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Instant payments will unlock the full potential of Open Banking

Instant payments will unlock the full potential of Open Banking

Edward van Dooren

Strategic advisor

18 June 2019

Instant payments will unlock the full potential of Open Banking


Now that the added value of instant payments is increasingly recognized worldwide – look at the movement in Europe with initiatives in the Netherlands and the Nordics – it is just a matter of time before the industry fully realizes that instant payments and Open Banking are a winning combination.

Real-time customer data

Both will be a winning combination because the user-friendliness of instant payments – which offers transfers of money from the payer to the payee almost immediately – is not the only advantage for both the consumer and the merchant. This new payment method can also be the engine that unlocks the full potential of Open Banking.

To do so, (challenger) banks simply need to add instant payments as an extra layer to their infrastructure. The new functionalities and services built on this layer generate an abundance of real-time customer data. Data that can be used directly for better and personalized domestic and cross-border services created by banks and third parties in the era of Open Banking and PSD2.

Corporate cash management

I would like to demonstrate this via equensWordline’s digital banking app which simplifies corporate cash management. Via Open Banking it is possible to access account data while instant payments enable quick transfers. This exact combination allows companies to respond directly to changes and move money from one account to another. As you see, without direct payments it is impossible to be completely up-to-date on current balances and the latest transactions, which makes this payment method indispensable for this application.

This is not all, because PSD2 and Open Banking also aim to boost the interoperability and reach of payment solutions by opening up the payment world. These are characterising that instant payments already possess, due to the European Central Bank (ECB) and the European Association of Clearing Houses (EACHA) that stimulates the development of pan-European real-time payment solutions through the TARGET Instant Payment Settlement (TIPS) and the Instant Payments Interoperability Framework (EIPIF). In fact, instant payments can be a trigger for more pan-European payment solutions to come and compete with solutions from players and bigtechs from other continents.

As shown, instant payments as a service is not just a user-friendly functionality. It’s an essential extra layer for banks and third parties who are seeking for new interoperable, competitive and corporate advantages in the Open Banking era. This is why instant payments will become the new normal in the global payments landscape.