Open Banking in Ireland

What Is Open Banking?

Let’s start with a general definition before taking a closer look at open banking’s adoption in Ireland and what’s needed for its future development.

Open banking means giving trusted third-party providers (TTPs) access to the payment account data of consumers and businesses.

Traditionally, customer data was kept by individual banks and used to meet their needs or provide insights, according to Ireland’s Department of Finance.

“Individuals would, under this approach, monitor, or engage with financial products on a bank by bank basis,” it stated. “There was no joined-up view of all the accounts used by a single consumer, either by the bank or by the customer.”

However, open banking is a “paradigm shift” from this previous approach as it enables customers to share data between banks and third party entities.

It’s become possible thanks to an API. This stands for application programming interface and is basically a set of rules enabling software applications to communicate.

The Open Banking Implementation Entity is a body that creates API standards enabling firms across Europe to meet their relevant obligations and the infrastructure in place.

In our Ireland open banking overview, we explore why this is attractive and highlight the  different platform solutions involved in the world of payment gateways in Ireland.

Benefits Of Open Banking

While granting access to your finances may seem an odd concept, there are plenty of viable reasons why it makes sense to share such important information.

The first is simplicity. In a complicated world, the ability to manage finances quickly and efficiently will be very appealing.

By management, we mean everything from being able to move money around easier to building up savings pots and keeping track of payments made.

Ireland’s Department of Finance has highlighted three benefits:

• Empowering customers to better manage their entire financial activities.
• Allowing technology companies to enter the financial landscape and provide offerings to consumers.
• Help people in vulnerable circumstances to better understand their financial situations.

Obviously, it’s important to understand how digital payments are viewed by those living in Ireland. Is it a growing area or has the reception to this area been lacklustre?

Well, 21% of the FinTech industry in Ireland is made up of payments companies, while 20 of the top 25 financial services companies are located in the country.

That’s according to the Fintech & Payments Association of Ireland, which also claimed that the country is the 4th largest exporter of financial services in the EU.

We shall explore this more in the following section where we also consider Ireland’s open banking standards and the various solutions available.

Payments In Ireland

There’s no denying that electronic payments are becoming more popular in Ireland and it’s a trend that’s expected to continue.

More than €12 billion was spent using mobile wallets in the 12 months to March 2024, according to the Banking & Payments Federation Ireland (BPFI).

Its latest data, it revealed the use of wallets, such as Apple Pay and Google Pay, accounted for more than half of all contactless payments made in the period.

Overall, in 2023 there were 4.1 billion payments made (11 million payments per day), the majority of which were through payment cards and mobile and online banking.

This growth is obviously tremendous news for payment processors in Ireland that are looking to get involved in this area.

Gillian Byrne, BPFI’s head of payments, said: “Demand for digital payments has jumped significantly in recent years as customers have adopted new technology and payment methods, and we can see this trend reflected in the latest Payments Monitor.”

Open Banking In Ireland

Let’s now move on to the open banking landscape in Ireland. How developed are the opportunities for fintechs and what changes have been made in recent years?

As far as Ireland’s open banking regulation is concerned, the European Union’s payment services regulations, known as PSD2, came into force in the country bank in January 2018.

This required banks to open up access to customer payment accounts to two new third party providers, according to a report from Ireland’s Department of Finance.

These are: Payment Initiation Service Providers (PISPs) and Account Information Service Providers (AISPs).

The study noted that PISPs help consumers make online credit transfers and inform the merchant immediately of the payment initiation. “This allows for the immediate dispatch of goods or immediate access to services purchased online,” it explained.

AISPs, meanwhile, enabled consumers and businesses to have a “global view” on their financial situation. For example, consolidating different current accounts in order to categorise their spending.

As of November 2022, there were five AISPs and 11 PISPs registered with the Central Bank, but it’s clear that open banking implementation has huge potential in Ireland.

You can explore a full list of open banking API providers in Europe and across the road via this useful directory.

Future Of Open Banking In Ireland

Looking ahead, what is the future of open banking in Ireland and how can the players in this area improve their chances of success?

According to the BPFI, open banking represents a “significant shift in financial services” in Ireland, but a joined up approach is needed for its future development.

Michael Concannon, head of FPAI strategy & development said: “Open banking is paving the way for innovations that are redefining how consumers and businesses interact with financial institutions.

Looking to the future, an FPAI report has set out six key recommendations that will help the development of open banking in Ireland.

• Establish an industry open banking working group to bring banks and fintechs together to discuss challenges and opportunities.
• Develop a communications plan on user education and trust for open banking.
• Set out a framework for monitoring and reporting on open banking progress.
• Regulatory and industry engagement on Instant Payment and PSD3 Implementation.
• Industry collaboration on fraud mitigation measures.
• Develop a national open API and data strategy with clear goals and objectives.

Why Consider Noda?

Noda has established itself as a leading platform in the world of open banking and is focused on reaffirming its position as a crucial partner for businesses.

It believes the main benefits of its proposition relate to the cost advantages, speed of processing and security of transactions.

Currently, its services span 2,000 banks in 28 countries. Having such a global spread of interests means Noda helps support many thousands of consumers and firms.

The key to Noda’s offering is its experience and knowledge in what is already becoming a vitally important industry.

Its advanced open banking API infrastructure makes for an efficient, cost-effective and secure alternative to traditional payment methods.