Open Banking Is Accelerating the Shift Towards Instant International Settlements

Gone are the days when three-day settlement cycles were considered normal. Real-time settlement is standard in advanced economies like the Netherlands. However, it's globally realized that all international payments must operate on this exact timeframe. They shouldn't be delayed now, since real-time speed is expected as well.

Standardized API integration and heavy financial reform have transformed global trade in recent years. Now, they're flipping its underlying plumbing on its head.

Consumers have quickly become accustomed, whether it's at an iDEAL casino, to turning over funds and having money available instantly. They're now expecting to experience this same level of liquidity for global payments. Banks are dismantling legacy technical infrastructure, making international payments sluggish and hard to track. They arrived days late, and the fees weren't known.

The Architecture of Speed Through API Connectivity

In traditional correspondent banking, multiple parties are involved, and payments pass through various intermediaries. Often, this feels like a game of telephone, with payments slowly recorded into one ledger after another.

Open Banking enables banks to communicate with each other via Application Programming Interfaces (APIs), thereby eliminating unnecessary intermediaries. Open Banking simplifies connectivity, eliminating multiple hops between providers and reducing the need to manually match and reconcile records.

Open Banking allows all banks to establish direct connections with one another today. It's flattening the banking world as everyone understands it. The payments market expects Account-to-Account volumes to grow at a compound annual growth rate of around 14% through 2027.

ISO 20022 Unifies Global Financial Languages

Speed without comprehension is meaningless. The international migration to ISO 20022 is essentially the Rosetta Stone of global finance. It's enabling digital context to travel alongside payment instructions. Legacy formats strip away detail just to reduce the required bandwidth.

ISO 20022 transactions don't do this, providing data-rich payment instructions that cut manual back-office loops. Reconciliation and repair tasks traditionally account for most cross-border payment delays.

Payments from financial institutions will travel with invoices, regulatory details, and remittance information, bundled into a single immutable communication. By late 2025, SWIFT and the Eurosystem's TARGET2 will migrate. Many major payment schemes will also complete substantial migrations to upgrade their remittance systems. Together, they'll support the G20's vision of slashing costs and increasing transparency.

Dutch Innovation Serves as a Blueprint for Europe

The Netherlands is leading the charge. The Netherlands has led the way in this revolution for years, normalizing bank-to-bank payments. In the process, it has avoided a significant portion of costly card networks. The European Payments Initiative and its new Wero wallet benefit from the Dutch model. It's delivering fast, bank-supported, and secure payments to European customers.

Local schemes show they can offer local customers instant and easy payments. Since their bank thoroughly verifies them, they prove that security and speed aren't a trade-off. In fact, they're now viewed as table stakes for the digital economy. By linking national payment systems through Open Banking standards, merchants in Amsterdam will now experience instant settlement. They'll process transactions for Berlin customers just as easily as for local customers.

Security and Compliance in an Open Ecosystem

The argument is often made that faster money movement means greater risk. However, Open Banking security works exceptionally well for international payments. Rather than transmitting insecure credentials, such as account numbers, overseas, Open Banking’s API tokenization approach keeps information secure in transit.

Users have to be authenticated by their own bank before money can be sent to them. Traditional payment methods lack the inherent trust relationships that exist in Open Banking systems. Fraud levels are lower with API Open Banking payments than with card-not-present transactions. That's because the payment process integrates Strong Customer Authentication.

The End of the Waiting Game

Open Banking is growing. It's gone beyond consumer utility and is quickly becoming the underlying infrastructure for serious global payments. Open Banking frameworks will soon enable near-frictionless interoperability across countries.

When this happens, the difference between domestic and international payments will disappear. A future in which geographic location no longer affects value transfer is now within reach.