Open Banking from EU's Payment Services Directive to Practice: The Cases of Solarisbank and Insha

Rapid developments and the adoption of financial technologies (Fintech) lead to radical changes in the delivery of financial services, including enabling fast payment systems. The recent COVID-19 pandemic catalyzed these processes, while Open Banking supports their further advancement. The concept of Open Banking is gaining global recognition for integrating innovative financial service providers into the sustainable financial ecosystem. This paper discusses Open Banking, including its core building blocks, prospects, and challenges. Given the European Union's pioneering role in adopting Open Banking regulations, the paper also reviews the revised Payment Services Directive (PSD2) and its role in advancing the European fast payment systems. Furthermore, the paper analyzes the practical implications of the PSD2 in Germany by reviewing the examples of the banking-as-a-service platform and the Islamic digital bank, Solarisbank and Insha, respectively. Finally, the paper sheds light on the benefits of Open Banking for ecosystem stakeholders, including fast payment system providers, and what they can derive from the introduction of Open Banking regulations.