Untapped open banking opportunities in Balkans

The implementation of the revised EU Payment Services Directive (PSD2) in 2018 was designed to foster a more open, competitive, and secure financial environment across Europe. PSD2 introduced the concept of open banking, requiring banks to make their payment services and customer information accessible to third parties via secure APIs (Application Programming Interfaces).

PSD2 faced significant challenges in achieving its full potential, as many focused primarily on meeting compliance requirements rather than exploring broader business applications. However, there is optimism that PSD3 will encourage the industry to develop robust ecosystems that unlock new opportunities and drive meaningful innovation. 

Meanwhile, despite the mandate, Balkan banks have largely approached open banking with caution, only meeting compliance requirements without recognizing the broader opportunities it presents. 

Stagnation in product development

In the race to comply, for example, many Bulgarian banks took the most cost-effective route. They either handled API development internally or partnered with local vendors to provide the bare minimum API functionality. The key focus was on meeting the compliance deadline, not on developing value-added products or exploring the wider business opportunities that open banking could offer. 

This stagnation stems from a fundamental misunderstanding: banks have yet to realize and believe that there is a business case for making this investment and that it is not in vain. Many bank executives remain skeptical of the value of open banking products and do not see the APIs as tools to innovate or grow their businesses. They also see it as a potential vector for security breaches, fraud, or unnecessary competition with small fintech companies. 

However, this mindset also fails to account for the fact that the true risks—namely, cybersecurity vulnerabilities—can be mitigated with the right technologies, while the potential rewards far outweigh these concerns.

Open banking implementation costs less than banks think

Without strong leadership pushing for open innovation, there is little incentive for banks to invest in the development of new products. It is time for Bulgarian banks to overcome their caution and embrace the opportunities that open banking APIs offer. Opening APIs can lead to greater customer engagement, improved product offerings, and, crucially, new revenue streams. 

A key aspect that many Balkan banks overlook is that open banking services are not expensive. The upfront costs of implementing open banking solutions can be low, especially when compared to the long-term potential for growth.

Many banks currently work with local vendors for API integration. However, to achieve maximum benefits from open banking, they may need to consider switching to vendors offering more advanced, cost-effective solutions. 

In fact, changing vendors is not a complex or expensive process—it's as simple as pressing a button.

Fast-to-market products and flexible solutions allow banks to implement an open banking system within a month. 

For example, some providers offer a Software-as-a-Service (SaaS) model, where banks pay a simple monthly subscription, which reduces upfront costs and allows for easier scalability. This approach helps banks avoid the heavy costs of maintaining in-house systems and allows them to focus on innovation and growth.

By opening their APIs, banks can offer a wider range of products and services beyond the two mandatory features (PIS and AIS). For example, premium APIs such as bulk payouts, instant reporting, and targeted financial products can provide new opportunities for growth. These products not only serve existing customers better but also attract new ones, especially as businesses seek more integrated solutions.

The power of integrated financial platforms

Take the example of Swedbank, which has taken a proactive approach to open banking by offering diverse financial products through its API ecosystem. The bank’s offering includes various types of personalized financial services from VendorLink’s direct leasing applications to Gateway APIs for linking accounting software with business accounts. 

In Bulgaria, banks could similarly build on existing open banking functionality to offer advanced solutions tailored to the needs of local businesses and consumers.

Another promising avenue is the e-commerce sector, where open banking APIs can create new use cases for payments and financial services. Open banking can enable seamless payment initiation and account information access, enhancing customer experience and reducing friction in the buying process. 

For example, APIs that enable instant payments, real-time account verifications, or simplified loan applications can give e-commerce businesses a competitive edge by improving conversion rates and streamlining the user experience.

Moreover, the integration of financial services into broader platforms is another compelling use case. Kaspi.kz, for example, has built a super-app that seamlessly integrates banking, shopping, and other services. This holistic approach is gaining traction, with customers benefiting from a unified platform that simplifies their financial and consumer needs. Balkan banks could similarly develop or partner with fintechs to offer multi-functional platforms that combine traditional banking services with newer, digital-first products.

The future of open banking in the Balkans 

The path forward for Balkan banks lies in fully embracing open banking as a driver of growth and innovation. The good news is that the tools and technology are already in place, and with open APIs, banks have the potential to develop new solutions that can transform their business models. 

The real challenge lies in the mindset shift—banks need to recognize that open banking is an opportunity to become regional innovators.

For local banks to succeed in this new environment, they need to be bold. They must invest in training, product development, and partnerships with fintechs to unlock the full potential of open banking. This means expanding beyond the core functionalities mandated by PSD2 and looking at the broader ecosystem of open banking products that can drive new revenue streams.