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December 15, 2021

Giving new meaning to “pay phone”: The year in review and where European fintech is headed in 2022

Keith Grose

In the earlier days of fintech, it was said that fintech was changing financial services. Now, nearly a decade later, it’s safe to say fintech’s impact extends far beyond financial services and is driving change across most industries. 2021 demonstrated that fintech’s disruptive influence is particularly prominent in Europe. 

The continent became the largest global economy for cryptocurrency and more Europeans than ever bought crypto for the first time. Digital wallets also became the most popular payment method for online transactions in Europe, and are poised to overtake cards at physical points-of-sale next year. 

For Plaid alone, Payment Initiation Service (PIS) usage increased sixfold in the UK. If that’s any indication for where the market is headed, the direction is up.  With a 60% increase in our customer base, our European team has had a busy year. We teamed up with companies like Paysend, Pensionbee, Kraken, Moneybox, and others to create better experiences that are helping people seamlessly, securely, and instantly move their money across the digital financial ecosystem.

If the way people transact has worked for all these years, why are such big changes underway now?  The simple answer is that pulling out a card to pay doesn’t make sense. In a world where everyone has a phone with their banking app, we don’t need cash or a card. Instead, our phones are increasingly how we pay. In the past few years, finance has become much more digital and connected, creating efficiencies in money movement and faster consumer experiences via digital wallets or “invisible” payments. The future of payments lies in apps and browsers, with APIs & deep linking to connect them.

As embedded online payments grow alongside ecommerce, account-based payments will become the norm, whether they happen via digital wallets, bank accounts “on file”, or the merchants’ own apps. That means open banking has a unique opportunity to evolve from helping people understand and access their financial data to enabling them to put it to use via payments with just a click and biometrics. 

Opportunity is plentiful but there is a lot of work still to do to make open banking payments as smooth and seamless as possible. This past year, we delivered products that developers need to leverage the open banking payment opportunity and keep up with rapidly changing consumer behaviour. We launched additional functionality to offer a full payment stack and lifecycle in the UK, and expanded our Payment Initiation Services coverage to France, Germany, Ireland, and The Netherlands, with more coverage across the rest of Europe coming soon. In addition to our own products, we launched a global payment partner ecosystem, including companies like, Railsbank, and Currencycloud, to make it even easier for companies to access PIS. 

As we look back on how this year changed fintech and how fintech adapted to meet the world’s changes, I believe we will see three major trends shape the European fintech ecosystem next year: 

  • Open banking data + payments: Open banking rails are attractive for payments not just for their speed: the real value lies in how open banking can help companies enhance KYC, improve security of payments, and enhance consumer protections. In 2022, we will see more companies pair open banking’s original offering with its new evolution to offer holistic solutions with one integration.  

  • Embedded finance in the mainstream: Enterprise and major tech companies have spent the past few years understanding embedded finance. Now with changing consumer adoption of fintech and alternative payments, the time is ripe for these companies to introduce new products and experiences. Next year we’ll see even more fintech in surprising places, from grocery stores to mobile providers.   

  • Global ecommerce explosion: Covid necessitated a major increase in ecommerce that will only continue. While a shop is located in one country, they have the potential to reach customers around the world, creating a bigger need for better foreign exchange solutions. We’re poised for a proliferation of simpler cross-border payment solutions. 

Going into the New Year, we’re looking forward to arming builders with even better tools to make these predictions a reality, from variable recurring payments to expanded geographic coverage—but to do that we’re going to need some help. This year, our team in Europe doubled, and we’ve opened up dozens of new roles. If you’d like to help build the next phase of open banking, join us. Or, if you’re developing a new digital financial product or service, let’s chat about how Plaid’s open banking data network and payments platform can help.