Lenders across Europe are embracing the benefits of open banking-powered payments, but barriers to adoption remain, a report has found.
Open banking platform Tink’s survey of 380 financial services executives across 12 European markets has revealed that three quarters of financial executives (74 per cent) cited increased payment security and fraud mitigation as key benefits of open banking payments.
This was followed by the ability to deliver instant transfers (70 per cent) and the potential to reduce costs for merchants (67 per cent).
However, Tink’s report highlighted that there is still work to be done to ensure open banking payments realise their true potential.
A lack of consumer awareness was ranked as a major barrier, with 75 per cent of financial executives believing consumer awareness is essential for the adoption of open banking payments.
The research also showed executives are concerned about the current limited adoption of instant payment rails across Europe to enable real-time payments.
Tom Pope, head of payments and platforms at Tink, said open banking has the potential to transform the payments industry.
He said forging strategic partnerships with fintechs can help financial institutions innovate around APIs to remove friction and improve the end user experience, which is vital to driving mass-market consumer adoption of open banking payments over the next few years.
Read more: Tink predicts open banking “boom” in 2022
“In certain markets we are already reaching a tipping point of user adoption, where financial institutions are embracing the opportunity and investing in a range of use cases,” he said.
“As a result, payment initiation services volumes are growing rapidly.
“But there is still some way to go to remove barriers to mass-market adoption. That’s why we welcome the European Commission’s proposal to mandate the adoption of instant payment rails and call on them to ensure that access to these rails is free for consumers.
“This move will ensure we have the infrastructure in place to continue to innovate whilst encouraging consumer uptake of open banking payments.”