In the panel session ‘Open Banking and embedded finance: how far have we come?’, industry leaders Gijs Boudewijn, general manager at the Dutch Payments Association and co-chair of SPAA Multistakeholder Group; Pietro Fragnito, senior innovation strategy and market outlook at Intesa Sanpaolo; and Paul Staples, group head of embedded banking at ClearBank, discussed new developments in the space.

When asked if they are working towards a fragmented landscape, Boudewijn said that most of the sector is working towards harmonisation. He highlighted that pan-European solutions are the objective, and that is what the industry should be gearing towards.

“There was fragmentation, there was friction that the newcomers, the fintechs, brought into the game. Take away that friction and bring together solutions for positive results. This is what we're excited for in the downstream.”

Staples from ClearBank disagreed, stating that fragmentation can at some points be beneficial for his business, which offers a variety of services to different market players.

Staples stated that it is impossible to implement open banking and embedded finance without completing customer segmentation and actually understanding the business case behind adopting embedded finance. He outlined the example of Uber adopting open banking and embedded finance services and having success in the US and Canada, but not so much in Europe.

“You have to go back to the ground level problem of what job are you solving for the consumer? Is it a big enough problem? Are they going to use an alternative way of banking? You may provide a non-bank to solve for it, and there's a lot of work that needs to go into that so it's not just simply return on investment financing. The revenue source is a scalable process. There's a lot of research needs to be done on the use of customer-centricity design solution.”

Fragnito explained how they partnered with a fintech to simplify transfer paperwork, and this was a success story that improved engagement, enabled a better service, and shows how success is embedded within collaboration:

“We made a partnership with the fintech that solves compliance problems for our customers. They do a lot of work when moving from one utility provider to another. We integrated their services in a seamless way in our application and our customer can complete the journey without going out to switch context and then come back.”

Commenting on the issues with PSD2 and how SEPA Payment Account Access (SPAA) is a solution, Boudewijn explained the purpose of SPAA and what it is meant to solve, stating that building good compliance APIs was an incentive for them to comply and adhere to a model that is more innovative.

Fragnito agreed that SPAA is needed as the legacy systems of banks do need to be modernised, and they need to fight through the complexity of compliance for the take of their customers and to improve their payments. He added that experts are trying to develop a holistic strategy to accelerate development.”

The panel concludes that banks must balance compliance with customer experiences, and to stay competitive banks and fintechs should prioritise collaboration to support innovation.