2019 was the year that open banking started to come into its own. Data use cases prevailed, but we also saw adoption of innovative payments implementations that are already moving the needle for third parties, lowering costs and streamlining the user experience. Todd Clyde, CEO of Token, writes

Early movers in the property sector in particular are already benefitting from adopting open banking payments, and other verticals will be quick to catch on.

While it is true that less than 50% of banks have met all the requirements mandated by PSD2 so far, this is only part of the picture. Progress is being made and we are successfully connecting and unifying the fragmented API landscape, providing third parties with one API to access all European banks.”

A look to 2020

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Adoption of open banking services and API calls will continue to increase in 2020. Initially this will be broader adoption of early single payment use cases, such as first payments and wallet loads (think early adopters Caxton FX and StuRents). By H2 I expect to see experimentation with more sophisticated payments use cases in a range of different verticals.

This will most likely begin with subscription payments and then expand to recurring payments of variable amounts, as awareness of what can be achieved with open banking continues to grow.

More banks will transition from APIs that are solely focused on delivering PSD2 compliance to premium APIs that enable commercial opportunities. Once this happens, it won’t be long before rule-based fund sweeping use cases emerge – where money is automatically moved from one account to another based on “rules” or “triggers” without requiring the user to be present or consent at the time of the sweep.

The impact this would have on overdrafts would be significant, but it would be an opportunity in disguise for banks, as it would enable them to offer lending or savings products and set up recurring funding / consumption of those products.”