Voice of the Industry

The 1000 flavours of Open Banking

Tuesday 5 April 2022 08:11 CET | Editor: Oana Ifrim | Voice of the industry

The Paypers speaks with Daria Berdnikova to learn more about the different Open Banking standards across the world, and how Klarna Kosma can help you navigate them

The open banking movement has changed and keeps changing the financial services industry across the globe. These changes have enabled both fintechs and incumbents to offer new (and enrich existing) financial products and add an additional data layer to personalise their offerings to end consumers. 

Although there is a market consensus on what benefits open banking brings, it’s viewed and applied differently depending on what market or sector your business is operating in. This can be challenging for companies that scale and are launching their propositions in multiple geographies.

Read on to find out more about the different open banking standards across the world, and how Klarna Kosma can help your business adapt.

What is Open Banking?

Open banking allows third party providers and companies to access, share, and use financial data of a business or consumer’s bank account. By consenting to their data to be used, consumers and businesses can benefit from better products and services tailored to their specific needs.   

Open banking has numerous applications. For example, businesses can use it to automate some tasks and reduce manual work, like settling multiple invoices. For individuals, it can provide easier ways to make payments, manage finances and simplify the process of sign up for new services.

There are a lot of countries where open banking is being used, but each one of them has its own way of regulating, implementing, and promoting it.

The world of open banking

While the term ‘open banking’ is universal, the actual regulatory framework used by each market is different. For example:
  • UK — Open Banking Standard
  • Europe — PSD2 (Second Payment Services Directive)
  • US — Open banking (informal)

It’s not just the names that are different either. The processes and regulations have been set independently too.


In order to allow third-party providers (TPPs) secure access to customer banking data, laws were put in place to require the nine biggest UK banks to create their own open APIs. Many smaller banks also did so, recognising the advantages open banking could give them.

The Open Banking Standard has been in place since 2018, to help banks conform to these API requirements. UK regulator, the FCA, has been implementing regulatory changes to support Open Banking adoption and make it easier and more convenient for users to engage with it.  As a result of the recent change to a 90-days rule, the consumer will no longer have to provide their credentials to their bank every 90 days (also called - re-authentication), they would only need to provide reconfirmation that they consent to have their data accessed. With reduced friction in the user journey, drop-off rates and adoption will significantly increase as a result of this change.

In arguably one of the most mature open banking markets, TPPs in the UK can use the open banking APIs in two ways — Account Information Services or Payment Initiation Services.

Account Information Service (AIS) providers can access and share customer financial data, including information like their balance, limits, and transaction history.

Payment Initiation Service (PIS) providers allow customers to conveniently make bank-to-bank payments without manually typing transfer details, by simply logging in using their online banking credentials. 

European Economic Area (EEA)

As a group of individual countries, there will always be some local differences in adoption and infrastructure quality. However, as a whole, the EEA have created their own open banking standard.

The Second Payment Services Directive (PSD2) was introduced in 2018. In the context of open banking, it allows the use of open APIs to help TPPs access customer banking data.

Just like the UK, TPPs can use the EEA’s open banking system via either AIS or PIS. This has already helped adoption across the EU: in the Nordics, most of the big banks have an open banking strategy, which was made possible thanks to the collaborative approach between countries and the P27 initiative; Southern Europe, represented by France, Italy and Spain, is using Open Banking for transforming their local payment ecosystems; Germany, being one step behind the UK in terms of Open Banking readiness, has long been a leader in interoperability and connectivity, with a local hero and payment method - SOFORT implementing domestic bank connections since 2005.


Rather than being built under government oversight, the US approach to open banking is more industry-led. 
In contrast to the UK and EU, there are no standardised rules and guidelines for open banking ecosystem participants in the US, which would allow widespread adoption of the technology. 

The US also lacks two key elements: 1) strong privacy protections involving financial data, and 2) standardised technical architecture. 

Despite that, the US has already taken steps to reform its regulatory framework. Last year on 9th July, US president Joe Biden signed an executive order promoting competition in the American economy, allowing customers to switch banks more easily. 

This would give banking customers the right to port their data from one bank to another, which will significantly boost open banking adoption in the country.

The Klarna Kosma approach

The Klarna Kosma business unit is collaborating and supporting various TPPs in different markets. An ongoing trend with European TPPs is the ambition to extend their services to the US and UK without having multiple providers.

Partnering with Klarna Kosma gives businesses direct access and in-house connections to 15.000+ banks in more than 24 countries (and counting), and extensive market knowledge of consumer behaviours and attitudes towards open banking.
It’s sometimes challenging to understand what open banking can do for traditional players in financial services.

Klarna Kosma works together with these traditional institutions to build new propositions. With both AIS and PIS on offer, we can build a product that’s easy to use and understand for their customers, boosting conversion and adoption rate and directly impacting our partners’ toplines.

There are no limits to the use cases that open banking can address. Whether you want to automate some processes or go the extra mile with personalising your offering to end consumers — using open financial data can help with both. 

Some partners, like loyalty programs or service comparison websites, use AIS to extract consumer transaction history in order to personalise their services; while others fully jump on the trend of embedded finance and are launching their own payment methods powered by PIS open banking technology. 

Klarna Kosma can help your business navigate the open banking standards within markets you plan to operate in. We’re available in more than 22 European locations, as well as the UK and the US, with more countries on the way.

About Daria Berdnikova 

Daria started her career and held several positions at leading fintech companies in Russia, first at Moscow Exchange then at FinEx ETF where her focus was on Institutional Clients and white label sales of Robo-Advising software, ETFs and packaged ETF Strategies for HNWIs. In March 2018 Daria joined Wirecard's Financial Institutions and FinTech Vertical where she was responsible for sales of Banking-as-a-Service, Card Issuing and Acquiring Solutions to insurance companies, money remittances, challenger banks and other payment companies. While briefly working with Zalando Payments Daria was responsible for commercial topics and relationships with payment providers and partners of Zalando. At the moment she is working at Klarna Open Banking team and is focused on both branded and white label solutions for other third-party providers (TPPs).

About Klarna Kosma

Klarna Kosma makes game-changing ideas powerfully real. Launched in 2022, Klarna Kosma is Klarna’s Financial Technology Platform for banks, fintechs, and innovative merchants, which are developing payment services or need access to financial data to create their own solutions benefiting the end-user. Our proven and mature platform provides essential connectivity to a growing network of more than 15,000 banks in 24 countries through a single Open Banking API. We process more than mln 200 transactions a year and are the most extensive Open Banking platform in the world.


Free Headlines in your E-mail

Every day we send out a free e-mail with the most important headlines of the last 24 hours.

Subscribe now

Keywords: Open Banking, payment initiation, banks, API, financial data
Categories: Banking & Fintech
Companies: Klarna
Countries: World
This article is part of category

Banking & Fintech


Discover all the Company news on Klarna and other articles related to Klarna in The Paypers News, Reports, and insights on the payments and fintech industry: