Open Banking in the Netherlands

Open banking is developing at a rapid rate in the Netherlands as thousands of people across Europe are enjoying the many benefits it provides.

Regulatory changes over the past five years have paved the way for innovative fintech providers such as Noda to offer their services in different countries.

But what do you need to know about the Netherlands’ digital payment solutions and open banking in the Netherlands vs Europe?

Here we take a look at what is open banking in Europe, as well as the outlook for digital banks in the Netherlands.

How open banking works

Let’s first take a look at how open banking works before we move on to how it’s developed in Europe and open banking in the Netherlands.

The concept of open banking revolves around consumers and businesses giving regulated third-party providers access to their payment account data.

There are a number of reasons why they’d be willing to divulge information. For example, they could be booking to simply manage their finances more effectively.

This includes keeping track of payments made and building up savings levels, as well as having the ability to more easily move money around.

Open banking is possible thanks to an API. This stands for application programming interface and is basically a set of rules enabling software applications to communicate.

Banking in the Netherlands: A positive backdrop

Let’s now take a closer look at the Dutch banking sector. According to Statista, banking in the Netherlands is one of the country’s most important service industries.

It stated: “The assets of domestic banking groups reached a value of approximately 2.6 trillion euros in 2023, which was more than twice the size of the Dutch GDP, highlighting the banking sector’s prominent role in the country’s economy.”

As far as personal finances are concerned, let’s also take a look at those who have a bank account in the Netherlands.

Dutch households’ bank deposits with Dutch banks rose by around €41.3 billion to €566.7 billion at the end of September 2023, according to DeNederlandscheBank.

However, there are many others who don’t focus all their attention on having an online Dutch bank account and opt for one elsewhere instead.

This is why Dutch households were found to have €10.5 billion in bank balances in euro area countries, excluding any bank account in the Netherlands.

The Benefits of Noda

Noda is well established as one of the key open banking in the Netherlands providers and has become a force in the payment processing industry.

Cost advantages, speed and security are among its most cherished advantages, and these have been demonstrated across the company’s global network.

This spans 1,650 banks in 30 countries. Of course, having such an international reach enables them to support thousands of individuals and business customers.

Of course, having an experienced and knowledgeable partner such as Noda is a prerequisite for anyone looking to embrace the benefits of open banking in the Netherlands.

We believe that’s where Noda scores highly. Its advanced open banking API enables direct bank-to-bank payments and additional data services.

This makes for an efficient, cost-effective and secure alternative to traditional payment methods and benefits both businesses and their customers.

With that in mind, what are the views of those in the Netherlands towards the introduction of more digital banking solutions?

Attitudes to digital: How do the Dutch compare?

Well, when it comes to the potential of digital banking in the Netherlands, there is a lot of good news for the providers of open banking.

The Netherlands ranked first in attitudes to digital trust across 42 economies worldwide, according to the 2020 Digital Intelligence Index.

Only 17% of Dutch consumers had big concerns with sharing financial data with third parties, and 25% had no concerns at all. 

Meanwhile, the proportion of Dutch people ordering online was around 97%, according to an annual report from the Dutch Payments Association.

Open banking in the Netherlands: how it works

What are the Dutch open banking regulations? How advanced are they and is open banking in the Netherlands good or bad?

The development of the Netherlands’ financial services has been rapid over the last few years, driven by an optimistic public and innovative business community.

The European legislation on consumer and business payments, known as PSD2, was introduced into the Netherlands back in February 2019.

PSD2 in the Netherlands obliges banks to give authorized firms access to an individual’s payment account if they are willing to give consent.

Prior to this point, only the individual concerned and the bank had access to payment data, but the legislation opened up the entire market to more competition.

According to De Nederlandsche Bank, this can only happen if a couple of important conditions have been met.

The first is that the provider has been issued a licence by either De Nederlandsche Bank in the Netherlands or by another EU Member State.

“PSD2 enables more competition in the payment market as it also allows firms other than your bank to view your payment data,” it added.

Fintech innovation in the Netherlands

The world of fintech in the Netherlands is on a “steep upward trajectory” and changing the way that society handles money, according to Invest in Holland.

“Banking and financial investment are shifting faster than ever from brick-and-mortar buildings to online, AI, and blockchain – and Dutch finance is leading the way,” it stated.

There are now more than 850 fintech companies calling the Netherlands their home, as well as a variety of traditional financial institutions and innovative technology firms.

Given this positive backdrop, it won’t come as a huge surprise to learn that there are a large number of players in this field.

In fact, there’s estimated to be more than 20 banks and account providers and around 50 banking APIs in the Netherlands.

Open banking is evolving in the Netherlands against a unique payments backdrop, according to a study by Mastercard.

“The Instant Payments initiative by the Dutch Payments Association is now the default method for credit transfers in the Netherlands and covers almost all Dutch payment accounts,” it stated. “The plan is for complete compatibility with the European SEPA instant credit transfer (SCT Inst) standard.”

The Instant Payments infrastructure isn’t the only ongoing solution. The report also highlighted the consortium of major Dutch banks that partner around iDEAL.

This is a real-time e-payments solution that enables account-to-account payments. It’s used by 95% of consumers and has a 68% share in preference for online payments.

Open banking in the Netherlands: What the future holds

Looking ahead, what is the future of open banking in the Netherlands? Well, according to the annual report of the Dutch Payments Association, it’s very exciting.

“For years, the Dutch payment system has been among the most efficient and advanced in the world, something to be proud of,” it stated. “But standing still is going backwards.”

The organization emphasized that its ambition was to “optimize payments even further” by closely cooperating with various members and stakeholders.

It added: “Rapidly advancing technology for payment solutions, new kinds of payment service providers, changing customer needs and ambitions for more European sovereignty in payments, require strong cooperation between all stakeholders.”

Bottom line

It’s certainly a very exciting time for open banking in the Netherlands as regulators, businesses and consumers are all enthusiastic about the possibilities.

The next few years are likely to see waves of innovation providing remarkably advanced technological solutions that will continue to revolutionize the payments industry.

The Dutch Payments Association has insisted it wants a “level playing field for all payment service providers” and that means the strongest players are likely to emerge victorious.