What open banking changed for Baltic fintechs

When the provisions of PSD2 took effect on 13 September 2019, the expectation across Europe was a boom in consumer budgeting apps. In the Baltics, that is not what happened. The value accrued somewhere less visible, and it is worth understanding why.

What the directive actually delivered

PSD2 was adopted by the European Parliament in October 2015. It created two new categories of regulated service, account information and payment initiation, and obliged banks to expose dedicated interfaces that authorised third parties could use. The ambition was straightforward: give customers the right to share their own financial data, and let competition do the rest.

Banks were not enthusiastic. For a mixture of technical, security and competitive reasons, progress was slow, and between 2015 and 2021 one country after another had to legislate or strongly encourage before API access became reliable in practice. A directive that looked like a single European deadline in 2019 was, in reality, a rolling series of national implementations spread over several years.

Fragmentation was the hidden cost

Europe ended up with several competing standards rather than one. The Berlin Group produced NextGenPSD2, which became the most widely adopted. France went its own way with the STET specification developed by its clearing house. Poland built PolishAPI with its banking association. Slovakia produced a separate standard with its national bank.

Each of those decisions is defensible in isolation. Taken together, they mean an aggregator serving several European markets maintains several distinct integrations, and every additional integration is a permanent engineering and maintenance cost. That cost lands hardest on exactly the small companies the directive was designed to help, and it is the single best explanation for why consumer-facing open banking products stayed thin: the unit economics of serving a customer in three countries were worse than the regulation implied.

The real winners were B2B

The companies that benefited most were aggregating account data for other businesses: underwriting engines, accounting tools, affordability checks and payment initiators. Selling infrastructure to builders turned out to be a far better business than selling dashboards to consumers.

Nordigen, founded in Riga in 2016, is the clearest local example. It built an open banking API giving developers access to bank account data across Europe, made basic access free at the entry tier to win developer adoption, connected thousands of banks, and was acquired by GoCardless in 2022. That is a good outcome for its founders and a telling one for the category: the exit was to a payments company that wanted the plumbing, not to a consumer brand that wanted the customers.

The lending side shows the same logic. Capitalia, a Latvian alternative lender, is using a 15 million euro guarantee from the European Investment Fund under the InvestEU programme to write crowdfunded loans of up to 50,000 euros to microenterprises across Estonia, Latvia and Lithuania, with maturities up to 36 months and no hard collateral requirement. The scheme is projected to support almost 700 loans at an average of about 30,000 euros. Better risk transfer is what makes the loan economics work, and the data plumbing is what makes the underwriting possible.

What held consumer products back

• Willingness to pay for personal finance tools stayed low, and the products that did charge were competing against free bank apps that already showed the same balances.
• Bank APIs varied in quality and reliability, so the engineering cost of covering several markets stayed high while the revenue per user stayed small.
• Retention fell once the initial curiosity faded, because aggregating accounts is a feature rather than a habit.

Brazil is the test case worth studying

Brazil ran open banking as a central bank mandate rather than a directive, with defined implementation phases, and the results are not close. By 2026, five years in, its open finance system had passed 100 million connected accounts and 154 million active consents, making it the largest such ecosystem in the world. PwC projects open finance could generate around 42 billion reais in new revenue for the Brazilian financial sector by the end of 2026.

Then read the caveat. The Brazilian association of fintechs reports that fewer than half of users complete the consent journey, abandoning it partway through the redirect between the merchant's app and their bank's app. That is in the largest and most mandated open finance market on earth. If consent completion stalls below 50 per cent there, consumer products built on open banking were never going to be easy anywhere, and the problem is user experience rather than regulation.

The lesson

Regulation creates capabilities, not companies. That distinction is the whole story of open banking in the Baltics. The directive made bank data legally accessible, and then a handful of founders worked out that the accessible data was worth more to other businesses than to consumers.

The founders who did well treated open banking as a supply constraint they could solve better than anyone else, and sold the solution to the people who needed it most: other businesses. Those who waited for consumers to develop a sudden enthusiasm for personal finance dashboards are, seven years later, still waiting.

What to watch

• Whether a successor framework reduces standard fragmentation, because that is the cost that keeps consumer products thin across borders.
• Whether payment initiation finally competes with cards. The UK introduced account-to-account payments it calls Pay by Bank, and adoption was negligible until several large retailers began supporting it in late 2024, largely because the cost to the merchant is materially lower than card fees.
• Whether consent journeys improve, since the Brazilian data suggests abandonment, not distrust, is the main obstacle.