Open Banking in Italy

Open banking in Italy

In September 2019, PSD2 went live in the EEA. The fintech market is considered quite attractive in Italy and their major 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 and was implemented in all EEA countries in 2016 and went live in September 2019.
 

Open Banking in Italy

Italian banks are implementing online banking services in order to improve their relationships with customers (Statista Research Department, 2019). With digitization of processes as a top priority, Italian financial institutions are increasing revenues while, at the same time, reducing costs (EY, 2020, 16). 

To developers, the fintech market is considered quite attractive in Italy. The ecosystem expanded from 11 fintechs in 2011 to 245 in 2020 (IBS Intelligence, 2020). Furthermore, according to an analysis by EY, the fintech ecosystem may be small but has great potential. For example, Italy has the highest number of blockchain projects in the EEA and second-highest number of blockchain projects in Europe (Vezzani & Faelli, 2020). 

In 2019, Italy introduced a regulatory sandbox, which enables fintechs to test their innovations without the risk of infringing on regulatory requirements(Vezzani & Faelli, 2020).Furthermore, Italy introduced a fintech committee within theMinistry of Economy and Finance with the purpose of identifying objectives, defining programs, drafting regulatory proposals and facilitating a relationship between authorities and operators (Vezzani & Faelli, 2020).  

Of all Italian citizens using the internet, 48% use the internet for online banking, which is 18% below the EU average (DESI, 2020, 9). Additionally, on integration of digital technologies, Italy ranks 22nd among EU countries (DESI, 2020, 10). Furthermore, Italy ranks 19th in the EU for digital public services (DESI, 2020, 12). 

Italy has a total of485 banks, with 465 being credit institutions (Amici, 2020). The largest Italian banks includeIntesa Sanpaoloand Unicredit. 

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 Italy, 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

Amici, A. (2020, December).EBF. Italy’s banking sector: Facts & Figures. https://www.ebf.eu/italy/

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). Italy.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

EY. (2020).FinTech waves - The Italian FinTech Ecosystem 2020. EY.

IBS Intelligence. (2020, November 26).5 Italian FinTech companies transforming the financial sector. IBS Intelligence. https://ibsintelligence.com/5-italian-fintech-companies-transforming-the-financial-sector/

Statista Research Department. (2019, August 5).Online banking in Italy - Statistics & Facts. Statista. https://www.statista.com/topics/4203/online-banking-in-italy/

Vezzani, F., & Faelli, T. (2020, June 16).Italy: Fintech Laws and Regulations 2020. ICLG.com. https://iclg.com/practice-areas/fintech-laws-and-regulations/italy


Banks

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

Providers

Here is a list of major open banking platforms in Italy

Nordigen

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


Yapily

Yapily, one of a number of fintech startups that offer an opening banking API to let enterprises, such as financial service providers and merchants, connect to banks. Founded in mid 2017 by Stefano Vaccino, Yapily’s open banking platform makes it easier for various service providers to connect to banks. Specifically, it provides a way to retrieve financial data and initiate payments via a “single secure API” that in turn connects to each supported bank’s open API.


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.