Find answers to all of your questions about Yolt and open banking below.
Open banking is the secure way for businesses to access individual and business bank account data with permission and within strict regulations. For businesses, it opens potential to automate repetitive processes, access more accurate and reliable data, unlock innovation, and offer new products and services. For customers and consumers, it enables greater choice and access to better products and services.
Open banking is split into two key areas. Account Information Services (AIS) transfer control of bank account data to the owner of the account. For businesses this means that – if you have the consent of the account owner – you can access their bank account data and use it to offer tailored products and services.
Payment Initiation Services (PIS) allow consumers to pay directly from their bank account without needing to input card details. This provides a faster more efficient payment process for the end user and enables the merchant to save on card processing fees.
PSD2 is European regulation for electronic payment services, which came into effect in 2018. It follows the original the Payment Service Providers Directive (PSD), which aimed to develop a single payment market in the EU in 2007. In the EU, open banking is an initiative under PSD2 regulations. In the UK, Open Banking is an initiative under the Competition and Markets Authority.
Open banking offers businesses a range of benefits depending on their vertical and use case. For example, lenders can automatically build a detailed and accurate financial profile of customers, and speed up the onboarding process, saving time, reducing fraud risk, and giving a better customer experience. You can see similar use cases for banks, financial managers, and insurers and utilities here.
Yes. Open banking is a highly regulated area of banking that goes above and beyond to protect the security of businesses and consumers. Any organisation that works with it must be licensed, secure, and faces heavy penalties for any breaches.
Yolt is a venture of ING Bank B.V., and due to this our solutions have been built with same bank-grade internal security requirements as other ING products.
Under PSD2 there are two consent flows. The most common model redirects the customer directly to their bank environment, so a Third Party Provider (TPP) such as YTS does not see any credentials. In the second model – primarily used in Germany – user login credentials are asked on the TPP side and sent to the bank. Strong Customer Authentication (SCA) is required in both cases.
You can work with open banking on your own, but this requires the right license, and building your own API connections with the relevant banks.
With regards to licenses, you can apply for your own license under the relevant national regulation, including under the Financial Conduct Authority (FCA) in the UK and De Nederlandsche Bank (DNB) in the Netherlands. However, this is a complex and lengthy process.
Likewise, you can build your own API connections with the relevant bank(s), but this requires considerable investment in terms of development and maintenance. Most businesses are better off working with a provider such as YTS, which is already licensed and manages the connections.
Curious to hear what open banking can mean for your business?Get in touch