The increasing potential of Open Banking – Nordigen interview

As we approach the anniversary of Open Banking, what are your thoughts on the progress made these past few years?

The fintech industry, and Open Banking specifically, have been growing at a breakneck speed over the last few years, further accelerated by COVID-19. The pandemic has made it abundantly clear that remote and digitalised services are critical in this new world we've found ourselves in. Open Banking has been critical to these services, providing secure online access to financial data, and helping to automate and digitise products. 

Open Banking adoption and development have been growing across various markets, with Europe leading the way with the highest adoption rates. The UK specifically has been at the forefront of the Open Banking revolution, with over four million active users since the inception of the practice. I fully expect this statistic to double in 2022, with other countries following suit and doubling their respective numbers this year as well. 

Open Banking is letting users take control of their data, as well as simplifying their banking and financial processes by connecting and aggregating bank accounts. Now that this option is available, there’s no going back to ‘closed banking’. The market is continuously developing: statistics provided by Allied Market Research illustrate how the Open Banking market is growing at 24.4% annually and is expected to reach USD 43.15 billion by 2026. Internationally, Open Banking usage doubled from 2018 to 2021. 

Do you feel that Open Banking has made a difference globally? If so, what are some popular and inspiring use cases you noticed? 

Yes, Open Banking has been creating opportunities for new fintech solutions internationally. Many applications such as lending and BNPL would not exist in the same way without Open Banking. Its mere existence creates a whole new world of possibilities for financial applications and solutions that can be capitalised on. In the future, Open Banking will give an equal position to banking solutions and fintech services. Open Banking and PSD2 help make the financial industry more competitive and introduce new players to the game. 

The practice is still developing in countries outside of Europe, although North America has been making strides in adoption rates this past year. Mastercard’s end of 2021 report highlighted that roughly 80% of users in the US and Canada have been utilising Open Banking connections to link their accounts. 

One of the reasons for Open Banking’s popularity is its versatility when it comes to the industries it can enhance. There are countless use cases for Open Banking, with the most popular ones including KYC automation, account aggregation, PFMs (personal financial management tools), BNPL & lending services, credit checks, subscription management, accounting, transaction monitoring, identity verification, and onboarding automation. 

Not all of these use cases are strictly business-focused. It's worth highlighting how Open Banking can help bring good into the world, such as streamlining charity donations. A fairly recent example of this is the collaboration between Open Banking Excellence (OBE) and payment API providers Moneyhub and Streeva. Prompted by social distancing and lockdowns of the pandemic, the project sought to find a way to easily and quickly donate from the safety of our homes. Now to donate to a charity of your choice you can scan a QR code available online, pick the one you wish to support, and transfer funds directly from your bank account. 

Open Banking can also facilitate payments for online education, through the use of BNPL lending services. Our own collaboration with the European Bartender School has illustrated how easy it can be to access education through Buy Now, Pay Later schemes, removing financial barriers for students. This can be applied across the board to a variety of sectors and will help raise professional qualifications for more willing participants. 

How does Nordigen help in bringing Open Banking into the mainstream?

Nordigen is democratising the financial industry by providing Open Banking data for free through official PSD2-regulated APIs. Removing the price tag from the equation eliminates financial barriers for entry for small- and medium-sized businesses, allowing them to benefit from Open Banking as well. Without these limits, SMEs can create fintech solutions and programmes without having to invest upfront in Open Banking technology, aggregation services, and expensive licencing. 

What major use cases do you see having an impact on Open Banking in 2022?

Banking will continue to move into the digital world, rendering documents such as physical bank statements obsolete. Instead, the responsibility for income verification will fall on Open Banking, with data obtained directly from bank accounts. This will make the process quicker and easier, as well as potentially cutting down on the use of paper, positively affecting the environment. 

I predict that major use cases in 2022 are likely to be account top-ups for stocks, crypto, and gaming, as Open Banking has proven to be convenient for transferring greater monetary amounts. Furthermore, with the consistent increase in the number of Open Banking payments providers, we will start to see freemium business models appear among ‘Pay by Bank’ providers.

What are Nordigen’s plans for this year in terms of expansion, new products and services, and partnerships?

As of 2022, our free Open Banking API is now connected to over 2,100 European banks. We plan to continue increasing our coverage to reach 95% across all European markets by the end of this year. 

We launched 6 premium products last year and have a roadmap of exciting new products that will come soon. Our vision is to become a one-stop solution where developers can get everything they need to build apps powered by Open Banking regardless of whether they're building a PFM app, a BNPL underwriting model, or an AML (Anti-Money Laundering) solution for a large bank. You can think of this as 'AWS for Open Banking'. 

About Rolands Mesters 

Rolands Mesters is the CEO and co-founder of Nordigen, the only freemium Open Banking API that connects to more than 2,100 banks, making it the largest network of bank connections in Europe. Rolands is a sales and growth hacker who is passionate about fintech and alternative lending. Rolands has been featured in the Forbes Latvia 30 Under 30 list as well as being featured in TechCrunch, Sifted, Fintech Futures. Rolands regularly shares fintech insights and analysis on Open Banking at international fintech events and is considered one of the foremost experts on Open Banking worldwide.

About Nordigen

Nordigen is a freemium Open Banking platform that provides free access to Open Banking data and premium data insights. Nordigen's free API connects to more than 2,100 banks in Europe and serves fintech companies and developers in 31 European countries, including the UK. Nordigen is a licenced Account Information Service Provider (AISP), regulated by the The Financial and Capital Market Commission of Latvia and authorised in 31 European countries.