Industry Insights – Q2 2023 Recap

Frankie Elmquist
July 6, 2023
5 minutes

Q2 wrapped up with a bang 💥 for the open banking industry with the UK reporting impressive acceleration in user adoption in May, validation as a disruptive force at Money 20/20 in Amsterdam, and the release of the final draft updated regulations for the European Commission.

The following five trends and developments stood out across the industry discussions this Spring.

AI, Open Banking and Instant Payments⚡️

According to a headline panel at M2020 AI, Open Banking and Instant Payment form “three pillars of disruption” for the financial services industry. Each is a market disruptor on their own, but combined they have the power to create powerful new models that will fundamentally change retail financial services as we know it.

Already JP Morgan chase is using a ChatGPT-like service called “IndexGPT” that uses AI to select investments for customers. While Mike Kelly, one of the AI pioneers, released the results of an exciting and controversial experiment where he built a plug-in for open banking APIs, called “BankGPT” that can tell you your balance, find transactions, discuss your budgeting with you and even make payments.  

Thought leader, David G.W. Birch, makes a strong argument for this in his recent article in Forbes The Impact of ChatGPT and Open Banking Cannot Be Underestimated. In which, he predicts that, in the not-too-distant future, we can expect that our financial decisions, transactions and analysis will likely be performed by AI, enable by open banking, and executed instantly via instant payments frameworks to deliver more comprehensive overview of financial services as well as our financial health.

Open Banking in stores 🛒

The UK was an early adopter of Open Banking and has had the regulatory and bank support to mature faster than in other areas of Europe. This May, the UK surpassed 7 million users of open banking, a 40% increase from the 5 million user benchmark set at the end of the year.

In Q2, we began seeing some of the first open banking use cases in e-commerce. The UK retailer Topp Tiles became one the first large-scale retailer to roll out instant bank payments at in-store checkout. To support uptake, many open banking providers to begun to release bank payment payments plugins for popular ecomm platforms like Adobe Commerce (formerly Magento), WooCommerce and Shopify.  

As a result, Juniper Research predicts that e-commerce volumes could reach 4.4 billion annually in Europe by 2027.

Streamlining KYC and Identity checks 🧑

KYC checks are notoriously time-consuming, labor-intensive and error prone. A single check can cost as much as 100 EUR and add up to 3% of a company's total operating budget, BUT not for long!  

Open banking is paving the way with new verification products to streamline KYC checks using real-time customer and account details. With AML compliance costing banks billions of dollars, the potential of open banking powered identity verification was a hot topic at Money 20/20 and in the media this Spring.  

Pay by Bank 💸

Industry players are moving away from using the term “open banking payments” in favor “pay by bank” and “Instant bank transfers” in payment interfaces and in the media to describe account-to-account (A2A) payments.  

The trend shows a commercial shift in focus by open banking providers to support market adoption. Both terms are designed to make it easy for customers to understand what the payment method is at checkout to improve recognition and conversion rates.  

Which of the two terms will take hold remains to be seen and could vary from market to market.  

Get ready for PSD3 😎

It’s not the latest PlayStation, but rather the final draft of new regulations from the European Commission. “Well, that’s not exciting” you might think. BUT you’d be wrong, because it’s very exciting indeed!

Because not only will PSD3 make data-enabled payments possible which will make it easier and more convenient to pay, but also more personalized financial services for things like insurance, investments, mortgages, and loans that are more accessible and affordable using just your bank account. So, you see, it’s not the latest gaming console, but it’s definitely cool.

To learn more about power that is PSD3, read The Next-Gen of PSD2 Regulations is Here

As an open banking provider, we are super excited about where these trends and new developments will take us, as well as all the cool payments and financial service products we can provide you with as a result. Curious? See how our customers are using open banking today.

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Industry Insights – Q2 2023 Recap

Q2 wrapped up with a bang 💥 for the open banking industry with the UK reporting impressive acceleration in user adoption in May, validation as a disruptive force at Money 20/20 in Amsterdam, and the release of the final draft updated regulations for the European Commission.

The following five trends and developments stood out across the industry discussions this Spring.

AI, Open Banking and Instant Payments⚡️

According to a headline panel at M2020 AI, Open Banking and Instant Payment form “three pillars of disruption” for the financial services industry. Each is a market disruptor on their own, but combined they have the power to create powerful new models that will fundamentally change retail financial services as we know it.

Already JP Morgan chase is using a ChatGPT-like service called “IndexGPT” that uses AI to select investments for customers. While Mike Kelly, one of the AI pioneers, released the results of an exciting and controversial experiment where he built a plug-in for open banking APIs, called “BankGPT” that can tell you your balance, find transactions, discuss your budgeting with you and even make payments.  

Thought leader, David G.W. Birch, makes a strong argument for this in his recent article in Forbes The Impact of ChatGPT and Open Banking Cannot Be Underestimated. In which, he predicts that, in the not-too-distant future, we can expect that our financial decisions, transactions and analysis will likely be performed by AI, enable by open banking, and executed instantly via instant payments frameworks to deliver more comprehensive overview of financial services as well as our financial health.

Open Banking in stores 🛒

The UK was an early adopter of Open Banking and has had the regulatory and bank support to mature faster than in other areas of Europe. This May, the UK surpassed 7 million users of open banking, a 40% increase from the 5 million user benchmark set at the end of the year.

In Q2, we began seeing some of the first open banking use cases in e-commerce. The UK retailer Topp Tiles became one the first large-scale retailer to roll out instant bank payments at in-store checkout. To support uptake, many open banking providers to begun to release bank payment payments plugins for popular ecomm platforms like Adobe Commerce (formerly Magento), WooCommerce and Shopify.  

As a result, Juniper Research predicts that e-commerce volumes could reach 4.4 billion annually in Europe by 2027.

Streamlining KYC and Identity checks 🧑

KYC checks are notoriously time-consuming, labor-intensive and error prone. A single check can cost as much as 100 EUR and add up to 3% of a company's total operating budget, BUT not for long!  

Open banking is paving the way with new verification products to streamline KYC checks using real-time customer and account details. With AML compliance costing banks billions of dollars, the potential of open banking powered identity verification was a hot topic at Money 20/20 and in the media this Spring.  

Pay by Bank 💸

Industry players are moving away from using the term “open banking payments” in favor “pay by bank” and “Instant bank transfers” in payment interfaces and in the media to describe account-to-account (A2A) payments.  

The trend shows a commercial shift in focus by open banking providers to support market adoption. Both terms are designed to make it easy for customers to understand what the payment method is at checkout to improve recognition and conversion rates.  

Which of the two terms will take hold remains to be seen and could vary from market to market.  

Get ready for PSD3 😎

It’s not the latest PlayStation, but rather the final draft of new regulations from the European Commission. “Well, that’s not exciting” you might think. BUT you’d be wrong, because it’s very exciting indeed!

Because not only will PSD3 make data-enabled payments possible which will make it easier and more convenient to pay, but also more personalized financial services for things like insurance, investments, mortgages, and loans that are more accessible and affordable using just your bank account. So, you see, it’s not the latest gaming console, but it’s definitely cool.

To learn more about power that is PSD3, read The Next-Gen of PSD2 Regulations is Here

As an open banking provider, we are super excited about where these trends and new developments will take us, as well as all the cool payments and financial service products we can provide you with as a result. Curious? See how our customers are using open banking today.

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Neonomics AS is licensed as a Payment Institution (PI), Payment Initiation Service Provider (PISP) and Account Information Service Provider (AISP), issued by the Norwegian Financial Supervisory Authority (Finanstilsynet) passported across the EU.