The reality of Open Banking and SEPA instant payments

Friday 28 April 2023 10:08 CET | Editor: Vlad Macovei | Interview

Lisa Scott, Banked CEO for Europe, goes through the Open Banking challenges for banks, the effects of SEPA Instant and IBAN discrimination, and the differences between markets.


Banked's Lisa Scott goes through the Open Banking challenges for banks, the effects of SEPA Instant and IBAN discrimination, and the differences between markets


What is the reality of implementing an Open Banking solution, and what challenges have you seen banks face during this process? 

Implementation of Open Banking payment solutions can be and should be very simple and easy. However, in a globalised world, the reality is that providing a consistent Open Banking experience and integration experience across markets is proving more complex.

APIs have made it easy for businesses to integrate into fintech providers offering Open Banking payments solutions but that is just one stage of implementation. What businesses need to look at is what is the end-to-end experience for merchants and consumers and what downstream impacts the globalisation of Open Banking will have with current onboarding experiences for both audiences.


With the introduction of SEPA instant payments, how have you seen banks respond and implement these changes? Are there any challenges in implementing this new payment method, and what are the benefits for customers? 

We believe that establishing bank connections in the market is only the starting point. Stopping there and expecting customer uptake to grow organically would be a mistake. 

As a global payments network, we’ve been through our due diligence process and identified there’s much more that needs to be solved to ensure a successful launch in each market with a product that works effectively, and not only connects.

The lack of standardisation of APIs in Europe creates a much-fragmented experience compared to the UK Open Banking scene. This fragmentation is not only significant country by country but also across different banks within the same geography.

For instance; although SEPA Instant rails allow transactions up to EUR 100,000, each bank has the right to impose a lower threshold at their discretion, which will limit the applicability of instant payments to specific verticals or use cases e.g. topping up investment accounts. Certain banks also charge consumers for SEPA Instant Credit Transfers, which is proving to be a significant barrier to real adoption. Others require consumers to enter sensitive bank credentials as a form of user authentication before they get handed over to their bank environment – app or web. 


How do transaction statuses vary across different banks and markets? What considerations need to be taken when developing a solution that takes these nuances into account?

As explained above, the lack of bank API standardization means that each bank has slightly different implementations. 

In the backend, the information provided by the bank APIs is fragmented. For example; in Germany, some banks do not provide a full confirmation of funds status. There is not enough information in their API response call to understand whether a transaction has been completed successfully and money has moved to the destination account. This can lead to high-risk scenarios where a user doesn’t have enough funds in their account for the transaction to be completed or the user hasn’t actually authenticated with their bank successfully.

The different transaction statuses banks provide need to be considered when building a solution that works end-to-end, including validation processes to ensure every transaction is completed successfully before goods or services are released by the merchant. 


What role do you see the industry playing in lobbying banks to address issues such as IBAN discrimination and adopting instant SEPA payments? How can we work together to create a better customer experience? 

IBAN discrimination happens when a bank, business or public authority refuses to accept your payment because it comes from a non-domestic IBAN. IBAN discrimination has been an illegal practice in Europe since 2014, yet it continues to affect consumers in the EU daily. 

At Banked, we believe that customers should be able to make and receive payments in any SEPA country, and we welcome all initiatives that help steer the industry to offer a better experience to customers. 

In October 2022, the European Commission (EC) announced a legislative proposal to help unlock the full-scale network benefits of instant payments. This proposal aims to make instant payments universally accessible; ensuring all providers offering SEPA Credit Transfer should also offer SEPA Instant Credit Transfers, increasing availability of SEPA Instant payments across bank providers, bringing fees at par with SEPA Credit and adding security and certainty of who the payment or disbursement is being made to. This is great news as it will allow consumers to really reap the benefits of instant bank payments and drive merchant adoption.

Industry lobbying will be critical alongside European Commission regulation to drive adoption further and remove obstacles for consumers like IBAN discrimination.


How do you ensure that your solution provides the best possible customer experience? What measures do you take to understand customer needs and preferences, and how do you incorporate this feedback into your solution design? 

Customer experience is at the forefront of all our decision-making processes across the company. We know that to drive the adoption of any new type of product or service having an easy, simple and in the payments world secure solution has to be a top priority.

We regularly conduct research with consumers to get feedback on our experiences existing and new. Our in-house design teams are focused on learning and looking across different experiences to see how we can continuously improve and evolve.

We focus on the end consumer and their experience with our merchant partners. We provide everything merchants need to talk to consumers and make it possible to educate the consumer in a simple, easy way. We support not only with the tech but also with the marketing tools and resources, helping merchants to overcome any barriers as they onboard the consumer. This means merchants do not need to solve issues alone, as we are here to help the consumer use (and embrace) the technology.

We know what really matters is delivering the best end-to-end customer experience and adding value to the payment process. We do this with a tailored checkout flow, a localized user experience by market and segment, and a flexible incentives platform embedded into the infrastructure. We bring brands to the merchant and handle the contracting, integration, and servicing of a wide range of incentives to minimize the effort needed to drive engagement and loyalty with consumers.

Measures like this help us bring Open Banking away from being a reaction to regulatory measures and instead the start of an exciting new chapter where the barriers between consumers and merchants dissolve. Consumers can pay seamlessly and securely, favouring the merchants that enable them to do precisely this. We take pride in enabling these connections.

About Lisa Scott

As CEO of Banked Europe, Lisa is responsible for the European operations at Banked and managing strategic relationships, developing in-market strategy, and driving regional growth and expansion. Previously, Lisa spent over a decade at PayPal overseeing product marketing and go-to-market strategies for consumer and financial products. Prior to this, she served as head of loyalty credit cards at Lloyds TSB, head of business development at Airmiles and finance manager at British Airways, bringing a wide range of expertise and success in building engaging products, improving portfolio performance, and driving customer engagement to Banked. 

About Banked

We are a global payments network focusing on creating payment solutions and solving merchant and consumer problems with direct bank payments. We look at the full end-to-end experience and the business lifecycle – not just the technical aspects. Banked powers real-time payments for consumers, businesses, and banks, improving customer experience, payment security, business efficiency and cost-effectiveness. A better way to take and make payments.

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Keywords: Open Banking, Open Banking payments, SEPA, IBAN discrimination, banks
Categories: Banking & Fintech
Companies: Banked
Countries: Europe
This article is part of category

Banking & Fintech


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