Open Banking is undergoing significant changes on both the payments and regulatory fronts.
While European fintechs have embraced these changes, traditional banks continue remain cautious, and in many cases unprepared, for new rules mandating instant payments.
To explore what this means for the future of payments, Lena Hackelöer, CEO & Founder of Brite Payments, told Payment Expert that methods like Pay by Bank and instant payouts are products of wider Open Banking adoption. But, she warned, Europe must build on its progress to “fully unlock the potential of open banking payments at scale.”
Firstly, what have been some of the new innovations involving Open Banking you have identified this year and how readily adopted have they been by the industry?
Open Banking has continued to evolve from foundational infrastructure into a more advanced, real-world application.
One key innovation that is advancing and gaining further familiarity is instant payouts, where Open Banking rails are being used not just for payments but for faster disbursements of funds, supporting use cases like refunds, lending and gig economy wages. The wider move toward end-to-end real-time processing is transforming how businesses manage cash flow and customer experience.
That said, fragmentation across APIs and inconsistent adoption at the bank level still create friction. Industry-wide efforts, like moves toward standardisation under PSD3, are promising, and we’re beginning to see greater alignment across markets. The foundations are now in place, and adoption is accelerating as Open Banking proves it can deliver both speed and reliability at scale.
Has there been an uptick in adoption of Open Banking payments by traditional banks this year, or are there regulatory boundaries to overcome before they can truly embrace it?
We’ve seen encouraging signs of progress, but adoption by traditional banks remains uneven. Some have started to explore Open Banking payments more actively, particularly where it supports their digital transformation goals or complements embedded finance strategies.
New rules are however pushing banks towards Open Banking. For instance, the EU’s Instant Payments Regulation (IPR) required EU banks to be able to receive instant transfers by January 2025 (and send them by 2027), essentially forcing banks to upgrade real-time payment infrastructure.
In parallel, banks must prepare for PSD3 in Europe, which is crucial to standardise APIs across countries. While these regulations clear a path, many banks face significant technical and operational work before fully embracing Open Banking payments.
Overall, the direction is positive, but for banks to fully embrace Open Banking payments, we’ll need stronger incentives, more consistent regulation and a shift in mindset from compliance to opportunity.
How vital is it for Open Banking’s growth that new regulations and guidelines are introduced in Europe, as well as amendments within the Instant Payments Regulation?
PSD3 is the next evolution of Europe’s payments directive, and it brings improvements, not just for banks and fintechs, but for consumers too. At its heart, PSD3 aims to simplify how banks connect with third-party providers by mandating common API standards. This means faster and more consistent experiences for users, and fewer frustrating differences between banks.
More importantly, PSD3 also addresses liability and refund rights, which are important areas that have held back consumer trust. By clarifying who’s responsible when something goes wrong and making refund processes more consumer-friendly, PSD3 helps increase open banking credibility and safety in everyday payments.
Equally, the Instant Payments Regulation is a big enabler, as once all banks can send and receive instant transfers, Pay by Bank solutions can work seamlessly across the Single Euro Payments Area.
Regulatory evolution will be key to a functioning Open Banking ecosystem as it removes technical roadblocks, ensuring security and letting Open Banking grow to its full potential.
While Open Banking payments, such as Pay by Bank, have grown into the mainstream consciousness, what more can be done to break down adoption barriers for both merchants and customers from the payment service provider’s end?
Awareness is growing, but there’s still work to do on the experience and education side.
For consumers, they require Pay by Bank to be as intuitive and trusted as card payments while being fast and familiar. That means smoother authentication flows, consistent UX across banks and better communication around security and convenience.
On the merchant side, integration and conversion are important. Payment providers need to offer open banking in a plug-and-play way with clear value. That includes real-time settlement, lower costs, and reduced fraud, all delivered without adding friction at checkout.
Outside of Europe, which countries/regions have increased their adoption of Open Banking payments and how could European countries learn from this?
We’ve seen strong momentum in markets like Brazil and India, where regulatory mandates and centralised infrastructure have accelerated adoption. Brazil’s Pix system is a great example (used by over 90% of Brazilians) as its real-time, government-backed model has driven massive consumer uptake and merchant acceptance in just a few years.
The US is also beginning to institutionalise Open Banking, after the CFPB proposed rules granting consumers a legal ‘right to financial data access’ which would require banks to share data with accredited third parties.
The key takeaway for Europe is the value of joined-up execution and the importance of collaboration. When regulators, banks and fintechs align around a shared vision with clear standards and fast settlement rails, adoption soon follows.
Europe has the building blocks, but needs more cohesion across markets to fully unlock the potential of open banking payments at scale.
Lastly, is AI the next innovation that will see Open Banking accelerate how it handles data and protect customers?
AI will certainly play a role, especially when it comes to making better use of data and improving things like fraud detection or personalisation. However, I don’t think it’s the silver bullet for Open Banking.
What’s more important right now is education, trust, and collaboration. For Open Banking to reach its full potential, consumers need to understand how it works and feel confident using it. Merchants and providers need to see the value, and banks need to be willing participants in building a better ecosystem.
AI can support that journey, but human factors, such as clear communication, great design, and aligned incentives, will really drive adoption forward.
