At EBAday 2024 in Lisbon, the second half of day two featured an engaging panel discussion focused on open banking and embedded finance.
In the session titled ‘Open Banking and Embedded Finance: How Far Have We Come?’, industry leaders Gijs Boudewijn, general manager at the Dutch Payments Association and co-chair of the SPAA Multistakeholder Group; Pietro Fragnito, senior innovation strategy and market outlook at Intesa Sanpaolo; and Paul Staples, group head of embedded banking at ClearBank, explored recent advancements in the field.
When asked about the potential for a fragmented landscape, Boudewijn emphasized that most of the industry is striving for harmonization. He highlighted the aim for pan-European solutions and the necessity for the industry to work towards this goal. “There was fragmentation and friction that newcomers, like fintechs, introduced. By mitigating that friction, we can unify solutions for improved outcomes. This is what excites us for the future,” he noted.
In contrast, Staples expressed that fragmentation can sometimes benefit his organization, which provides a variety of services across different market segments. He emphasized the importance of understanding customer segmentation and the business case for adopting embedded finance. Staples cited Uber as an example of successful implementation in the US and Canada, but noted that similar success has not been as prevalent in Europe.
“You need to start at the grassroots level and ask: what problem are you solving for the consumer? Is the problem significant enough for them to consider alternatives? This requires thorough work beyond just looking at return on investment,” he remarked, stressing the need for customer-centric design solutions.
Fragnito shared a success story of collaboration with a fintech company that simplified transfer paperwork, resulting in enhanced customer engagement and service quality. “We partnered with a fintech to solve compliance issues for our clients, enabling seamless service integration in our application. This helped our customers complete their journey without needing to switch contexts,” he explained.
Addressing concerns with PSD2 and introducing SEPA Payment Account Access (SPAA) as a solution, Boudewijn described SPAA’s purpose and its role in fostering compliance through innovative models.
Fragnito concurred, emphasizing the necessity to modernize legacy banking systems and navigate compliance complexities to enhance customer experience and payment processes. He mentioned efforts to develop a comprehensive strategy to expedite growth.
The panel concluded that banks must strike a balance between compliance and customer experience, and that collaboration between banks and fintechs is essential for driving innovation.