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As the latest Konsentus Open Banking tracker reveals static TPP numbers across both the EU and UK, we ask whether progress is stalling across the continent.
European Open Banking – stall speed?
When Konsentus reported a decline in the number of Third Party Providers (TPPs) with regulatory approval in the UK at the end of 2022, many were quick to blame the effects of Brexit which (they argued) had seen companies exit the UK in favour of wider licensing opportunities in the EU.
Six months later, it now appears TPP numbers are stagnating across Europe, raising questions about how well the continent is progressing towards a true Open Banking environment.
TPPs are the lifeblood of Open Banking
While legislation mandates that banks should open their customer accounts to competition from Third Parties, those Third Parties are responsible for providing that competition by offering their services to banking customers through a bank’s digital customer channels.
Stagnation in the number of TPPs could mean less interest in getting involved on the part of non-bank.
In the European Economic Area – effectively, the EU plus Norway and Iceland – there was one less TPP than reported at the end of Q1 2023.
In the UK, four additional TPPs were approved to provide PSD2 open banking services, one less than the five whose permissions were removed.
This gives an overall number of 556 TPPs active in the UK and EEA, three less than reported at the end of Q1 2023.
Countries in northern and central Europe have seen the most change this quarter. 64% of the TPPs whose permissions were removed were all from Nordic markets and, of the newly approved entities, half of them are regulated in either Luxembourg or Finland.
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News of stagnant TPP numbers comes at a time when Open Banking ought to be flourishing across Europe, more than five years after PSD2 fired the starting-gun on what was hailed as a revolution in banking services designed to make banking cheaper, more innovative and competitive.
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