PSD3 and PSR1: Redefining Open Banking in Lithuania’s Fintech Landscape

The Baltic region, and particularly Lithuania, has been at the forefront of fintech innovation in Europe. As the European Union prepares to implement PSD3 and PSR1, these new regulations promise to bring significant changes to the payment ecosystem, further transforming the financial services landscape in Lithuania.

Open banking, which mandates that banks share customer data with licensed fintech companies, has promoted competition and innovation. Now, PSD3 and PSR1 aim to refine this framework, ensuring higher security, efficiency, and broader access.

Open banking allows banks to share customer data with licensed companies, with the customer’s consent, through secure digital connections known as APIs. This system enables new types of financial services, such as direct account-to-account payments, making transactions faster, easier, and safer.

Lithuania’s Role in Open Banking

Lithuania has cemented itself as a leader in the open banking revolution. Known for its forward-thinking regulatory framework and fintech-friendly environment, the country has become a hub for innovation.

According to Aurimas Dambrauskas, Regional Sales Manager at Noda, these upcoming regulations offer Lithuania an opportunity to further strengthen its position.

“Lithuania is already leading the way in the fintech sector, and PSD3 will only enhance this. With clearer API standards and more robust fraud prevention measures, Lithuanian businesses will be able to offer even more secure and efficient services,”

Dambrauskas says.

What Will Change Under PSD3 and PSR1?

The updated regulations aim to address the shortcomings of PSD2, particularly in areas such as technical standards and cybersecurity.

1. Improved API Standards

PSD3 introduces minimum functionality and response time requirements for APIs, ensuring greater consistency across member states. “For Lithuanian fintech companies, this means less friction when scaling across Europe, as API uniformity will simplify integration,” Dambrauskas highlights.

2. Enhanced Fraud Prevention

PSD3 extends the scope of Strong Customer Authentication (SCA) to tackle advanced fraud methods like spoofing. Measures such as IBAN and name checks, along with risk-based authentication, are expected to become standard.

3. Access for Non-Bank PSPs

Non-bank Payment Service Providers (PSPs), including firms like Noda, will gain easier access to EU payment systems. “This is a huge step forward,” notes Dambrauskas. “It levels the playing field and ensures fintech companies have the tools they need to compete with traditional banks.”

Opportunities for Lithuanian Businesses

Lithuanian fintech companies stand to gain significantly from these changes. By providing access to richer financial data and fostering innovation, PSD3 and PSR1 are expected to boost competition and lower costs for businesses.

“Lithuania’s fintech ecosystem thrives on innovation and collaboration,”

Dambrauskas explains.

“With PSD3, we’ll see improved analytics and better tools for businesses, helping them make smarter financial decisions.”

Challenges Ahead

Despite the opportunities, adapting to PSD3 and PSR1 will not come without challenges. The enhanced requirements for fraud prevention and API functionality will demand significant investment in technology and compliance.

“At Noda, we’re already preparing for the new standards,”

says Dambrauskas.

“It’s a complex process, but ultimately, these improvements will increase trust and drive growth across the industry.”

A Step Forward for Open Banking

PSD3 and PSR1 represent an evolution, not a revolution, for open banking. By addressing gaps in PSD2, the new regulations aim to foster innovation, enhance security, and build trust in the financial ecosystem.

As Lithuania continues to lead in the fintech space, these changes are expected to bolster its reputation as a hub for cutting-edge financial services. Businesses that adapt early will stay compliant and position themselves to thrive in an increasingly competitive market.