Innovation

Q3 2021 Open Banking tracker

November 22, 2021

In the third quarter of 2021, open banking in Europe continued to grow. The total number of third-party providers at the end of September was 518, an overall increase of 21 (4.2%).  Notably, passporting numbers showed a rapid uptick over last quarter. On average, each EEA country added 9 more passported third-party providers, compared with 5 in the second quarter. 

In Q4 2020, we remarked that Lithuania was the fastest growing fintech hub in Europe outside of the UK.  This quarter Lithuania is leapfrogging up the table again, with an increasing number of third-party providers establishing themselves there. “Since the U.K.’s exit from the EEA, and in the absence of an agreement on financial services cooperation between the U.K. and EU, Lithuania is proving to be a strong hub for third-parties formerly based in the U.K.,” says Jim Wadsworth, senior vice president for open banking at Mastercard. Several third-party providers have migrated their customers to Lithuania-based companies in order to passport licensed activities into other countries. 

Headlines at 30 September 2021:

  • 518 third-party providers were registered with a National Competent Authority in Europe. 302 third parties were registered in the EEA, while 216 were registered in the U.K.
  • The number of third parties grew by 4.2 percent across the region — slightly lower than the previous quarter. The growth rate in the EEA was 5.2 percent, while there was 2.9 percent growth in the U.K.
  • Each EEA country has at least 55 registered third parties under European passporting arrangements; the U.K has 259 including 43 under the Temporary Permissions Regime.
  • Across the region, 94 percent of third parties were authorised to provide account information services; of these, 52 percent were also authorised to provide payment initiation services.

Our European open banking tracker is brought to you in collaboration with Konsentus, the software as a service company in which Mastercard is invested and that helps to power Open Banking Protect. To learn more about Mastercard Open Banking Solutions, visit openbanking.mastercard.com, and register your interest to learn more.

Read a full summary of growth and progress in Open Banking for Q3 2021 below.

 

Open Banking to the end of Q3 2021

Number of registrations

Following our pattern, we will report on total third-party registrations in Europe, showing consolidated figures and where appropriate, breaking out the UK and the EEA. At 30 September 2021, the total number of third-party providers that were registered with a National Competent Authority to provide open banking services in Europe was 518, 216 were in the UK and 302 in the EEA. 

 

Last quarter the growth was 5 percent; this quarter the growth is 4.2 percent — a slight drop. There was a net gain of 21 third-party providers, despite 28 new third-parties being approved to provide services (EEA + U.K.).

Location of registrations

The U.K. continues to lead in growth, despite losing four third-parties. Their gain of ten easily outpaced all other countries. Also, as of September 30, 2021, 43 third-parties were allowed to provide services under the Temporary Permissions Regime in the U.K., as opposed to 45 on June 30, 2021. 

For the third quarter in a row, Poland has seen the largest increase in the EEA with three new Home registered third-party providers. Its total now stands at 23. Spain has seen the largest increase in passporting numbers, with 11 more third-parties approved to provide services into the country. In addition to one new home third-party provider, this takes Spain’s total from 93 to 105.

Twelve countries increased their home third-party providers this quarter. While the U.K. increased its grip on first place, Germany and Sweden remain unchanged at second and third, respectively. France gained two third-parties to stay just ahead of fast-rising Lithuania and keep fourth spot with 27. 

The number of countries with over 100 third-party providers (home and passported or registered under the Temporary Permissions Regime) has doubled since the last quarter and now is 10 countries: Belgium, Finland, France, Germany, Italy, Netherlands, Poland, Spain, Sweden, and the U.K.

 

Meanwhile, the EEA has yet to establish a regime to clarify rules for passporting so that U.K. financial firms can conduct business in Europe. This explains in part the growing number of registrations of U.K.-based firms with Lithuania’s National Competent Authority, to give them access to passport through the EEA.

Types of solutions

From the end of last quarter, there has been a significant increase (16) in the number of third-party providers which are authorised to provide AISP and PISP services.

The type of institution registering to operate as a third-party remains consistent. Electronic money institutions (EMIs) make up roughly 14 percent of all third-parties. 

Open banking at Mastercard

Mastercard has officially completed its acquisition of Aiia, a leading European open banking technology provider. Aiia offers a direct connection to banks through a single API, allowing its customers to develop and launch new digital solutions.

Aiia’s open banking platform and expertise, including strong API connectivity and payment capabilities, has shown significant growth. Aiia has a unique model for open banking in Europe, driven by data privacy, security, quality and access. The acquisition complements Mastercard’s existing distribution channels, technology and data practices.

In U.K. news, Tesco Bank’s Pay by Bank service, enabled by Mastercard Open Banking Connect, has passed one million transactions since its September 2020 launch. The Pay by Bank integration with Tesco’s online and mobile apps means that customers can make immediate credit card payments directly from their bank accounts, with the ability to view account balances beforehand. Pay by Bank is also built into Tesco Clubcard Pay+, which gives consumers a new way to pay, save and pick up Clubcard points.

 

Information correct as of 22 October 2021
Data (unless otherwise sourced) is provided by Konsentus. Analysis of EEA National Competent Authority and European Banking Authority PSD2 registers

In June 2019, Mastercard led a multi-million-pound pre-Series A funding round in Konsentus