefine operating models and cost structures
Consumers More convenient, fast and simple financial management
Governments Define and regulate the use of data by TPPs
Payment Providers (PISPs) Initiate payments on behalf of customers
Telcos, utilities, transport, retail, etc. Integrated banking and payments services in products and services


Main Players Opportunities and Risks
  • Already have ownership over the required brand, experience and infrastructure
  • Do not consider themselves to be effective innovators, must effectively respond to the changing playing field
Bigtechs (Amazon, Google, Facebook, etc.)
  • Already have a strong brand, user base and infrastructure
  • Experienced in developing customer-oriented services and products with a wide reach
  • Can take a leading role in expanding the payments ecosystem
  • Have the freedom to develop new technologies upon already existent banking infrastructures
  • Can leverage banks’ data and services directly or enter partnerships with other fintechs and banks


Market trends and sentiment

  • In the US, large banks are entering partnerships with TPPs, not due to law enforcement. In Europe, legislation like PSD2 (EU) and Open Banking (UK) will be implemented in 2018. Digital banks and lenders are already starting to reinvent banking. In Africa, new underwriting models are arising from access to alternative sources of data. New digital finance ecosystems are emerging in China, based on data-sharing capabilities. In South and Southeast Asia, API and data-sharing fintechs are growing strongly. (McKinsey research)
  • 63% of North American payment executives believe that open banking is critical for banks to compete with new entrants, compared to 51% in Europe and 40% in Asia Pacific. (Accenture survey of 100 payment executives at large banks)
  • 53% of respondents from traditional banks, retailers, telcos, PSPs and fintechs are planning to buy third-party solutions or build solutions themselves, 47% are planning to enter into partnerships to comply with PSD2, whereas 20% assume a wait and see strategy (KPMG survey)

Research reports

  • Open Banking: A Consumer Perspective (Barclays)
  • Open Banking: What Does The Future Hold? (Deloitte)
  • Open Banking & APIs Report 2017 (The Paypers)
  • PSD2 Strategy: Comply, Compete or Innovate? (KPMG)
  • Open For Business (Accenture)
  • PSD2: An Open Banking Catalyst (Capgemini)
  • Open Banking: How to flourish in an uncertain future (Deloitte)

By Michael Brooijmans, Research Analyst at Holland FinTech

Want to know more about open banking? Follow our series of articles over the next two weeks. [/vc_column_text][/vc_column][/vc_row]

Share this Article
Related Insights
Dutch FinTech Map 2022
Make sure your company is on the map! Are you a member, or active in the Netherlands? Provide your details to be featured!
Amsterdam Fintech Week
Amsterdam FinTech Week is back on 9-16 September, fully in-person and online. Be a sponsor, co-organizer, or just participate at the summit or one of the countless side events.
AMLD5 Guide
A source for consulting PSD2 legislation coupled with commentary, tips & tricks, applicability, in collaboration with our member law firms.

How likely are you to recommend Holland FinTech?