The Dutch have some hesitation
While the Netherlands adopted PSD2 readying for introducing open banking, there appears to be some reservations among the general public:
Post its adopting the PSD2 legislation in 2019, the Netherlands is now in the process of readying for open banking. The country has a track record of being a leader in the whole of Europe in adoption of digital banking systems and evolving matured digital payments modalities. This has promoted several other European banks to operate from the country - like Spanish digital bank Open Bank and Icelandic Meniga. All these banks are proponents of open banking and have made strides in implementing it in their own countries. However, the Netherlands seems to be a slow starter in this realm.
The country has been a great promoter of GDPR, or the General Data Protection Regulation, of the EU. This apparently had an adverse effect when the country wanted to introduce PSD2 as Dutch people had become incredibly wary of allowing their banks to share some of their data. This has obviously led to the low adoption of open banking in the country.
54 LICENSES
The European Banking Authority says the Netherlands has 54 payment institutions having PSD2 licences, not i ncluding firms operating in the country through passporting. Of the 54, some 10 have PSD2 licence for Payment Initiation Services (PIS) or Account Information Services (AIS). This is the category where significant open banking innovation by many thirdparty providers (TPPs) occurs.
It is expected that in 2020 there could be more number of fintechs or digital banks receiving licenses to operate in the country, which is expected to lead to increased integration of fintech propositions with financial services.
BANK AS A PLATFORM
One thing specific about the Netherlands banking sector is that it has successfully developed ‘ bank as a platform’ concept, whereby innovative financial services organizations function in partnership.
Through this, banks are moving from closed systems to open platforms, with APIs playing a key role; there are digital portals that give access to a company’s data and services. As the system matures, it is expected that APIs of existing banks will give third-party companies access to the payment details of bank clients, provided they give their consent for this, thus paving the way for adoption of true open banking.
Leading Dutch bank ABN Amro is fairly progressed in developing a system whereby it intends to change the way banking as a service is offered to customers. It is now in the process of applying API techniques for clients and identifying API-driven earnings models. It has recently launched Gradefix, a project to make risk assessments based on payment data. Clients and SMEs submit the data themselves for analysis and receive a complete summary of their financial situation. The bank strongly emphasizes that using the open banking principles, it can make banking easier for clients, but also for everyone with whom it wants to do business.
ING unit Yolt - in fact Yolt Technology Services, or YTS) - has recently said as a leading open banking provider in Europe, it now offers an API coverage of over 90% across the Netherlands. It has API connections with leading banks in the Netherlands, including ING, Rabobank, ABN Amro, SNS Bank, Regio Bank, ASN Bank, Bunq, and Revolut. YTS, which makes on average 14 million API calls each week, offer 3 main services for financial institutions and tech businesses across Europe - an account information service, a payment initiation service and data enrichment service.
It is often said that Dutch banks and financial services institutions need to adopt a different approach in adopting open banking, especially when the country’s consumers are very much into digital, faster payments and speedy transactions. There are concerns openly expressed on who actually are using the shared data and why.
They have also expressed scepticism over whether the benefits of consumer choice and control are worth the risks associated with opening up so much data. But, going by past records, Dutch consumers have proven to be ready adopters of new technology and are willing to share information if the payoff is perceived to be worth it.
ING A LEADER
Geographically, ING offers standardized APIs for 16 European countries for current accounts as well as card accounts (for AIS). ABN Amro offers API services for current accounts in the Netherlands, Belgium, Germany and the United Kingdom. Rabobank and Volksbank offer APIs for their Dutch accounts. For authentication, all banks use the OAuth 2.0 Payment Service Users (PSUs) authentication. ING also makes it possible to initiate domestic transfers within Europe with nonEuro currencies.
However, the 4 largest Dutch Banks differ substantially in API standards, services and flows, geographic scope of the services as well as the extent of the information provided on the developer websites. TPPs aiming to use the PSD2 API services will have to invest substantially to adopt all the variations. But this has another side - it may stimulate innovation hitherto not seen much in other countries which had already adopted open banking.