Open banking is transforming financial services across Europe. Once seen as a regulatory experiment, it has grown into a movement reshaping how businesses, banks, and consumers interact. For merchants, the rise of open banking means faster payments, lower costs, and new ways to engage customers.
This guide explores the progress of open banking in Europe, from regulation and market maturity to country-by-country developments and what it all means for businesses.
What Is Open Banking?
Open banking allows consumers to share their financial data with authorised third-party providers through secure APIs. Instead of banks holding a monopoly over account information, customers can give consent to share their balances, transaction histories, and payment capabilities.
For businesses, this unlocks opportunities such as:
- Instant account-to-account payments at checkout.
- Real-time account verification to reduce fraud.
- Financial data insights that support credit scoring, KYC, or personalised services.
It’s a shift that benefits both merchants and consumers, replacing slow, costly payment rails with more direct and secure options.
Regulation: PSD2 and PSD3
The foundation for open banking in Europe lies in regulation.
In 2015, the European Commission introduced the Second Payment Services Directive (PSD2). By 2018, PSD2 was in force, requiring banks to share customer data with third parties when authorised. It also mandated Strong Customer Authentication (SCA), introducing two-factor checks to reduce fraud.
PSD2 applied across the European Economic Area (EEA) and inspired frameworks beyond Europe, including the UK.
But regulation didn’t stop there. In 2023, draft legislation for PSD3 and its companion Payment Services Regulation (PSR) was published. PSD3 aims to:
- Improve API quality and reliability.
- Strengthen fraud protection and liability frameworks.
- Introduce Verification of Payee (VoP) to reduce misdirected transfers.
- Enhance consent management for consumers.
With negotiations now underway, full implementation of PSD3 is expected around 2026–2027, marking the next chapter in Europe’s open banking journey.
Market Maturity Across Europe
Although the rules are Europe-wide, adoption levels vary significantly. According to industry reports, the UK, Germany, Sweden, and France are leading, while other markets are still catching up.
The UK is often seen as the global model. More than 13 million users now use open banking, supported by the Open Banking Implementation Entity (OBIE) and a strong Faster Payments System.
Germany ranks second in maturity, with the Berlin Group’s NextGenPSD2 API standard setting a technical framework for banks and fintechs. Sweden also stands out thanks to high digital adoption, strong infrastructure, and homegrown fintech giants like Klarna and Tink.
Meanwhile, countries like Spain, Poland, and the Baltics are rapidly gaining ground, supported by national initiatives and high mobile banking penetration.
Regional Developments
Northern Europe
The UK leads the pack with robust infrastructure and regulation. Over 13 million users rely on open banking services for everything from pay-by-bank to account aggregation.
Ireland has seen a 60% increase in online and mobile banking payments since 2018, and banks are expanding support for Payment Initiation Services.
Scandinavia benefits from high digital adoption. Sweden has over 8 million Swish users, while Norway’s Vipps and BankID support secure digital payments. Denmark is also well-positioned, with platforms like MobilePay and regional projects such as P27.
Benelux and the Baltics
Belgium and the Netherlands are making rapid progress. In Belgium, 87% of households use online banking, laying the groundwork for instant, low-cost payments. The Netherlands stands out with near-universal use of iDEAL, high API adoption, and a fintech-friendly regulatory environment.
The Baltics are small but advanced. Estonia has 91% internet banking penetration and strong digital ID systems. Lithuania has positioned itself as a fintech hub, licensing over 100 e-money institutions. Latvia is also building momentum with PSD2-compliant APIs.
Central and Eastern Europe
Germany continues to lead with strong frameworks like the Berlin Group’s NextGenPSD2. Adoption is growing steadily, driven by consumer demand for cashless payments.
Poland is emerging as a standout thanks to BLIK, a mobile payments app with more than 10 million users. This widespread adoption shows strong readiness for open banking expansion.
The Czech Republic is moving cautiously, but interest is rising, with about 30% of consumers open to data sharing. Austria, meanwhile, is accelerating through regulatory sandboxes and fintech-bank collaborations.
Romania, though less mature, is developing quickly. With PSD3 on the horizon, adoption is expected to rise, supported by improving fintech infrastructure.
Southern Europe
France is seeing strong momentum. API calls surged from 34 million in 2021 to over 800 million in 2022, driven by banks like BNP Paribas and Société Générale.
Spain has embraced digital payments, with Bizum becoming a household name. Over 20 million users rely on it, and the service is expanding into e-commerce.
Italy and Portugal are still in earlier stages. Italy’s sandbox is helping fintechs test new services, while Portugal remains dominated by Multibanco but is slowly building an open banking ecosystem.
Opportunities for Businesses
For merchants and digital businesses, open banking offers tangible benefits.
- Faster payments: Instant account-to-account transfers improve cash flow and reduce settlement delays.
- Lower costs: With no card networks involved, fees are significantly reduced.
- Fraud reduction: Strong Customer Authentication and bank-level security protect against chargebacks.
- Better customer experience: Payments can be authorised in a few taps via mobile banking apps.
- Cross-border growth: APIs provide access to multiple banks across different countries through a single integration.
These advantages are especially relevant for sectors like e-commerce, travel, SaaS, marketplaces, and gaming — industries where speed, security, and cost efficiency are critical.
Challenges & How to Prepare for Open Banking Integration
Adopting open banking comes with hurdles. Coverage isn’t consistent across Europe — some banks are ahead, others are lagging. That can lead to patchy experiences.
Many consumers also don’t yet trust pay-by-bank, so building awareness and reassurance is key. On the technical side, APIs differ in quality, which means some integrations take more effort. And with PSD3 around the corner, regulations will keep shifting, so businesses need to stay agile.
The way forward is preparation. Start by mapping your use cases — whether it’s faster checkouts, richer customer data, or smoother recurring payments. Then look closely at providers: coverage, API performance, pricing, and support all matter.
Test the full journey to make sure payments feel seamless, and start small with pilots before scaling. Most importantly, plan for growth. Pick solutions that can evolve with your business and flex as regulations change. Done right, open banking becomes a long-term advantage, not just a short-term experiment.
What’s Next for Open Banking in Europe?
The next few years will be decisive. With PSD3 and the new Payment Services Regulation (PSR) on the horizon, expect big improvements: stronger APIs, clearer rules on liability, and the rise of Variable Recurring Payments (VRPs).
Cross-border payments are also set to get faster and cheaper. This will make it easier for businesses to expand internationally without the usual payment bottlenecks.
At the same time, smarter analytics tools will give merchants deeper insights into customer behaviour, risk, and financial health — turning data into a real competitive edge.
The bottom line is that open banking will no longer be an optional extra. It’s on track to become a core part of Europe’s financial infrastructure, reshaping how businesses operate and grow.
