“LUXHUB, Unlocking the Potential of Open Banking”
The Second Payment Services Directive (PSD2) is often seen as the cornerstone of Open Banking. As one of the pioneers in Europe, which is the most significant change / innovation you have experienced since then?
With Open Banking being only 5 years old, we are really noticing an ever-increasing consumer acceptance of the concept as a whole. Most people are now aware of the main Open Banking capabilities and especially of the idea that they can access their bank accounts through a TPP (Third-Party Provider). In Luxembourg, for example, 25,000 accounts are accessed monthly for the account aggregation use case. This represents only the beginning of the story but also showcases the potential of Open Banking, since account information-based services are just starting to come to market.
On the financial institutions side, more and more banks are starting to collaborate on exposing and monetizing features beyond the scope of PSD2, with PSD2 APIs reaching a certain maturity level in terms of stability. This shows a growing “openness”, and that is what actually defines Open Banking.
Finally, we, at LUXHUB, notice that a rising number of corporate software platforms are understanding the value of PSD2 and are now increasingly considering partnerships to provide Open Banking capabilities to their users. One can notably think of the automation of labor-intensive tasks such as the retrieval of bank accounts statements, and the reduction of potential manual inputs when initiating payments.
LUXHUB holds both AIS (Account Information Services) and PIS (Payment Initiation Services) licenses – obtained from local regulator CSSF. What does this mean for LUXHUB and the services you provide?
The concept of “Open Banking” is wider than the banking/financial institution scope and pretty much every single private or public organization can leverage such services and integrate them within their own websites or applications. Yet, to be able to provide Account Information and Payment Initiation services to this wider audience (from Fintechs and SMEs to private corporations and public administrations), LUXHUB needed to be a regulated player in the geographical area you operate in, under the supervision in this specific case by the NCA (National Competent Authority) for Luxembourg.
As our ambition was always to provide extended Open Banking services and lean towards Embedded Finance, it was the logical step for LUXHUB to embark in this journey and obtain both licenses. More concretely, they enable us to act as an intermediary between the aforementioned non-regulated audience and every banking institution providing payment account information (AIS) and payment initiation (PIS) services.
Several use cases and actual products have emerged since, and notably Trusted Corporate Pay and its innovative authentication exemption, which was recently recognized at the Luxembourg Finance Awards 2022.