Market review: Open banking in Italy

What could a new wave of financial innovation mean for Italy?

Italy has traditionally been a cash-focused market with a keen desire to save. But, thanks to open banking, new payment methods are being adopted and both consumers and businesses are now more likely to find solutions tailored to their specific wants and needs.

This blog reflects on how open banking is providing new opportunities for consumers and businesses, considers how open banking can benefit Italy’s growing fintech market, and details how Yapily’s open banking infrastructure can support the Italian economy.

Open banking: changing the face of finance

For decades, financial institutions have kept customers’ data under lock and key, making it hard for consumers to switch banks and find the best solution for them without relying solely on the bank to do what’s best for them. Open banking was introduced to break down these barriers, helping customers take back control of their money and make better financial decisions. Open banking has since prevailed as a key enabler of innovation with a wide range of use cases, enabling accurate affordability checks for lenders, direct account-to-account payments that bypass the middleman to reduce costs, and live access to financial data for accurate cash flow reporting to name a few.

Italy in focus

A financially conscious marketplace

Italians are known for being some of the best savers in the World. In fact, the only countries to out-save Italy are the United States, Japan, Belgium, and the Netherlands. However, the financial crash of 2008 resulted in a negative view of traditional financial services that still lingers today, paving the way for new tech to help them save more and improve their overall financial management.

As well as being strong savers, Italians have also always preferred to pay in cash rather than through electronic methods. However, since the pandemic, Italy’s love affair with cash is fading, accelerated by governmental incentives to encourage card payments to avoid tax evasion.

Open banking provides a great opportunity to increase the usage of alternative payments as Italians move away from cash, and gain insight into better ways to save and invest their money. Open banking payments enable the instant movement of money from one account to another, removing middlemen to reduce fees for the merchant, and increase security for the customer.

Italian attitudes towards digital assets and financial services

  • 70% see digitisation as an opportunity to improve the quality of life
  • 46%-59% have concerns about data protection
  • 42% use online banking (compared to 90% in the UK)

The open banking opportunity in Italy

While open banking faced a relatively slow start in Italy, adoption is gaining momentum as the country begins to transform its payments landscape. In our latest European Open Banking League table, Italy improved its score by 1.2 points from 2021 with a score of 6.2. This is a clear sign of progress and demonstrates a regional desire to accelerate open banking from players across the ecosystem.

Collaboration with the banks

Open banking restricts financial institutions’ ability to monopolise financial products, which provides a massive opportunity for collaboration between tech companies and traditional banks. This collaboration will enable banks to build lost trust with consumers and businesses while providing them with access to services and products that meet their unique needs.

The Italian fintech scene is expanding rapidly, with the launch of the country’s first Open Banking Hub in October 2019. This is driving Italian fintech innovation, giving banks the opportunity to keep pace with Third Party Providers (TPPs) and offer increasingly competitive banking services in payments, lending, and wealth management.

Opening the door for Italian third-party providers (TPPs)

The door is officially open for fintechs, TPPs, and other non-financial services, allowing them to enter a market that was previously dominated by traditional banks. Open banking has paved the way for alternative providers to offer niche banking and financial services. By accessing real-time financial data, non-financial services are also able to compete for the first time. Case in point: Enel, a large Italian Utility company that’s launching a digital banking service.

Providing consumers with choice

Consumers and businesses no longer have to rely on traditional banks to do what’s best for them. They will soon have access to a wide range of TPPs that create very specific solutions to solve unique problems.

Open banking benefits consumers with new insights that can help them better manage their money. By democratising financial information, products like Yonder have the ability to provide expats living in the UK with access to a credit card, even with limited financial history in the UK. Open banking enables expats to access their real-time information, giving them an accurate and clear overview of their financial behaviour.

Businesses will benefit, too, whether it be through streamlined payments or access to more detailed insights. SMEs especially will now have access to products that were previously only offered to larger enterprises. Comma, for example, is a payments TPP that offers bulk payments to SMEs, streamlining the process of paying suppliers, contractors and employees.

These are just a few select open banking use cases; the possibilities are limitless, and there’s incredible potential for Italian TPPs to match and exceed the innovation we’re seeing across Europe.

Areas for improvement

Italy is taking steps in the right direction but will need to move quickly to keep pace with open banking innovation across the continent. With many businesses utilising open banking in the region, tighter supervision of regulatory standards would help boost this further.

Currently, inconsistencies in this area are creating challenges for TPPs and companies to offer a high-quality service to their customers. It would also help to increase integration outside of the top two to three banks. Going forwards, policymakers and banks should work together to improve education and understanding.

“While the EU Commission has been taking steps in the right direction, launching the EU Digital Finance Platform to feed into its upcoming proposal on open finance, it has the opportunity to go one step further and resolve some of the systemic issues that have surfaced as the Open Banking ecosystem continues to grow at pace.” - Maria Palmieri, Director of Public Policy, Yapily

Yapily is the open banking platform that helps you build what’s next

Yapily enables forward-thinking product teams like Vivid, American Express and Intuit Quickbooks to build personalised financial experiences with access to over 1900 banks and institutions across 19 countries and counting.

Yapily’s product suite includes Yapily Data, Yapily Validate, Yapily Payments, and Yapily Bulk Payments, along with add-on services Yapily Connect, Yapily Virtual Accounts, and Yapily VRPs.

Whether you’re looking to obtain licensing, access financial data, initiate payments, or expand globally, Yapily can power your innovation. Get in touch to learn more.


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