Europe embraces open banking, Tink reports

Financial institutions across Europe are “betting big” on open banking payments, according to new research from European open banking platform Tink, citing tangible benefits for merchants and their end users.

In its first open banking report of 2022, Tink took a closer look at the benefits, drivers, and barriers for adoption of open banking payments in Europe.

One key finding was that three quarters of financial executives (74%) ranked increased payment security and fraud mitigation as key benefits of open banking payments. While the ability to deliver instant transfers (70%) and the potential to reduce costs for merchants (67%) were also cited as important advantages.

The survey of 380 financial services executives across 12 European markets also revealed the specific use cases they believed are best suited to open banking payment initiation services (PIS), focusing on processes that are often inconvenient, frustrating, and time consuming for the user.

Peer-to-peer transfers were ranked first, followed by invoice/bill payments, fund transfers for investments and savings, and online commerce payments.

However, the research highlighted that there is still work to be done to ensure open banking payments realise their true potential.

For example, a lack of consumer awareness was cited as a major barrier, with 75% of respondents believing consumer awareness is critical for the adoption of open banking payments.

Another concern for executives is the current limited adoption of instant payment rails across Europe to enable real-time payments, which topped the poll of major barriers to the take-up of PIS.

Tom Pope, head of payments and Platforms at Tink, said, “Open banking has the potential to transform the payments industry. In certain markets we are already reaching a tipping point of user adoption, where financial institutions are embracing the opportunity and investing in a range of use cases. As a result, PIS volumes are growing rapidly.

“But there is still some way to go to remove barriers to mass-market adoption. That’s why we welcome the European Commission’s proposal to mandate the adoption of instant payment rails and call on them to ensure that access to these rails is free for consumers. This move will ensure we have the infrastructure in place to continue to innovate whilst encouraging consumer uptake of open banking payments.”

Payments giant Visa recently officially completed the acquisition of open banking platform Tink for an undisclosed fee.

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