In the UK, Open Banking and Instant Payments—in the form of the Faster Payments Service (FPS), the national real-time payments scheme launched in 2008—are now well-established features of the banking and payments landscape.

With both schemes having reached critical mass, they’ve become a powerful and mutually supporting combination for driving payments innovation and use cases. While the use of FPS has been growing for more than a decade, it saw a renewed surge following the launch of Open Banking in 2018.

The result? Open Banking and Instant Payments are growing together in the UK—with banks and non-bank players increasingly looking to offer solutions that bring their customers the best of both schemes.

Readying for disruption

To thrive in this new environment, banks will also need to do something else: reposition themselves to ride out disruption.

As well as making the UK a global payments leader, the combination of FPS and Open Banking has made it the world’s most disrupted financial services market—with a host of innovative fintechs seizing market share that the banks traditionally held.

As Instant Payments and Open Banking gain scale and momentum in Europe, the European financial services market is heading for similar disruption. And to ensure they’ll be disruptors rather than disrupted, banks must act now.

Five options for banks in the new ecosystem

For Europe’s incumbent banks, the question is: how far will the disruption from Open Banking and Instant Payments go—and how can they make the most of it? As they wrestle with this conundrum, they face five strategic options for the roles they could adopt in this new world:

  1. Customer-facing services: Acting as the customer’s interface to the payments system, especially for corporate treasury.
  2. Payment services provider (PSP): Enabling customers to use their online banking credentials to make instant payments and engage in e-commerce.
  3. Technology provider for corporates and merchants: Helping corporates like large merchants and airlines manage access to accounts, identity services and payments processing.
  4. A new pan-European card and payments scheme: European regulators want to break the international card schemes in Europe—and the ERPB SEPA API Access Working Group is considering ways to enable Europe’s national schemes to link up.
  5. “Request to Pay” (RtP) for Europe: RtP—highly successful in the UK—is an overlay on Instant Payments that creates a more convenient user experience. Retaining control of overlays like RtP will help banks maintain their direct customer relationships.

As Europe’s banks weigh up these options, the competitive threat from the global tech giants is growing by the day. So, there’s no time to lose. The message is clear: Act now—before it’s too late. Contact us to see how we can help.

About the Authors

Sulabh Agarwal

Managing Director – Global Payments Lead

Britta Kotthaus-Krahmer

Director – Technology Consulting, Financial Services

Amit Mallick

Managing Director – Global Open Banking & API Lead

Tim Grünhage

Management Consultant – Payments


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