Natasha Cáceres

Open Banking has changed the game, building investor trust and driving a surge of funding into fintech, especially for PayTechs.

Regulation has a reputation for slowing things down. More compliance, more costs, more friction for smaller players trying to enter a market. In Europe’s fintech sector, the data tells a different story.

Since PSD2 came into force, fintech investment in Europe grew at 13% annually between 2015 and 2023, reaching $5.6 billion. That growth was not evenly distributed across all fintech categories. PayTechs, the companies built around payment services, captured a disproportionate share of that capital. The reason is not hard to see: PSD2 gave them something investors value above almost everything else, a regulatory framework that reduced uncertainty. When the rules are clear and access to banking infrastructure is guaranteed by law, building a business on top of it becomes a much safer bet. ¹

The mechanism behind this is worth understanding. PSD2 required banks to open their APIs to authorized third parties, which meant that a fintech in Spain could access the same payment infrastructure as Santander. Combined with Europe’s passporting system, which allows a company licensed in one EEA country to operate across the entire region without additional licenses, the market suddenly became much larger for anyone willing to comply with the regulation. Over 400 non-bank providers have emerged in the EU since then, many of them smaller fintechs that would have had no realistic path to market under the old system.

The contrast with the United States is significant. Without a federal mandate for data sharing, access to banking infrastructure in the U.S. remains largely negotiated between dominant players. Smaller fintechs depend on partnerships that established institutions can revoke, restrict, or price out of reach. The market is innovative, but it is not open in the same structural sense.

Europe is already moving to the next phase. PSD3 and the Financial Data Access Regulation (FiDA) are extending the same logic beyond payments to insurance, investments, and pensions. The direction is clear: financial data as shared infrastructure, not private property. Whether other regions follow, or continue watching from the side, will define who leads the next decade of financial services.

1. Data supporting regional comparisons exclude any potential influences and focus solely on the impact of PSD2 following its implementation. I will include data in upcoming posts. ↩︎