Europe’s fintechs raised more over the last 12 months than was raised by the region’s entire tech sector in any year up until 2018. “While capabilities and choice in how we pay has been around for a while, we saw a huge switch of activity from face-to-face to ecommerce,” says Jim Wadsworth, Mastercard’s Senior VP Open Banking. “There was a massive shift in how people transact – and it was seamless. That’s testament to the industry’s resilience.”
This is particularly positive news at a time of uncertainty, when both companies and their consumers are prioritising recovery and stability. Payment solutions designed to create control and flexibility will support a globally competitive, resilient and sustainable European payments market of the future.
A collaborative market
An increasingly coalescing market has helped bring about technological evolution, with established companies and disruptors coming together to respond to consumer demand for an efficient, transparent and secure system. The result has been innovation such as open banking. Thanks to the implementation of the transformative Second Payment Services Directive (PSD2), Europe became an early adopter of this system, which uses open APIs to allow third-party developers to build applications and services around the financial ecosystem.
In 2020, Europe counted approximately 12.2mn open banking users, with the figure predicted to reach 63.8mn by 2024. Open banking holds significant benefits for consumers: using a bank account with third-party applications can add value by allowing it to track, save and spend more efficiently. However, adoption has varied throughout the region. It has been widely used for some time in the Baltic and Nordic states – where a collaborative approach is more established – but other countries are just starting to catch up.
This disparity is unsurprising. With so many different countries with varying legislation, data laws, evolving regulation and security concerns, creating cohesion and partnerships between financial companies and their consumers can be challenging. Mastercard has a focus on building collaborative relationships in the sector, as evidenced by the development of its Open Banking Tracker, in collaboration with Konsentus. This tool revealed that the total number of third-party providers at the end of 2021 was 529, a 17.5 per cent year-on-year increase. Meanwhile, in Denmark, Mastercard made open banking more widely accessible by acquiring the open-banking fintech Aiia with the aim of helping businesses and consumers across Europe use their own data simply, securely and quickly.
