The future of Open Banking in Italy

Open Banking in Italy is unlocking new opportunities, streamlining payments and enhancing financial access for consumers and businesses.

Open Banking is delivering better banking transfers, done faster.

So, whether it’s increasing cross-border payment acceptance rates and customer satisfaction. Or increasing conversion through increased choice and a seamless UX. Or cutting costs by decreasing fraud and chargeback risks, the Open Banking proposition is compelling.

We examine Open Banking in an Italian context.

Banking sector in Italy

Italy’s banking sector is highly fragmented with two larger banking groups – Intesa Sanpaolo and UniCredit – and long tail of smaller local and regional banks. So much so, the market is ripe for consolidation.

At the time of writing, the largest banks and insurer Generali are engaged in a series of takeover bids. This will likely lead to more branch closures and accelerate the move to digital banking and commerce still further.

Italy had around 34 bank branches per 100,000 inhabitants in 2023, down from 57 in 2008, the year of the global financial crisis, says the ECB. This puts it in fourth place in the eurozone, behind France, Spain and Austria, but slightly ahead of the European average of 30 in 2023.

So what? Digital transformation in Italy is underway. Spurred on by bank consolidation, branch closures, increasingly connected customers and the pandemic effect, digital-first offerings are now a must-have.

Shopping habits in Italy

E-commerce continues to thrive in Italy, with year-on-year growth of 27%. The e-commerce market was worth around €80 billion in Q1 2024, with an average transaction value (ATV) of more than €90.

Covid kickstarted a change in how Italians bank, shop meet, date, game and more. Consumers are increasingly connected via mobile, smart watches, speakers etc. They lead busy, on-the-go lives and are known to move to providers for a better solution or UX.

Today’s customers expect more. That’s more speed, convenience, value and choice. This may explain why almost one-fifth of all items Italians buy online come from sellers based outside Italy.

So what? Open Banking gives Italian consumers a better way to make local bank payments to sellers globally. At the same time, it gives sellers access to hundreds of banks and thousands of customer accounts in Italy through a single integration.

Payment habits in Italy

Italians are falling out of love with cash. The average Italian has €54 in cash in their wallet at the start of the day, according to an ECB study published in 2024. This is slightly below the euro area average of €59, and significantly below the €82 Italians had in their wallets in the 2022 study.

The preferred cashless payment methods in Italy are cards (78%) and mobile payments (11%). In comparison to other European countries, prepaid cards are popular in Italy. Around 9% of respondents to an ECB studysaid they preferred this cashless option.

However, when shopping online, Italians prefer digital payment methods. They use card to pay for just 31% of their online purchases and a mobile device 40% of all the time.

So what? Open Banking plays to this. There’s no need to top up wallets or type in card details on the tiny keyboard of a mobile device. The UX is slicker and quicker than cards. It’s also easier than logging into online banking and manually going through the payment process step-by-step.

Open Banking in Italy

Several overlapping trends are driving the interest in and uptake of Open Banking. Payment volumes and values are growing as a result.

So, whether you’re a large e-commerce retailer, iGaming operator or financial services company, your business wants to retain customers and own customer relationships. Plus, compete strongly in the digital remittance and pay-in/pay-out space. Fortunately, transformation of cross-border payments has already started, helping businesses:

• Increase revenue – attract new customers, with better ATV and authorization rates
• Cut costs – reduced cost of payment acceptance, no chargeback and lower false declines
• Improve business – better cashflow, easier cross-border expansion and optimized fraud prevention

So what? It’s time to get on board and develop your own compelling Open Banking propositions, tailored to particular use cases, customer segments and payment corridors.

Open Banking opportunities in Italy

Convenience drives use. Digital-first, hyperconnected, always-on, consumers and businesses are known to switch for a better experience. The popularity of Paypal, Satispay (wallet), BANCOMAT Pay (wallet) and MyBank (bank transfer) in Italy bears this out. Open Banking payments deliver on end-user needs, too.

• Convenience – Open Banking payments are slicker and quicker than topping up wallets, typing in card details or manually completing an old-style bank transfer.
• Coverage – make local bank payments to sellers globally with a familiar bank interface they know and trust.
• Speed – to pay, customers select bank transfer, find their bank and confirm payment. It’s that simple and funds transfer is instant or near-instant.
• Security – customers approve payments within their own banking app, so sensitive card details are never shared or stored.

So what? Regulatory, technical and use case development will accelerate Open Banking adoption still further. Specifically, PSD3 will help foster more open competition and thus consumer choice. Whereas standardizing API quality and connectivity will improve take-up and the end user experience.