Open Banking in Iceland

Open banking in Iceland

In September 2019, PSD2 went live in the EEA. The financial industry has changed rapidly in Iceland and 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 Iceland

Thanks to fintech solutions, the financial industry has changed rapidly in Iceland. Luckily,Icelanders are considered to have a high adoption rate towards new financial solutions and fintech solutions are provided both by independent businesses and commercial banks (Reykjalín, 2021). Furthermore, there are 25 fintech startups in Iceland and in 2018 both the Association of Fintech Companies and the Fintech Cluster were established to strengthen innovation and cooperation (Reykjalín, 2021).

In regards to regulations, there are no specific legislations aimed at fintech activities and no regulatory sandbox has been established (Reykjalín, 2021). However, the Central Bank of Iceland has set up a fintech help desk to assist those who aim to establish new fintech services (Reykjalín, 2021).

Of all Icelandish citizens using the internet,94% use the internet for online banking, which is 28% above the EU average (Statista Research Department, 2019).  

Iceland has a total of 8banks, the largest of which include Glitnir Banki hf and Kaupthing Bank

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 Iceland, 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

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/

 

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

Reykjalín, S. (2021, March 18).Fintech 2021 - Iceland. Chambers and Partners. https://practiceguides.chambers.com/practice-guides/fintech-2021/iceland

Statista Research Department. (2019, January 22).Online banking penetration in Iceland 2005-2018. Statista. https://www.statista.com/statistics/380888/online-banking-penetration-in-iceland/

Tracxn. (2021, June 6).FinTech Startups in Iceland. Tracxn. https://tracxn.com/explore/FinTech-Startups-in-Iceland

 

 


Banks

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

Providers

Here is a list of major open banking platforms in Iceland

Nordigen

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