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Finastra Global Survey Shows Appetite for Open Banking Picking up Pace Worldwide

86% of global banks surveyed are looking to use open APIs to enable Open Banking capabilities in the next 12 months

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Finastra research reveals that 86% of global banks are looking to use open APIs to enable Open Banking capabilities in the next 12 months. In addition, 30% of banks surveyed believe Open Banking is already making a tangible impact in delivering improved overall customer experience. This is against a backdrop where regulation is perceived to be tighter than a year ago and close to half (48%) of those audited believe that regulators are holding back innovation.

The research, which was conducted prior to the Coronavirus outbreak amongst 774 financial institutions and banks across the US, UK, SingaporeFranceGermanyHong Kong and UAE1, shows a maturity of API adoption and calls for the harmonization of regulations between geographies.

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Key findings include:

  • Open banking is on the up in 2020 compared to 20192: The percentage of financial institutions looking to leverage open APIs has substantially increased in the US (+23%) and UK (+17%), while Singapore (+1%), France (-1%) and Germany (-4%) are relatively stagnant since our research in 2019.
  • Improvements in the overall customer experience accelerate API adoption: The US (45%), Hong Kong (42%) and France (36%) are leading the way in harvesting this benefit of Open APIs (UAE: 32%; Germany: 20%; Singapore: 20%; UK: 19%). Overall, 41% of global banks say that they are ‘still in the early stages of adoption’, so it’s difficult to measure the impact of Open Banking on their business so far.
  • Regulation is perceived to be tighter than a year ago and industry or government support is required to foster innovation: Almost half of those audited believe that regulations are holding back innovation. 48% state that ‘regulation is too tight’ – 10% more than 2019 – and the same percentage (48%) believe there is ‘not enough government or industry support to foster innovation’, particularly so in Hong Kong (62%), France (50%) and Singapore (49%), compared to 38% in the UK.
  • A call for harmonization: 83% of financial institutions and banks agree that regulations regarding fintech innovation should be harmonized across different geographies.
  • Cost of fintech research and development is of concern in some regions: Cost of R&D in the US, UAE and APAC regions is highlighted, more so than in the UK. (USA: 55%; Hong Kong: 55%; Singapore: 51%; UAE: 46%; France: 43%; Germany: 34%; UK: 33%).

Simon Paris, CEO at Finastra said, “It’s encouraging to see Open Banking maturing on a global scale, but it’s still seen by many to be in its teenage years, with scope for creating even greater opportunities. We believe it will be the first step towards Open Finance which will see the next wave of innovation in financial services being created through collaboration on open platforms, like, using open APIs and open software solutions.

“Currently banks and technology vendors are rightly focused on business continuity and keeping their workforces safe. We’ve also seen many of these firms moving with amazing pace to bring innovative solutions to market, with the help of technology, to support customers in this new environment. As we come through this situation together, we must endeavor to emerge stronger, and it will be interesting to see how Open Banking and collaboration accelerate when this outbreak ends.”

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To see the findings summary report, click here

Notes to editor:

  1. Research was conducted online at the end of January 2020, amongst 774 financial institutions and banks across United States, UK, SingaporeFranceGermanyHong Kong and UAE. These financial institutions represent a gross total of just over USD$4.7 trillion in turnover over the last 12 months, employ over approximately 4.9 million staff and have approximately 110 million client/customer/member relationships.
  2. Comparative analysis was made from results from a similar survey run by Finastra in 2019 which was also conducted online in the UK, US, SingaporeFrance and Germany (March – May 2019).

Definitions used in the survey:

  • Open Banking: Open Banking is a series of reforms to make the banking sector more competitive. It brings changes to how banks handle their customers’ financial information, putting control back in the hands of the customer. It means that customers can opt to share their financial information with authorized providers, to gain access to new services and innovation to help them manage their money better.
  • Open application programming interfaces (open APIs): A computing interface to a software component or a system, that defines how other components or systems can use it. Aids open access for developers to build software.
  • Fintech collaboration: The collaboration between financial institutions or banks with technology providers to help improve the customer experience while also reducing operational cost.

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