Open Banking in Ireland

Open banking in Ireland

In September 2019, PSD2 went live in the EEA. Ireland has emerged as a growing international huband their banks already offer open banking.
 

What is Open Banking and PSD2?

Open banking is banking practice that securely shares financial information such as consumer banking, transactions and other financial data to third-party financial service providers (Estevez, 2020). Sharing data is done through the use of application programming interfaces (APIs) and only with the consent of customers (The Balance, 2020). Open banking is the drive behind both innovation and competition in the financial industry (Cahill, n.d.). 

PSD2 is a European Directive that regulates electronic payment services, was implemented in all EEA countries in 2016 and went live in September 2019.
 

Open Banking in Ireland

Ireland has emerged as a growing international hub for fintech with over 400 financial service companies, 37,000 employees within the financial services and 100,000 employees within technology (A&L Goodbody, n.d., 2,11). Ireland has a large talent pool for the fintech industry and universities and educational institutions have launched educational initiatives to help cultivate the next generation of fintech talent (A&L Goodbody, n.d., 11). It makes sense why so many fintechs choose Ireland as their base because Ireland boasts an already well developed fintech ecosystem, skilled talent pool, government support and good track record (A&L Goodbody, n.d., 2). 

The Irish government has prioritised the fintech industry. In 2015, the government launched a strategy for developing the country’s International Financial Services Sector for the following five years with a key focus on recognition and promotion of fintech as a rapidly growing area of innovative financial services (A&L Goodbody, n.d., 3). The long-term ambition for Ireland is, by 2025, to become a world leader as a location for financial services and a source of innovation-led solutions (Hunt & Bluett, 2021). This ambition is made clear in regards to the Future Jobs Ireland framework where€100 million has been made available to support innovative and transformative technology investments under the Disruptive Technologies Fund (DESI, 2020,11). 

In addition to its pre-existing regulatory sandbox, in 2018, the Central Bank established an Innovation Hub, aimed at allowing fintech firms to engage with the Central Bank outside of existing formal regulator/firm engagement processes (Hunt & Bluett, 2021). 

Of all Irish citizens using the internet, 75% use the internet for online banking, which is 9% above the EU average (DESI, 2020, 9). Additionally, on integration of digital technologies, Ireland ranks 1st among EU countries (DESI, 2020, 10). Furthermore, Ireland ranks 9th in the EU for digital public services (DESI, 2020, 12). 

With a sophisticated banking system split into two groups, 1. Financing and financial services available directly from banks and 2. Financing availability through financial markets, Ireland has a total of291 banks. The Irish Government has majority stakes in AIB, 71%,  and Bank of Ireland 14%. 

How Does Open Banking Work?

Open banking uses an API that allows financial institutions to exchange financial data, usually through a third party-developed application (Estevez, 2020). These applications are developed by up and coming FinTech companies with the mission to improve digital banking.

To access and use the open banking APIs in Ireland, you will need to acquire an account information service provider license, issued by the relevant authority. Furthermore, you will require a relevant certificate (QTSPs or eIDAS), compliant with PSD2 requirements. Alternatively, you can use an open banking platform, such as Nordigen

References

A&L Goodbody. (n.d.).The Irish fintech ecosystem: A guide for foreign investors. A&L Goodbody.

The Balance. (2020, October 11). What Open Banking Is and How It Will Affect You. https://www.thebalance.com/what-is-open-banking-and-how-will-it-affect-you-4173727

Cahill, H. (n.d.).InvoiceFair. The Evolution of Open Banking: Connectivity breeds digital competition. https://invoicefair.com/the-evolution-of-open-banking-connectivity-breeds-digital-competition-081118/

DESI. (2020). Ireland.Digital Economy and Society Index (DESI) 2020, 1-13.

Estevez, E. (2020, August 27).Open Banking. Investopedia. https://www.investopedia.com/terms/o/open-banking.asp

Hunt, B., & Bluett, G. (2021, January 11).Ireland: Ireland Seems Perfectly Positioned To Cultivate A Thriving FinTech Sector. Mondaq. https://www.mondaq.com/ireland/fin-tech/1023856/ireland-seems-perfectly-positioned-to-cultivate-a-thriving-fintech-sector


Banks

Here is a list of major banks providing Open Banking in Ireland

Providers

Here is a list of major open banking platforms in Ireland

Nordigen

Nordigen is an authorised Account Information Service Provider. We provide free access to bank data and premium data insights, using regulated PSD2 connections.


Plaid

Plaid is a financial services company based in San Francisco, California. The company builds a data transfer network that powers fintech and digital finance products. Plaid's product, a technology platform, enables applications to connect with users’ bank accounts.


Truelayer

TrueLayer is a London-based start-up that helps fintech companies verify accounts and connect their apps to bank data. TrueLayer was founded by Francesco Simoneschi and the company has offices in 5 cities across the world.