UK and Nordics are leading European Open Banking

Alongside the Nordic countries, Britain has been crowned the best place for Open Banking, according to new research.

A study from Mastercard found that a high number of Open Banking APIs, progressive regulators, and consumer readiness, make these countries the perfect spots for Open Banking in Europe.

In the UK, there are more than 100 live solutions already in market. In the first quarter of the year, usage exceeded 2 billion API calls for the first time.

The report also revealed that the UK and Nordic countries have solid digital infrastructures that make them “very well-placed” to allow the widespread use of Open Banking.

95 per cent of houses in Denmark, 98 per cent in Norway, 96 per cent in Sweden, and 96 per cent in the UK, have internet access.

While 88 per cent of Danish, 95 per cent of Norwegian, 79 per cent of Swedish, and 83 per cent of British mobile phones are smartphones.

The proportion of 14-76 year olds using digital banking is 91 per cent in Denmark, 95 per cent in Norway, 84 per cent in Sweden, and 88 per cent in the UK.

According to The Open Banking Implementation Entity (OBIE), which was set up by the UK Competition and Markets Authority (CMA) in 2016 to deliver Open Banking, around 294 FinTech companies and payment service providers have joined the Open Banking ecosystem in the UK, of which 102 have live offerings in the market.

By early 2021, more than three million UK consumers and businesses used open banking enabled products to manage their finances, access credit and make payments.

Payments API volume in the UK increased by more than 70 per cent between Q1 2021 vs Q4 2020.

Mastercard said that the pan-Nordic collaborative models and P27 initiative aid the region’s Open Banking readiness. Most of the big Nordic banks have an Open Banking strategy, with Nordea Group and DNB Bank among Europe’s frontrunners.

Norway also has digital customer identification services such BankIDs and Invidem, which add security by proving an individual is who they claim to be and are strong examples of how the Nordic countries are leading the way.

“By taking advantage of pan-European developments such as PSD2, all European banks are progressing towards a full open banking environment, but it is clear the UK and Nordics are leading the way with high consumer readiness and a number of solutions already live,” said Jim Wadsworth, senior vice president for Open Banking, Mastercard. “There are varying approaches across the continent and to ensure that all European markets can take advantage of the opportunities that open banking presents, we need greater standardisation. Mastercard Open Banking Connect provides a universal connection to financial institutions’ open banking functionality, providing third parties with scale, resilience and speed.”

The report also highlighted key differences in how countries are approaching Open Banking.

In France, Italy, and Spain, the concept is being used as a vehicle for digital transformation in domestic payment ecosystems.

In Germany, a collaborative approach specific to the country, is being taken for the development of Open Banking.

Denmark, Norway, and Sweden are working on Open Banking to deliver a cross-country system.

While Poland and Hungary are reportedly using it to "leapfrog" away from legacy banking infrastructures.

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