Finastra research reveals that Open Banking is now universally and unequivocally regarded as a key part of a bank’s landscape, with 99% of respondents considering it either a ‘must have’ or ‘important’ – up from 94% in 2021. The proportion of global financial institutions that consider it a ‘must have’ has risen to 61%.
The Financial Services: State of the Nation Survey 2022 found that views on open finance are also maturing with some 94% of financial institutions regarding it as either a ‘must have’ or ‘important’ in the context of data sharing. Almost half (48%) of respondents now consider open finance a ‘must have’, a notable rise on last year (38%). The increase is significant across all territories, but particularly pronounced in the UAE (up from 50% in 2021 to 71% this year), the UK (up from 33% to 47%) and the US (up from 45% to 56%). This suggests that the sector globally is actively investigating products and services that would benefit from an ecosystem model.
Over three-quarters of professionals agree that open finance is already making the industry more collaborative and is having a positive impact on the sector.
The research was conducted amongst 758 professionals at financial institutions and banks from August to September 2022 across France, Germany, Hong Kong, Singapore, the UAE, the UK and the US. It explores the Open Banking and finance landscape, the technology and initiatives set to make an impact in financial services over the next year and the growing importance of ESG.
Other insights include:
- Banking-as-a-Service (BaaS) and Embedded Finance have become an industry norm – The majority (83%) of institutions agree that BaaS and Embedded Finance are already expected/demanded by customers. More than a third (35%) of institutions surveyed have improved or deployed BaaS in the past year, while 33% have implemented Embedded Finance.
- Drivers for technological adoption remain consistent with previous years
- Growing the business (48%), meeting current and future customer expectations (45%), staying ahead of competitors (42%) and cost cutting (42%) are all key drivers.
- Interestingly, half of institutions (50%) now have all or most of their software stack on cloud-based solutions, with a further third (32%) splitting equally between cloud and on-premises solutions.
- Global financial institutions are being prudent with their technology investments – with 82% noting constraints compared to 2021. Despite the current economic uncertainty and wider cost pressures, the majority (74%) forecast that they will have resumed their full investments by the end of H1 2023.
- Support for ESG is widespread – Almost nine in 10 organizations (86%) agree that it’s important for the financial services and banking sector to support Environmental, Social and Governance initiatives. Linked to this, 82% of respondents agree that green lending presents an opportunity for growth and revenue generation, with the UAE (94%) and Singapore (88%) showing the strongest appetite.