Who benefits the most from open banking, and where is the biggest commercial benefit for banks? These are some of the questions that are constantly on my mind as I interview industry experts for our next white paper on the evolution of Open Banking and Embedded Finance in Europe.

This time around, Jasper Wolfs, Head of Product – Open Banking at Rabobank, shared his thoughts on what he believes is a paradigm shift in the banking industry:

Welcome, Jasper. You are the Head of Products Open Banking at Rabobank. Could you perhaps briefly explain to our audience how long you have been involved in the space before we dig deeper into your vision for the future of Open Banking?

Good question. I have been with Rabobank for two years. Prior to that, I held various product roles at different fintech companies. I wouldn't necessarily see myself as a traditional banker and might have a slightly different perspective on certain topics. I have been intensely involved in my current role for more than two years.

Previously, while working with fintech companies, I joined the PSD2 initiative from its early stages. I experienced the opportunities firsthand and managed licensing and related procedures. This gives me a unique position as both an insider and outsider, offering useful insights. Overall, I remain very optimistic, particularly from a personal perspective.

And you definitely have an open mindset towards Open Banking ;). We are now ten years after PSD2, because that's how long we've been discussing this directive. Looking at Open Banking today, do you consider it a success?

Good question, and that's the key question. I think there are several answers to it, and we will also discuss the types of customers a bit more later, because I think there's a big difference between natural persons (consumers) and business customers. So I think for business customers, it's a success.

I believe that, from a retail perspective, adoption by consumers hasn't been a major success so far.

The main evolution I see, particularly for incumbents, is the paradigm shift. This shift occurred because PSD2 forced banks and other financial institutions to open up. While services exist, it's crucial to emphasise that it's mainly customer data that's involved. The data does not belong to the banks themselves, of course. Opening this data up was the key impact.

Essentially, PSD2 pushed the entire market into an API enabled European space. From a paradigm perspective, I believe it has been a huge success.

So maybe, business-wise, not too much. It differs across customer groups. But looking at the paradigm shift and the change in the industry, I think it has been a success after 10 years.

Yes, I think it's essentially that. Maybe some insights from the research I did. Back in 2019 and 2020, I conducted a similar series of interviews. What I noticed there, especially in Dutch banks, was that those who were very pro-Open Banking kept building on the proposition. But in Belgium, I have the impression that quite a few organisations who told me how disruptive Open Banking would be at the end didn't do much more than what the directive obliged. So, what you saw was that they did the compliance APIs, whatever was needed, and they held the belief that that would completely disrupt the market, but after evaluation they made the decision that that's probably not the case, and they completely cooled down the investments in Open Banking, with one big exception, which is I think KBC at this moment.

That's a really good point. The impact will vary by country. I am based in the Netherlands, where we are seeing relatively strong traction. In my view, with PSD2, the genie is already out of the bottle.

The legislation was intended to open up the financial industry and foster competition. In the Netherlands, companies such as Adyen and Mollie, together with various tech firms, are actively developing APIs. This may make us more responsive than some other countries.

As a result, I already see a vibrant Open Banking ecosystem developing rapidly due to competitive pressure. I am confident that similar developments will take place across other European countries as well.

I see other countries in Europe as less mature than the Netherlands. I cannot really comment specifically on Belgium in this case.

It made banks more agile and more aware of the opportunities and the risks of not doing it, indeed.

I'm not very familiar with Belgium, but looking at Germany as an example, Deutsche Bank is involved in many interesting initiatives. I saw an interview last week with one of their representatives (Joris Hensen interview with The Banking Scene). However, when I speak with Germans, it seems there's less activity overall. I'm also not very aware of what’s happening in Italy and other countries.

In Belgium, we already had Isabel twenty-five years before PSD2, which is a banking platform supporting all banks and their business clients. You also mentioned earlier that businesses benefit more from it than consumers, and perhaps this advantage was recognised in my country even before the directive was introduced.

But before we dig deeper into that, maybe my next question: how would you define Open Banking APIs, and do you consider them different from the regulatory PSD2 APIs? And why is that differentiation so important according to you?

I think an excellent build-up in this interview. So there are three PSD2 APIs: PIS (payment initiation services), AIS (account information services) and CAF (confirmation of funds). The last one is hardly used by any client; we see that confirmed in the data.

The other two are picking up, by the way. I'm not allowed to share too much, of course, but we can see how much our APIs are called by other parties, and we see that
PSD2 API consumption is growing really rapidly over the last few years. And that's cool to see. You have those APIs, and they form the foundation.

And then you have the commercial or the premium APIs. If you look at Rabobank, but also other banks, we used the core stack of the PSD2 APIs and then built premium APIs. And I think it's really important. Rabobank has over 10 APIs in the payment and account space; three are PSD2 APIs, and the rest are premium commercial APIs. An important point that many overlook is that premium APIs can be accessed without a PSD2 license. This is a crucial difference. If you're using them as an aggregator or a third party, this flexibility is significant.

In which case you have an agreement with Rabobank?

Yes, exactly. That's a really important point, as it enables corporates to use your APIs directly without having to go through an aggregator. Many companies bank with one bank, in which case an aggregator doesn't have much value in itself. So there are other use cases for aggregators, and they are really important too.

But I think this is a really important distinction.

A significant amount of value is generated because banks recognised that APIs offer substantial benefits, particularly for corporate or business clients. That distinction is very important.

Okay, let's make it a bit more concrete now. Could you give us a few successful use cases from Rabobank using Open Banking, perhaps specifically on the premium aspect? How important was the regulatory framework in building them?

From a few past interviews, I learned that the regulatory framework obliged banks to build the rails, and that adding more APIs followed to make the business case. But how does it look at Rabobank? And what are the most successful use cases that you see at the moment?

I believe, in the fundamental rules of PSD2 legislation, there was a lack of detailed specifications regarding what data to obtain. The APIs provided were quite basic. In the Netherlands, and likely in Belgium as well, there are a few major banks. As a bookkeeping party, you mainly need to connect to ING, ABN AMRO, Rabobank, or similar banks, covering about 90% of the market.

Looking at premium APIs, we already have our bookkeeping connection in place, which is fully API-powered and has been very successful. Client adoption has reached well over 100,000 users.

This demonstrates that customers are willing to use value-added API services when they solve a real need and provide a seamless experience.

And is that specifically for accountancy?

Yes, this is mainly for bookkeeping packages. We offer a variety of options. These tools can import data from the account to help reconcile, which significantly saves time for customers. They also allow users to initiate payments directly from the bookkeeping platform, eliminating the need to log into their bank accounts. Typically, customers still approve these payments and direct debits through their bank environment. Additionally, we've added many services; for example, direct debit isn’t included in PSD2, but it can still be performed, and payments can be initiated.

We have the verification of payee API, which allows you to verify your creditors as a Rabobank client, so Rabobank customers can do the creditor check in a bookkeeping package. For example, we offer a real-time account notification service, where customers are instantly notified, which is also not part of PSD2.

So you see, there is a whole package, and we have more than 300,000 business clients using it. That's the big success case. The so-called bookkeeping connection existed for a long time in the Netherlands, also before PSD2 and APIs, but it's much improved and much more widely used through the APIs. The only thing the Rabobank customer needs to do is go to their favourite software package, click consent, log in to Rabobank, and then they are connected to all of these APIs in one go. So that's a great success. And this improves the lives of Rabobank clients massively.

You will also begin to notice a paradigm shift from traditional bookkeeping packages to other types of solutions.

Can you give an example of that?

The “Accelerating the home-buying process for notaries “ is a good example: we implemented our Premium Payments APIs: the Payment request API and Account Notification API within a leading notary software platform.

When a home buyer needs to transfer their own funds as part of a property purchase, the notary can send a payment link directly from the platform. Once the buyer completes the payment, an instant account notification is sent to the notary, confirming receipt of the funds in real time.

This significantly streamlines the home-buying process by eliminating manual payment checks and reducing administrative effort. As a result, the process can be completed up to three times faster.

In addition, buyers gain peace of mind through immediate confirmation that their payment has been received, which reduces uncertainty and helps prevent follow-up calls to the notary.

And that allows you to use much higher limits than usual?

You can pay up to 50,000 euros. So the limits are indeed directly higher. And it's connected to our instant notification service.

There are many such examples, demonstrating that API usage is expanding rapidly.

And do you think the regulatory framework was important in building all that, or would Rabobank have built it anyway because there was simply a demand in the market without PSD2?

Maybe I’ll add one more example. If you look at Shopify, for example, and we are not so active there, but I also see the tech companies moving a lot. When you want to start a webshop, you go to Shopify, you connect instantly to Stripe or Adyen, and you get a bank account to go along with that. I think the paradigm is going to be everywhere eventually also looking at AI

You also open your embedded accounts, as we discussed earlier. This practice is becoming more common, and you can already see many examples here. For instance, you purchase software from a SaaS provider for bookkeeping, notary services, your webshop, or other needs, and in return you receive a bank account. However, many bankers are not very fond of this practice. But this is, I think, the reality we're heading towards.

So your question was whether banks needed a regulatory framework or whether Rabo would have done this anyway. For Rabo, it's hard for me to judge. But to be honest, I'm not sure about the incumbents in general. I'm quite critical there because I don't think they would have moved so fast, at least, maybe eventually, without this regulation.

But I think we're also happy that it came into force because we have to fight off the fintechs eventually, and they are much more tech-savvy, much more API first thinkers than we are. So, it also positioned us to be more competitive. That might be a positive outcome.

Interesting. I think the examples you gave also provide very good context. My second question was going to be who benefits most from these services, businesses or consumers. I think you've already hinted at the answer a few times: businesses benefit more, because consumers have been less likely to adopt the API. But in your examples, of course, there are businesses with high volume, simply because customers don't buy a house every year or every week.

But the moment they need a house, it is very convenient to have such an API they can work in a very trusted environment. So I think having those examples puts this question in a slightly different context. I think, in terms of volume, businesses definitely have the advantage. But I see a lot of benefits for consumers as well. Would you agree?

Yeah, that's a really sharp observation. Think about it. Because we also have an insurance company working with the same payment request (link) API and the account notification service API, when you didn't pay your bill.

They sent you a payment request via our notification services instantly, and you pay your bill via the payment link, etc. That's more convenient for the retail customer as well, the consumers, as you put it. Because it gives instant peace of mind. For the corporates these seemingly little improvements save hours of time.

I fully agree, and that's maybe the core point. We discuss a lot of banks, but the customer benefit is really about being where the customer wants you to be. So not necessarily being in a bank app because we like you to be in our app, et cetera, but really being where the customer is. And I always feel that the best customer journey wins. That's my true conviction. And that's being where the customer is and making the need for businesses more relevant, because they already have more volume for reconciliation, which can take hours a day.

This payment processes can now be automated by businesses via APIs , so there's no need to download and upload your file information manually, as they have done before. You no longer need to download your payment batches from your bookkeeping system and upload them into your banking platform. Now, everything happens automatically, making it much easier to manage your cash flow. But also to reconcile and make sure that you received al your money and paid all your invoices as a company.

So there are many benefits for business customers, but that has also influenced consumers to a large extent.

If you look back over the past ten years, what did we get right and what did we get wrong? Maybe let's focus more on what went wrong and build up to the next question afterwards.

Regarding PSD2, I always thought that banks simply need to act from an outsider's perspective: start and open up data. But honestly, how many other industries are required to publish data through APIs? That's not so much, definitely not free of charge.

I think if there's no incentive, and not per se that banks may not be capable of monetising it, but they lack a compelling reason to do so. Ultimately, everyone needs to make some profit, and there's no need to feel sorry for them. However, setting up this infrastructure requires significant effort, which is a lot of work.

Therefore, the absence of adequate financial incentives to support this is problematic.

That is what I hear a lot. I spoke to another big bank last week as well, and they said it needs to benefit the customer, the business, and the bank, because otherwise there's no buy-in from the stakeholders involved.

I think that is absolutely correct.

The second issue is inadequate API specification and monitoring. The specifications are limited, leading to varied user flows across banks. For example, with PIS, different banks in countries like Germany and Italy have distinct processes. Sometimes, users need to undergo the SCA process two or three times, depending on the bank. That's why PIS is not working at this moment, for example.

The lack of monitoring, as well as the specifications in the user flow and the APIs, is also problematic. But then, if you couple that with the first point, there are also not really incentives for banks at the European level.

I think, honestly, Rabobank does very well there, and we have very good APIs, but there is no incentive for the European banking scene to really pick this up and solve it themselves, because, if there is no financial incentive at the end of the day, it's very difficult to get this going. So I think those two things they did wrong.

If you look at PIS, we now have Wero, which is the account-to-account payments solution and a great initiative also to reduce the dependency on card schemes from the US. PIS could also be an European challenger here aswell. That's always struck me as odd that the regulator didn't pick that up.

And I was talking about the digital euro, for example. For digital payments, you actually have a solution, but just make it work via PSD2/3

Do you think the PSR, the new payment service regulation, will address some of the issues that went wrong? Because it is a regulation, it's no longer a directive. There are a couple of things that are much more specific than PSD2. How do you look at that?

Honestly, I still think we discuss this a lot internally, and the text isn't fully finalised yet. So please see this as my perspective. I've reviewed it at a high level and spoken to people in the industry. For example, aggregators tend to be more positive about this legislation, often saying there will be stricter enforcement and more monitoring. Others I’ve spoken to believe there won't be many changes, just more consistency in fraud prevention and similar aspects.

However, I believe they will likely increase their monitoring of uptime, API quality, and specifications. Additionally, they seem to focus on user flows. So, PIS, how does it change? I don't know, Rik. It's a bit of speculation.

Probably in two years we'll know more, but I think they will focus more on the points we just said went wrong, partially then. So let's see.

I have more speculation for you. Europe is now debating FiDA. I remember Rabobank on stage with us, two years ago already. No, it was last year. Last year. Debating FiDA. And what I remember was that a couple of things were definitely good, for example, a compensation framework. But on the other hand, there were also quite some elements, for example, the magnitude of the directive. So my question to you again is, do we need it? And if so, do we need it in its current form? And there, I think the overall conclusion was that yes, we may need it, but not in its current form.

Yeah, good question. FiDA kept going back and forth and making changes, and now I think they've adopted the federated approach. I'm not very enthusiastic about that. There's a lot of speculation about what's included or excluded. You know how it goes in the scene: some things are included, and we have to deal with that, but it's still not final. We keep wondering what our next steps will be, and this is the pathway towards it.

It's not really that which makes me happy, but maybe that's what happens. Rik, you have been involved with this regulation for a longer time. The content is much more comprehensive, featuring increased data sharing and a financial or monetisation framework.

Do we really need it? I was, of course, preparing this, Rik, with the paradigm shift in mind. Considering the Netherlands, the UK, and Belgium, which is rapidly advancing, and the mounting pressure from tech firms like Adyen, Mollie, and Stripe, these companies are significantly impacting the industry by shifting from PSP services to traditional banking. I believe we, as a bank, will eventually be pushed in that direction, because the core fundamentals of the sector are what matter most in this discussion.

And then, for retail and business customers, there might be a difference. So can you still serve these customers in your own app, or do you want to be where the customer really is? And I think for your retail customers, for you and me, we can still be quite well served in a banking app, and there can be more services there, like KBC is doing, for example, with your train tickets, et cetera. But for businesses, there are so many types of business, with so many things to think about.

And the bigger they get, the more varied the demands are. So it's very difficult to serve them all in one interface, one front end, which I feel, and I think the market's slowly moving there. Also, the banks are slowly moving there.

You should maintain your own channels because they are important, but it's also crucial to be where the customer is. I believe the FIDA spirit is gradually gaining acceptance in the market. However, I'm unsure whether you truly need it.

Regarding the federated approach, I don't see many benefits. I'm rather sceptical about it. Here's how I would phrase it.

Good thinking. I understand there's significant pressure from companies like Shopify, Adyen, and Mollie. I haven't heard much from OpenAI, Mistral, or Anthropic. I believe there's a real possibility that soon, one of these organisations might shape the future of Open Banking by partnering with a major global or European bank, creating a model for others to follow.

Do you think the rise of AI is increasing the importance of Open Finance or revealing how much the industry still needs to catch up?

That's a very good question.

It's a tricky question, of course. It's pure speculation. I'm well aware of that.

But it's also a vision, and I think having vision is important. If you look at bank channels, you already see it. I read a paper about it yesterday. And I don't say that's the case for Rabobank, of course. But in general, if you look at banks, there's already a very scattered image for customers. And customers nowadays have, on average, seven bank accounts with Revolut, and many others.

So you have to log in to all those portals to check your interest rates, and maybe your pension is somewhere else. For corporates, this is even more difficult in that sense.

And I see Revolut demonstrating that advantage with retail customers. They have now also integrated with AIS, for example, and they show more bank accounts. They want to be the home bank and then give you insights into your other bank accounts as well.

So there you also see the Open Banking paradigm, which lets you see all your accounts. If you bank with HSBC or Barclays as well, you can see that in the balance and initiate payments via Open Banking.

With AI, I believe it's a step even further. I see a strong possibility that it could benefit existing companies. The big question, which is still up for debate, is whether it will disrupt SaaS software. I can't say for sure, but theoretically, you could connect your bookkeeping, CRM, and banking systems all to your AI interface or agent.

Picture waking up in the morning, launching your AI package, and viewing pending orders needing payment. As a business owner, you click 'pay' and are taken to your bank. There, you complete strong customer authentication to finalise the payment. This links your orders to your payments, and potentially your CRM as well.

So you start a conversation with a person, and Rik needs to close it or handle it. Currently, you're probably logging into three different systems, but these might be integrated through MCP and APIs in an agent.

The scenario you're envisioning, initially for banks, seems realistic. In the US, for example, ChatGPT has already collaborated with an aggregator to access this data, which is quite promising. It's definitely not a benefit for banks, given PSD2 in place in that context.

PSD2 enabled banks to deliver those APIs to get standardised, but now we have to give data to those AI machines if they work with an aggregator to these AI agents, for example. It can already be done in the US. How it will play out here, that's the question.

During this interview, I considered that if banks supply information directly to the AI tool, they retain more control compared to a scenario where, for instance, a bookkeeper shares bank data obtained from the bank. In the latter case, third-party sharing occurs, which could be more sensitive. Therefore, it's likely that banks shouldn't need to wait once there is sufficient demand.

I think that's an excellent analysis.

Banks may be in a better position than before since payments are likely to still go through the bank portal. Many parties working with you as an open bank already see the bank as responsible for any payment errors, making the bank a crucial part of these processes. This gives us a strong, secure position. We shouldn't fear this as an industry. Interestingly, this might even improve the orchestration of PSD2 or similar systems, allowing us to leapfrog forward, which could be beneficial.

As a final question: who's really driving Open Finance today? Is it the regulators, the banks, the fintechs, technology companies, AI providers, or the customers themselves?

For your information: I raised a similar question on LinkedIn, and I think the majority of responses were a mix of all of them.

I understand. That's also maybe a bit of a boring answer. Personally, I think the regulator triggered the Open Finance agenda, and then incumbents picked it up and elaborated on it. We had a very positive attitude towards Open Banking, et cetera, and we matured it.

But now, if I'm honest, I see the tech companies, and I see how fast they develop their APIs and how mature their propositions are, and they have more modern tech success, so it's apparently less difficult for them to spin up APIs in their work, and they think API-native.

So all in all: the regulator set the start, banks defined the direction, and now tech companies are taking over. I think that's roughly the sequence we see.

That's the end of my interview. Thank you so much for your open conversation, the valuable examples you gave, and the vision you shared.

If you prefer to watch or listen, you can find the full interview with Jasper below or listen to it on your favourite podcast channel here (don't forget to SUBSCRIBE for future insights from industry experts!).