In line with the worldwide move towards open banking, Coop Pank in Estonia has partnered with Tietoevry Banking to introduce a new open banking system.
This step supports the bank's ambitious growth strategy, aiming to capture a 10% market share in Estonia by 2027.
Coop Pank is already one of Estonia's top five banks, providing financial services to 320 convenience stores within the Coop Eesti Keskühistu network across the country. The bank's shift towards open banking was initially driven by the need to comply with the EU's Second Payment Services Directive (PSD2). This regulation requires banks to open their payment services and securely share customer data with authorized third-party providers, supporting a wider global shift towards greater financial transparency and competition.
To facilitate such data sharing and access, Coop Pank implemented a set of Open APIs. The process, which took six months from start to finish, not only allows the bank to comply with regulatory requirements but also helps strengthen its competitive position in the market in the long run.
“The agility of Coop Pank adapting new regulatory requirements is impressive and could serve as a benchmark for financial institutions in other regions,” stresses Valdis Janovs, Head of Instant Retail Payments and Cards at Tietoevry Banking - the project's technology partner.
Tietoevry Banking delivered a PSD2 compliance solution and provided a “sandbox” environment required by Estonia's regulator. The “sandbox” facilitated test connections between banks and third-party providers, particularly retailers, e-commerce getaways, and financial service providers.
Now, with the Open API system up and running, Copp Pank runs all Coop Eesti Keskühistu payments through their new API, which has resulted in an increase in transaction volumes. The new services, initially mandated by PSD2, have enhanced the bank's integrations with third-party providers, enabling the organization to expand its offerings beyond traditional banking services and channels.
“This is just the start. This PSD2 compliance solution opens doors for further development and growth for the bank. The global trend in banking innovation is increasingly shifting toward bank-fintech partnerships, and Coop Pank has laid the foundation for such cooperation. This leads to more diverse and integrated financial services for clients while generating higher revenues for traditional financial institutions. At the end of the day, it's a win-win for all parties involved,” says Valdis Janovs.
With the help of the PSD2 compliance solution, Coop Pank aims to accelerate its growth and capture a 10% market share in Estonia by 2027. The bank plans to grow its customer base to approximately 150,000 and achieve a loan portfolio of at least two billion euros. “This demonstrates the potential for growth that open banking can unlock. Coop Pank's experience could serve as an inspiring example for banks worldwide as they strive to remain competitive in an increasingly open and interconnected financial ecosystem,” Valdis Janovs concludes.