AISP & PISP roles in open banking — Nordigen

What are the roles of AISPs and PISPs in open banking


| Article by: Vitor UrbanoProfile Image Vitor Urbano 3 min

AISP and PISP are two of the most important acronyms in the world of banking and financial technology. But what do they mean, and why should you care?

Putting it simply, AISPs are companies that provide account information services, allowing third-party providers (TPPs) to present users with detailed transaction information from multiple bank accounts.

On the other hand, PISPs are those that provide payment initiation services, allowing TTPs to not only access transaction information, but also initiate payments on behalf of the user. 

AISPs have been around for a long time, but their role has become increasingly important with the advent of open banking. At the same time, PISPs have grown exponentially over the last few years, being the most popular options for hundreds of businesses.

What are the roles of AISPs and PISPs in open banking?

 

Account Information Service Provider (AISP)

An AISP, or account information service provider, is a company that provides users with online access to their account information from various financial institutions. They provide customers with a single access point to all their account information, helping them manage their finances and make better-informed decisions about their money. 

With tools like budgeting, customers can take their financial capabilities to another level. Moreover, by sharing customer data with third-party providers, AISPs can help create new products and services that improve the overall customer experience.

Good examples of AISP use cases

  • Money management tools:  account information service providers allow for personal finance management applications (PFMs) to be built. These applications allow customers to view information from multiple bank accounts in one place, whilst offering a multitude of features such as creating budgets, alerts for subscriptions, savings planning, etc.
  • Lending applications:  unlike traditional lending companies, AISPs allow businesses to assess loan applications in a much faster manner and with higher precision. Open banking also allows for lending companies to access detailed and up-to-date information about customers’ financial situation.

Payment Initiation Service Provider (PISP)

PISPs, or payment initiation service providers, play an important role in the open banking ecosystem, enabling customers to initiate payments to third-party accounts using their online banking credentials. This allows consumers to easily and securely pay bills, transfer money, and do other activities without providing their login information to multiple websites.

In addition, PISPs can help banks increase engagement with their customers by providing a convenient and easy-to-use payment interface. They can help banks attract and retain customers. This is especially important in the era of open banking, where banks face increasing competition from new players in the market.

Good examples of PISP use cases

  • Financial management tools: payment initiation service providers can take PFMs to another level, by allowing applications to automatically allocate funds to savings accounts, move money between accounts to avoid overdraft fees, and many other features.
  • Business solutions: PISPs allow the development of new tools that merge seamlessly with business frameworks, helping them manage and collect payments. Real-time bank transfers can also be a great addition brought by PISPs.

Open banking is changing the way we bank, and the roles of AISP and PISP are essential to its success

Open banking is a game changer in the financial industry. It is making it easier and faster for customers to access their money and make transactions. AISP and PISP are essential to its success, and businesses that want to stay ahead of the curve should consider partnering with these providers.

Even though we are still seeing the early days of open banking, its adoption rates are growing by the day. As more players enter the market and services are widely available, there are no doubts that new tools and applications will rise up to the occasion, taking the financial industry to a new Era.

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