What do financial institutions think of the rise of Open Banking? According to a survey of more than 700 banking professionals by software company Finastra for its State of the Nation Survey 2022 report, the impact of open finance is broad, global and necessary for the financial industry to move forward: “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’ – a jump from 94% last year.”
These figures show that the industry is increasingly receptive to this business model which seeks to positively impact current banking by leveraging its potential and benefits through its shared data and infrastructure system, creating a much more efficient and interconnected environment.
Advantages of Open Banking
85% of those surveyed highlight as one of the main advantages of the open banking model its capacity to support much more collaborative financial projects. This is one of the fundamental values that are helping its development and implementation, and which is fully aligned with the commitments that the financial industry is making on a social and environmental level.
Another one of the benefits linked to this new way of banking is its potential to contribute to the creation of a fairer and more egalitarian financial system, as well as one that is more inclusive and accessible to the entire population.
This business model also aims to improve the banking customer experience by opening up multiple opportunities to access more financial services and new providers. “Traditional banking, in order to continue leading the sector, must enhance its connection with the most innovative ecosystem of the financial industry and boost the personalization of its services and products. It is not a question of competition, it is a question of putting the customer at the center of your strategy and offering them the best solutions on the market, even if this means activating collaborations with third parties,” explains Oriol Ros, Director of Corporate Development at Latinia.
Industry trend: collaboration
Indeed, to talk about Open Banking is to talk about collaboration. Industry professionals surveyed by Finastra are clear: “Collaboration remains a priority for banks with 96% considering it important (94% in 2021). Moreover, a majority continue to consider collaboration ‘very important’ (70% vs. 66% in 2021). This view is fairly universal, with at least 89% of all geographies saying that it is important.”
But despite this predisposition to activate synergies on behalf of financial organizations and projects that are already underway, there is still resistance to their definitive expansion. According to the survey, “the increase in security risk remains the most widely identified barrier across geographies, with 2 in 5 (40%) saying that this is a barrier to collaboration (up slightly on 39% in 2021). This is followed by complex regulations (37% vs. 40% in 2021) and legacy systems and IT (35% vs. 35% in 2021). There have not been any particularly pronounced changes year-on-year, the same challenges continue to exist”.
“The biggest challenge for banks today is cybersecurity and, therefore, their reluctance to open up and share their data and that of their customers with external companies is completely understandable. However, the industry will have to bet on advanced technologies, such as our products specifically designed for banking, which offer real-time solutions that help in the early detection of digital fraud,” concludes Oriol Ros.