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Experts Talk: Open Banking in 2024 - Challenges, Opportunities, and the Future of Financial Payments

Updated: Feb 12

Interview with Selda Ali, CTO of IRIS Solutions 


In recent years, the financial landscape has undergone a transformative evolution, driven by technological advancements and changing consumer expectations. Open Banking, initially conceived to foster innovation and competition, has become a pivotal force reshaping how individuals and businesses interact with their finances. Today, we sit down with Selda Ali, CTO of IRIS Solutions, to delve into the current state of Open Banking, exploring its role in promoting financial inclusion, and the technological trends driving its momentum. 


I. Current Challenges in the European Open Banking Market  Q: What are the current challenges faced by the Open Banking market in Europe? 

Selda Ali: Some of the goals of Open Banking have been successful, such as bank data being much more accessible than before and third parties having access to transaction data which can create user profiles and provide information about users. Today, at least partially, we could say that the Open Banking journey in Europe has seen successes in accessibility. Challenges like delays in settlement initiation, security, and compliance requirements still pose significant obstacles. The non-standardized API access further contributes to a fragmented market, impacting service delivery times and limiting supplier relationships. Despite these challenges, service providers like us, IRIS Solutions, must find innovative ways to enhance customer experience, integrating seamlessly while navigating industry-specific gaps. 


II. Growth, Risks, and Opportunities in Open Banking  Q: What's the expected growth rate for Open Banking from 2024 to 2030, and how does it vary across different regions or market segments? What risks and opportunities come with this growth? 

Selda Ali:  Decades ago, accessing and managing financial data was a distant, exhausting and almost impossible process for consumers. In recent years, Open Banking fostered financial innovation by simplifying and humanizing the digital banking experience. The Open Banking concept serves two main purposes: promoting healthy competition and innovation within the banking ecosystem and second - improving the overall customer experience.  

What we see today is that the global Open Banking market is on a remarkable trajectory, with a projected CAGR of 25.47% from 2024 to 2030. This growth is propelled by technologies like cloud computing, AI, ML, blockchain, and APIs. While Open Banking brings transparency, efficiency, and enhanced customer experience there are also many risks along the way. I would only briefly mention them - fragmented customer experience, technology investment, and potential financial fraud. All this needs careful consideration both from private and public sector perspective.  

  III. Instant payments and the impact on Open banking Q: How the European Parliament decision on instant payments will impact Open banking?

Selda Ali: The European Parliament's decision ensures that money transfers will be super quick, arriving in just ten seconds. This helps Open Banking because people and businesses can get their money instantly and safely. It also makes sure that fraud is kept under control, and clients can set limits on how much money can be transferred, giving them even more control. Overall, instant payments make Open banking easier, faster, and safer for everyone involved, which on its turn will give another boost to the creation of Open banking companies and solutions.

IV. Challenges in account-to-account Payment Services Implementation  Q: With the surge in instant A2A payment services, what challenges arise? What do you see in your daily work when ensuring seamless integration and widespread adoption across different platforms? 

Selda Ali:  A2A payments are revolutionizing how we transact, making transferring funds easier, faster and much more cost-efficient for individuals and businesses. It has quite a few challenges that come with it. One of them is security –let’s face it: in A2A payments, the risk of fraud and cybercrime is might increase. As more and more transactions take place online, it is essential to implement multi-factor authentication and encryption technologies to protect sensitive information.    Another challenge is the lack of standardization. Different payment systems have different standards, which makes it difficult for them to work together. There is a need for a common standard that can be used across all payment systems to ensure uniformity and interoperability.  

Finally, there is a need to educate consumers and businesses about the benefits and risks of A2A payments. Many people are still unfamiliar with the technology. Raising awareness and providing information about the benefits and risks of A2A payments helps a lot. Still, we need the push from all interested players – TPPs, banks, regulators, policymakers, etc., even academia. It’s a marathon, not a not a sprint. 

V. Influence of A2A Payments on Consumer Behavior:   Q: How do you anticipate that the growing prevalence of A2A payments, facilitated by digital wallet integrations, will influence consumer behavior and shape the broader payments landscape? 

Selda Ali: Open banking-powered Account-to-Account (A2A) payments mark a transformative change on a global scale by sidestepping card payments. Digital wallets on the other hand are ushering in a new era, steering away from traditional payment methods. Here’s the role of digital wallets – through them A2A payments become more available to end consumers, which in return unlocks valuable information. This shift fundamentally transforms how individuals interact with money and financial services.  

At the end of the day all the new business trends that we have read in the more futuristic books: analyzing customer behavior, building comprehensive financial profiles, and managing risk become a reality. A new realm, where KYC is more accessible and crucial in empowering businesses to make more informed decisions..

VI. Navigating Compliance in Open Banking Adoption:   Q5: Given the varying pace of open banking adoption globally, how can businesses navigate the complexities of compliance and software implementation across different regulatory landscapes, especially in markets with diverse approaches like the EU? 

Selda Ali: Implementing Open Banking globally requires concerted efforts in awareness, regulatory cooperation, and technology upgrades. As the boundaries between financial services and other industries blur, companies must prioritize customer data protection, invest in technology, and align long-term strategies with evolving regulatory landscapes. Above all, companies need to understand that letting customers have full control over their data is not just a regulatory necessity it is a good business practice, which can be a game changer for their businesses.    

VII. Key Advice for Implementing Open Banking: Q: What are the three key pieces of advice you would give to any company looking to implement Open Banking in its daily business? 

Selda Ali: Focus on customers and their needs, think strategically and invest in technology and eventually compliance. Place your customers at the heart of your Open Banking strategy. Be transparent about how their data will be used and communicate this clearly. Create user-friendly interfaces that empower customers to control and manage their data. Establishing trust is key in the Open Banking landscape, and a customer-centric approach not only meets regulatory expectations but also enhances your reputation and relationships with customers. 

Based on it create a clear strategy and implement robust technology, aligning with long-term goals and regulatory expectations. This is my recipe for a successful entry in the Open banking sphere.   

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