Konsentus open banking tracker reveals sharp rise in cross-border activity image credit shutterstock

The Konsentus Q1 2024 TPP tracker reveals that there are 367 regulated third-party providers (TPPs) in the EEA. Germany has the highest number of domestic third parties at 37. Meantime, Italy has the highest number of non-domestic TPPs, totalling 149. Some 52% of EEA TPPs passport their open banking services outside of their domestic market. And 66% of all EEA TPPs can authorise payments on an account holder’s behalf.

Konsentus started to report on the number of regulated open banking third parties in the European Economic Area in 2019. For the first time since then, over half now have the required permissions to provide open banking services outside of their home-regulated market.

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The rise of TPP passporting open banking services to other EEA markets

Konsentus’ data reveals that in September 2019, 34% of the total number of EEA TPPs could passport their open banking services to other EEA markets. By March 2024, this figure had reached 52% – an overall increase of 53%.

A similar trend is reported for payment services growth. In September 2019, the percentage of EEA TPPs who could initiate payments on an account holder’s behalf was 52%. The number has increased over the last few years and now stands at 66% (241 of the 367 total EEA TPPs).

The growth in cross-border transactions and increasing number of fintechs who are authorised to initiate open banking payments on an account holder’s behalf creates additional security risks for banks.

Cross-border fraud rates 9 times higher: EBA

These challenges are reinforced by data reported in an EBA Opinion Paper published on 29 April 2024. It states that for both cards and credit transfers “cross-border fraud rates in volume are about 9 times higher than for domestic transactions”.

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Identifying and validating third parties to protect account data and funds is now becoming increasingly important. Banks must prepare to safeguard their accounts in preparation for increased activity as the ecosystem expands to support the transition to open finance and beyond.

Mike Woods CEO Konsentus said: “In the early years of PSD2, fintechs spent their time and effort building APIs and connecting to the banks. They are now capitalising on all that early hard work, monetising their services and earning revenue.

“Our data reinforces that although quarter-by-quarter change is marginal, the difference is significant when you compare the figures from 2019 with today. Banks must make sure they’re fully prepared to respond to the changing landscape and continue to keep their customers’ data and funds safe and secure.”