FinTech Timeline: The History of Open Banking in Europe
1980
The German Federal Post Office
The birth of Open Banking began after an experiment conducted by the Deutsche Bundespost (German Federal Post Office), when the management team ran a test using five remote computers and invited 2,000 people to participate in their online banking pilot scheme. The test showed that users could perform banking transactions from their homes via their TVs using specific transfer codes. In the UK, Oracle and teletext services soon followed.
1998
HBCI and financial transaction services
Germany again broke boundaries when it came to the next step in the development of Open Banking as a platform. From 1998 to 2002, banking experts developed the Home Banking Computer Interface (HBCI) which made it possible to establish security, messaging and transfer protocols. In 2002, the HBCI was replaced by the Financial Transaction Service, resulting in a banking security system and the invention of the PIN code.
2004
SOFORT – screen scraping
Two years later, the very first screen scraping and data mining was carried out by what is being referred to as SOFORT, which enabled bank customers to give service providers permission to access their banking information – and provide login details. This breakthrough allowed the bank provider to access the account as if they were the customer.
2007
The directive on payment services is launched
In 2007, the European Commission developed the first payment services directive – called PSD1. The aim was to stimulate competition in the financial industry, increase the quality of the services offered and to protect the end user. The move led to a new industry category – namely payment services, which contained new regulations that enabled non-banks to transact and grow in the sector.
2011
Recession and resetting of banking services
In 2011, the UK’s Midata initiative was announced, which was a government initiative that enabled UK customers to download current account transaction data and feed it into online tools to increase bank switching. Backed by RBS and Visa, the scheme was officially rolled out in 2015 with the aim of “changing personal banking forever”.
2022
APIs and financial freedom
Today, Open Banking has transformed the global retail transaction landscape. Innovative APIs have resulted in far more frictionless relationships between banks, suppliers and customers as automated solutions enable non-bank entities to offer similar products and services. Open Banking also has the potential to reduce cyber-attacks and fraud and result in a streamlined financial payment system.
