Practical Guide to Open Banking and PSD2 Part I: Lending

Brian D’Arcy

In this post, and the next 2 blog posts, I’ll cover how Open Banking and PSD2 can be used practically, today. Lending is changing from face to face and phone interactions to self-service online digital experiences, and this is being accelerated globally to protect staff and customers from the spread of COVID-19 (Coronavirus). Data and APIs are the key ingredients in driving down costs and risk, increasing automation, and delighting borrowers with amazing customer experiences.

I’m not going discuss the vision of Open Banking \ PSD2 or the regulatory details (if there is interest in this I can do it in a future post), and if you want to find out about the nuts and bolts of Open Banking the OBIE in the UK answer “What is Open Banking” on their site

Let’s start by taking a look at the 3 largest banks in Ireland and what’s available today, I’ll take a look at two areas 1) Customer Experience (CX) and 2) the Data available through the APIs. If there is unnecessary friction in the CX users will abandon the process and revert back to emailing PDFs and uploading images like they do today. Data quality and coverage are important for lenders, if the data needed to inform a credit decision is not available through Open Banking, additional manual workarounds will be needed reducing opportunities for automation.


  • CX: the user journey is very similar to the online banking experience, so this provides a familiar process to the user, with an additional security step where you must approve the login using your internet banking app on your smartphone. This additional step adds an extra layer of security and positive friction gives the user additional confidence they are dealing directly with their bank
  • Data: the APIs provide the key data needed by lenders, including account and balance data, and historical transactions. Identity information is not available.

Bank of Ireland

  • CX: the experience for Bank of Ireland customers is very frustrating. If you use Banking 365 for online banking you first need to download and configure a password generator app to your smartphone. The majority of personal and small business customers will not have this already and when they use Open Banking for the first time will need to go through this process. This has a negative impact on CX, making it slow and frustrating for the customer.
  • Data: similar to other APIs the data is all there, account and balance data and historical transactions. Identity information is not available.

Ulster Bank

  • CX: the login and authorisation process is the same as logging into your anytime banking. This means users can use Open Banking without having to complete any special registration steps, and the familiar process gives users confidence the process is secure and they are interacting directly with their bank
  • Data: the APIs provide the key data needed by lenders, including account and balance data and historical transactions. They also provide identity information which is key to reduce fraud.

Integrating Open Banking into lending processes reduces the time spent reviewing bank statements from hours to seconds, and increases automation. At Luna Connect we have been working on Open Banking solutions for lending since it was introduced and its only when you see it in action you really appreciate the power of APIs, data integration and automation.

If you want to find out more about Open Banking and how it can help your business reduce costs, improve customer experience and enhance compliance get in contact, and subscribe to this blog and get notified when our next 2 posts are published.

To access the second post in this series go here Practical Guide to Open Banking and PSD2 Part II: Are you ready?

Brian D’Arcy
Founder & CEO, Luna Connect Digital Lending Software