A new generation of payments is taking shape – powered by open banking

4 min read|Published May 31, 2022
A new generation of payments is taking shape – powered by open banking

In our latest report, ‘The future of payments is open’, we asked financial executives across Europe their thoughts on open banking powered payments – and the drivers needed for full-scale adoption. It’s clear that while open banking is changing the payment landscape, there’s still work to be done before this new ecosystem can reach its full potential.

TL;DR – Quick summary
  • Our survey reveals financial executives in Europe consider security, speed, and low cost as top benefits of payment initiation services.

  • Barriers to full-scale adoption still remain, however: payments infrastructure and low user awareness are considered key challenges.

  • Partnering with the right fintech is a great first step to realising open banking powered payments’ true potential.

TL;DR – Quick summary
  • Our survey reveals financial executives in Europe consider security, speed, and low cost as top benefits of payment initiation services.

  • Barriers to full-scale adoption still remain, however: payments infrastructure and low user awareness are considered key challenges.

  • Partnering with the right fintech is a great first step to realising open banking powered payments’ true potential.

For the fourth year in a row, we asked YouGov to conduct a survey on financial executives across 12 European countries, to learn their opinion of open banking and how it’s transforming the financial industry. For our latest report, ‘The future of payments is open’, we asked them about the benefits and challenges of open banking powered payments – more specifically, of PIS (payment initiation services). 

Higher security and fraud prevention key benefits of PIS

Understandably, fraud is a significant issue for many financial institutions. After all – as payments move online, fraudsters move with them. PIS has increased payment security and fraud prevention qualities, something that our survey respondents see as a key benefit. Nearly three quarters of respondents (74%) said the high security of PIS is a great advantage from a merchant perspective. So, open banking powered payments such as PIS – which have SCA processes (strong customer authentication) implemented into the payment journey – are considered a secure alternative to other payment methods.

PIS speed and low costs highly ranked by financial executives

While the surveyed financial executives ranked higher security and fraud prevention as the key benefit, speedy payments such as instant transfers (70%) and low cost payments (67%) were also ranked high. Instant transfer is considered an advantage over other payment methods as traditional methods operate on legacy payment rails that can take days to settle, leaving merchants waiting to see the money in their accounts. 

Benefits for merchants that use PIS

Finding the user tolerance sweet spot

When asked which specific use cases executives believe are best suited to open banking payment initiation services, the answers reveal a focus on processes that are often inconvenient, frustrating, and time consuming for the user. 

Ranking of use cases PIS are best suited to:

  1. Peer-to-peer (P2P) transfers 

  2. Invoice/bill payments 

  3. Fund transfers for investments and savings 

  4. Online commerce payments


This asked the question: using this information, could we identify the ‘sweet spot’ for PIS user tolerance? For example, user tolerance may be low when queuing up at the kiosk to buy an apple or a bottle of water. Customers would want to choose the payment method that they know would always work. Similarly, when completing a high-value purchase the user tolerance may be low, as the perceived risk of something going wrong does not weigh up against the easy alternative of using a familiar solution.

Using factors such as transaction frequency and value, we identified a user tolerance sweet spot (pictured below). Interestingly, the top use cases of PIS fall within the area where customers would be more willing to use an unfamiliar payment method.

Mapped use cases graph

Choosing the right partner key to overcoming barriers

Our research made it clear that while the surveyed financial executives felt there were many things to gain from implementing open banking powered payments such as PIS, barriers to full-scale adoption remain. Survey respondents were concerned about lacking user awareness and highlighted that the payment infrastructure isn’t ready for instant transfers, with few instant payment rails. But as the European Commission has proposed to mandate the adoption of instant payment rails, that particular issue may soon be resolved.

The survey illustrates that open banking payments are well suited for meeting the market demand for fast, secure, consistent, and seamless payment journeys. But it also shows that the industry recognises the need for a solid foundation of trust and reliability to be built to let this new ecosystem reach its full potential. Solving these challenges will require increased focus and investment in the months to come – and choosing the right partner for this journey is key. 

More in Open banking

How VRP is sweeping money management into a new era
2022-11-30 · 9 min read
How VRP is sweeping money management into a new era

Sweeping VRPs, the me-to-me payment method that is simplifying money management for businesses and consumers.

Open banking
How to achieve the best possible Pay by Bank conversion rate
2022-11-21 · 12 min read
How to achieve the best possible Pay by Bank conversion rate

When making a purchase online, consumers look for simple, safe and convenient payment experiences. In this guide, our Payments team shares its best practices for optimising Pay by Bank user journeys and ensuring the highest possible conversion rate. 

Open banking
Image showing hands holding a phone and a coffee cup
2022-11-17 · 2 min read
Open banking solutions to meet digital-savvy customer expectations

The modern customer expects more from their service provider than ever before. Discover how open banking can help you satisfy their needs in our ultimate solutions guide.

Open banking

Get started with Tink

Contact our team to learn more about what we can help you build – or create an account to get started right away.

Contact our team to learn more about our premium solutions or create a free account to get started right away.