Banking's Wild West: The Open Banking Frontier

By Jeremy Rodgers, Founder of Contentifai.

The New Frontier: As Europe's open banking territory expands, financial institutions race to stake their claims in this modern gold rush where the maps are still being drawn and the rules continue to evolve.

Stand at the edge of Europe's financial sector and you'll see it: a vast new territory opening up. Similar to the American frontier of the 1800s, open banking has transformed a controlled, orderly domain into an area filled with opportunity, risk, and fierce competition.

The year 2015 marked this territory's "land grant" moment, when the European Commission issued PSD2, effectively breaking up the banking monopoly on customer financial data. What followed was nothing short of a gold rush. The global open banking market, valued at $13.9 billion in 2020, is now projected to reach a staggering $43.1 billion by 2026.

In this new financial territory, the maps are still being drawn. Each quarter brings new discoveries, new claims staked and new partnerships formed. And just as in any frontier, success belongs to those who can navigate the rough terrain, forge the right alliances and adapt to the changing rules.

What's at Stake: The Customer Data Gold Rush

What drives established institutions to venture into unknown territory? In a word: opportunity.

The open banking gold rush centres around two precious resources. First is customer data, the gold nuggets of the digital age, previously locked in the vaults of traditional banks. Second are payment rails, the essential infrastructure connecting different territories and enabling commerce to flow.

This opportunity hasn't gone unnoticed. A 2023 study revealed that 37% of European consumers now use open banking applications, with adoption accelerating yearly. Pioneering banks like BBVA recognised this potential early, creating their Open Platform to stake multiple claims across this new territory.

Yet many still confuse the current territory (open banking under PSD2, focused primarily on payment accounts) with the broader frontier on the horizon: open finance, which extends to investments, pensions, insurance and beyond. The distinction matters because the pioneers who master today's open banking terrain will be best positioned to explore tomorrow's wider territories.

Frontier Players: From Settlers to Outlaws

Every frontier attracts different characters, each playing distinct roles in taming the wilderness. 

The open banking territory is no different.

The Settler Towns: Established Banks

Traditional banks resemble the settler towns of the Wild West, bringing stability and trust but sometimes struggling to adapt to frontier life. BBVA stands out as a bank that transformed from cautious participant to active builder, developing embedded banking services that extend their reach beyond traditional boundaries.

The Pioneer Outposts: Fintech Disruptors

Riding fast across the territory are the fintechs, establishing outposts where traditional banks feared to tread. Companies like Tink (now part of Visa) embody this spirit, connecting to over 3,400 banks across Europe and creating links between previously isolated settlements.

The Specialised Prospectors: Niche Players

Then there are the specialised prospectors, each focused on extracting value from particular veins of gold. Yokoy uses open banking to improve expense management for businesses, while Minna Technologies helps consumers manage subscriptions through open banking connections. These specialised players prove you don't need to claim the entire territory to succeed; sometimes a single, well-chosen plot yields the greatest returns.

The Sheriff's Office: From PSD2 to PSD3

As the open banking territory expands into new lands and settles them, so too do its governing frameworks seeking the next step in digital land grants.

PSD2 established the initial regulatory structure, but the European Banking Authority's analysis highlighted significant implementation challenges: inconsistent API standards, complex authentication flows and limited scope that prevented full realisation of open banking's potential.

Now, a new set of regulations is being drafted. The European Commission's proposed PSD3 aims to address these limitations and expand the territory's boundaries. Key proposals include broader scope (moving toward true open finance), enhanced consumer protections and more standardised technical requirements.

Yes, the European Commission's official documentation on the PSD3 proposal notes that it aims to "create a more integrated, innovative and competitive EU payments market" while ensuring appropriate protections for consumers.

Sustainable Mining and The Next Territory

The forward-thinking financial players are using open banking to further sustainability goals alongside commercial interests.

Nordea Bank has saddled their horses at first light and followed this approach with their Carbon Tracker, which uses open banking data to calculate customers' carbon footprints based on spending patterns. This innovative application shows how open banking infrastructure can support environmental awareness and sustainable consumer choices.

As open banking expands toward open finance, these sustainability applications will multiply. The Open Finance Association actively champions this connection, promoting data sharing as a foundation for transparent, environmentally conscious financial services. Think of them as your kind Samaritan friend on the bold frontier steppe.

This convergence of open banking and sustainable finance presents particularly fertile ground for financial institutions looking to differentiate themselves while contributing to broader societal goals.

Staking Your Claim and Telling Your Story

The open banking frontier rewards the bold, the innovative, and the collaborative. Financial institutions that view this territory as merely a compliance exercise will find themselves outpaced by those who see it as an opportunity to pioneer new business models.

Success requires a clear vision of your role in this changing territory. Are you a town-builder like BBVA, creating platforms that support an entire ecosystem? A trail-blazer like Tink, connecting previously isolated parts of the financial world? Or a specialised prospector like Yokoy, extracting maximum value from a specific niche?

Whatever your chosen path, one thing is clear: the days of static, isolated banking are behind us. The territory has been opened, and there's no going back to the old boundaries.

At Contentifai, we help financial institutions communicate their unique position in this complex frontier. Just as map-makers and storytellers were essential to navigating the physical frontier, clear communication is vital in today's open banking territory. Through strategic content that blends human expertise with AI capabilities, we help banks and fintechs articulate their vision, explain complex concepts to customers and establish themselves as trusted guides in this new financial world.

The open banking maps are still being drawn. Make sure your institution isn't just on the map, but helping to create it and carve out a territory to call its own.