Finastra: Financial Services State of the Nation Survey 2021

Finastra: Financial Services State of the Nation Survey 2021Finastra: Financial Services State of the Nation Survey 2021

Finastra research amongst 785 professionals at global financial institutions and banks reveals that most organizations are already deriving the benefits of Open Banking and Open Finance, with the latter considered the natural evolution or the next stage of Open Banking for the sector. Looking at wider technological trends, our research finds that Banking as a Service (BaaS) and embedded banking services will have a notable impact on the financial services sector; with evidence that these initiatives have already started ‘paving’ the journey to true Open Finance and helping to develop and enhance the services financial institutions are able to provide to their customers. We also explore which technologies will be the most sought after this year for banks and financial institutions, as well as the impact that the pandemic has had on the industry.

Download the report here to learn more.

 

Global

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Finastra survey finds Banking as a Service (BaaS) set to make significant impact on financial services in next 12 months

  • 85% of respondents at global financial institutions believe Banking as a Service (BaaS) will make an impact over the next year; 40% believe the impact will be significant
  • More than 9 in 10 respondents agree that Open Banking is important to their organization; 97% of those that already use Open Banking recognize that it has provided benefits to their business

London, UK June 28 2021: Finastra research reveals that Banking as a Service (BaaS) and embedded banking services are set to have a notable impact on the industry in the next 12 months. Whilst all markets broadly anticipate this trend - 85% of respondents at global financial institutions - Hong Kong (92%), the UAE (90%) and Singapore (87%) expect the impact to be greatest.

The ‘Financial Services: State of the Nation Survey 2021’, also finds that most organizations are now deriving the benefits of Open Banking and Open Finance, with the latter considered the natural evolution for the sector. Globally, 94% of those surveyed agree that Open Banking is important to their organization, with 63% reporting that it’s enabled them to improve customer experience and 59% stating that it’s helped attract new types of customers.

The research was conducted amongst 785 professionals at financial institutions and banks in March 2021 across the US, UK, Singapore, France, Germany, Hong Kong and the UAE. 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 how COVID-19 has impacted the sector.

Other insights include:

  • Alongside BaaS, mobile banking and artificial intelligence are identified as the other top technologies which will be improved or deployed in the next 12 months. 95% of organizations are forecasting that they will look to improve or develop technology in this period. The UAE (44%) and Hong Kong (42%) lead the way when it comes to interest in mobile banking, compared to an average of 36% across all seven markets
     
  • Collaboration remains important to 94% of financial services institutions, though there remain several existing and new barriers surrounding regulation, security, and technology. Complex regulations have been identified as a significant barrier, with 40% of global respondents agreeing. France (47%), Singapore (45%) and Germany (44%) picked this as their number one barrier. An increase in security risk was identified as the top barrier by banks in the US, Hong Kong and the UAE (all 40%), while legacy systems and IT was cited as the top barrier to collaboration in the UK (48%).
     
  • COVID-19 has acted as an accelerator for businesses to adapt and invest in new technology and innovation, according to 8 in 10 global organizations. Respondents in Singapore (87%), the UK (82%) and the UAE (82%) are most likely to agree.
     
  • Financial services organizations are increasingly looking at their organizational purpose. 86% agree that ‘financial services and banking is about more than just finance, and we have a duty to support the communities we are serving’. At Finastra, we call this redefining finance for good.

“Our findings show how financial institutions are already benefiting from Open Banking and, new this year, a growing role for BaaS. We believe that these initiatives have already started paving the way to true Open Finance, helping financial services institutions to develop and enhance the services they provide to their customers,” said Eli Rosner, Chief Product and Technology Officer at Finastra. “For BaaS specifically, 81% of global respondents see it as a means to grow business, enhance their distribution channels, shorten time to market and streamline operations. Valuable insight from so many financial institutions sets the tone for the evolution of financial services as banks and their customers adapt beyond the pandemic and, together with the industry support they provide, serve their communities better.”

Access the full report and findings here.

How is the journey to Open Finance stacking up?

Finastra research of 785 professionals at global financial institutions reveals that Banking as a Service (BaaS) and embedded banking services are set to have a notable impact on the industry in the next 12 months.

France

Press release
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Finastra survey finds Banking as a Service (BaaS) set to make significant impact on financial services in next 12 months

  • 85% of respondents at global financial institutions believe Banking as a Service (BaaS) will make an impact over the next year; 40% believe the impact will be significant
  • More than 9 in 10 respondents agree that Open Banking is important to their organization; 97% of those that already use Open Banking recognize that it has provided benefits to their business
  • France is expecting payments to witness the greatest revolution brought about by Open Banking

London, UK June 28 2021: Finastra research reveals that Banking as a Service (BaaS) and embedded banking services are set to have a notable impact on the industry in the next 12 months. Whilst all markets broadly anticipate this trend – 85% of respondents at global financial institutions – Hong Kong (92%), the UAE (90%) and Singapore (87%) expect the impact to be greatest. France is perhaps taking a slightly more cautious, but still significant, approach (81%).

The ‘Financial Services: State of the Nation Survey 2021’ also finds that most organizations are now deriving the benefits of Open Banking and Open Finance, with the latter considered the natural evolution for the sector. Globally, 94% of those surveyed agree that Open Banking is important to their organization, with 63% reporting that it’s enabled them to improve customer experience and 59% stating that it’s helped attract new types of customers.

The research was conducted amongst 785 professionals at financial institutions and banks in March 2021 across the US, UK, Singapore, France, Germany, Hong Kong and the UAE, with 105 respondents in France. It explores the Open Banking and Open Finance landscape, the technology and initiatives set to make an impact in financial services over the next year, and how COVID-19 has impacted the sector.

Other insights include:

  • Alongside BaaS, mobile banking and artificial intelligence (AI) are identified as the other top technologies which will be improved or deployed in the next 12 months. 95% of organizations are forecasting that they will look to improve or develop technology in this period. The UAE (44%) and Hong Kong (42%) lead the way when it comes to interest in mobile banking, compared to an average of 36% across all seven markets. France’s top focus is on AI.
     
  • Collaboration remains important to 94% of financial services institutions, though there remain several existing and new barriers surrounding regulation, security, and technology. Complex regulations have been identified as a significant barrier, with 40% of global respondents agreeing. France (47%), Singapore (45%) and Germany (44%) picked this as their number one barrier. An increase in security risk was identified as the top barrier by banks in the US, Hong Kong and the UAE (all 40%), while legacy systems and IT was cited as the top barrier to collaboration in the UK (48%).
     
  • COVID-19 has acted as an accelerator for businesses to adapt and invest in new technology and innovation, according to 8 in 10 global organizations. Respondents in Singapore (87%), the UK (82%) and the UAE (82%) are most likely to agree.
     
  • France predicts that the sector most impacted by Open Banking will be payments (46%), followed by retail banking at 40%.
     
  • Financial services organizations are increasingly looking at their organizational purpose. 86% agree that ‘financial services and banking is about more than just finance, and we have a duty to support the communities we are serving’. At Finastra, we call this redefining finance for good.

“Our findings show how financial institutions are already benefiting from Open Banking and, new this year, a growing role for BaaS. We believe that these initiatives have already started paving the way to true Open Finance, helping financial services institutions to develop and enhance the services they provide to their customers,” said Eli Rosner, Chief Product and Technology Officer at Finastra. “For BaaS specifically, 81% of global respondents see it as a means to grow business, enhance their distribution channels, shorten time to market and streamline operations. Valuable insight from so many financial institutions sets the tone for the evolution of financial services as banks and their customers adapt beyond the pandemic and, together with the industry support they provide, serve their communities better.”

Access the full report and findings here.

Germany

Press release
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Finastra survey finds Banking as a Service (BaaS) set to impact financial services in next 12 months

  • 80% of respondents in Germany believe Banking as a Service (BaaS) will make an impact over the next year
  • More than 9 in 10 global respondents agree that Open Banking is important to their organization; 96% agree in Germany
  • Germany identifies complex regulation as its number one barrier to collaboration

London, UK June 28 2021: Finastra research reveals that Banking as a Service (BaaS) and embedded banking services are set to have a notable impact on the industry in the next 12 months. Whilst all markets broadly anticipate this trend – 85% of respondents at global financial institutions – Hong Kong (92%), the UAE (90%) and Singapore (87%) expect the impact to be greatest. Germany is perhaps taking a slightly more cautious, but still significant, approach (80%).

The ‘Financial Services: State of the Nation Survey 2021’ also finds that most organizations are now deriving the benefits of Open Banking and Open Finance, with the latter considered the natural evolution for the sector. Globally, 94% of those surveyed agree that Open Banking is important to their organization. 96% agree in Germany, with 77% in region reporting that it’s enabled them to improve customer experience (higher than the global average citing this benefit at 63%).

The research was conducted amongst 785 professionals at financial institutions and banks in March 2021 across the US, UK, Singapore, France, Germany, Hong Kong and the UAE, with 108 of the respondents from Germany. The survey explores the Open Banking and Finance landscape, the technology and initiatives set to make an impact in financial services over the next year, and how COVID-19 has impacted the sector.

Other insights include:

  • Alongside BaaS, mobile banking is identified as another top technology which will be improved or deployed in the next 12 months. 95% of organizations are forecasting that they will look to improve or develop technology in this period. The UAE (44%) and Hong Kong (42%) lead the way when it comes to interest in mobile banking, compared to 36% across all seven markets and Germany alike.
     
  • Retail banking will see the greatest impact from Open Banking in Germany, according to nearly half (48%) of respondents in region. This was also the consensus (versus other sectors) in the UK (56%), US (49%) and Hong Kong (49%). Payments also rated highly in Germany (47%).
     
  • Collaboration remains important to 94% of global respondents. Complex regulation has been identified as the number one barrier in Germany (44%), and is also reflected in Singapore (45%) and France (47%). An increase in security risk was identified as the top barrier by banks in the US, Hong Kong and the UAE (all 40%), while legacy systems and IT was cited as the top barrier to collaboration in the UK (48%).
     
  • COVID-19 has acted as an accelerator for businesses to adapt and invest in new technology and innovation, according to 8 in 10 global organizations. Respondents in Singapore (87%), the UK (82%) and the UAE (82%) are most likely to agree.
     
  • Financial services organizations are increasingly looking at their organizational purpose. 86% agree that ‘financial services and banking is about more than just finance, and we have a duty to support the communities we are serving’. At Finastra, we call this redefining finance for good.

“Our findings show how financial institutions are already benefiting from Open Banking and, new this year, a growing role for BaaS. We believe that these initiatives have already started paving the way to true Open Finance, helping financial services institutions to develop and enhance the services they provide to their customers,” said Eli Rosner, Chief Product and Technology Officer at Finastra. “For BaaS specifically, 81% of global respondents see it as a means to grow business, enhance their distribution channels, shorten time to market and streamline operations. Valuable insight from so many financial institutions sets the tone for the evolution of financial services as banks and their customers adapt beyond the pandemic and, together with the industry support they provide, serve their communities better.”

Access the full report and findings here.

UAE

Press release
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Finastra survey finds Banking as a Service (BaaS) set to make significant impact on financial services in next 12 months

  • 90% of UAE respondents believe Banking as a Service (BaaS) will make an impact over the next year
  • UAE banks keen to collaborate in order to drive innovation and revenue growth

Dubai, UAE June 28 2021: Finastra research reveals that Banking as a Service (BaaS) is set to have a notable impact on the industry in the next 12 months. Whilst all markets broadly anticipate this trend – 85% of respondents at global financial institutions – Hong Kong (92%), the UAE (90%) and Singapore (87%) expect the impact to be greatest.

Moreover, six in 10 UAE respondents will embrace collaboration with third parties if it supports growth (through creation of new revenue streams or services) (61%) and accelerates innovation and better ways of delivering existing services (61%). Almost the same amount in region (59%) said they would look favorably on working with third parties if it enabled them to provide a better customer experience.

A total of 119 UAE-based finance industry executives were interviewed as part of the ‘Financial Services: State of the Nation Survey 2021’ report, which canvassed the opinions of 785 professionals at financial institutions and banks in the US, UK, Singapore, France, Germany, Hong Kong and the UAE. The research explores the Open Banking and Open Finance landscape, the technology and initiatives set to make an impact in financial services over the next year, and how COVID-19 has impacted the sector.

Other UAE insights include:

  • Open Banking is expected to have the greatest impact in the areas of trade finance and corporate banking. 57% of respondents said trade finance, while 55% said corporate banking, followed by retail banking (53%).
     
  • Respondents are in favor of Open Banking and its logical evolution towards Open Finance. 68% say Open Banking is a ‘must have’ for their organization, while 91% slightly or strongly agree that Open Finance is the future of banking.
     
  • Artificial intelligence and mobile banking are priority areas for investment in the next 12 months. More than half of respondents (51%) say their organization plans to invest in artificial intelligence, while 44% say their organization has plans to invest in mobile banking.
     
  • Management could be the greatest barrier to banking innovation in relation to existing regulations. Decision makers stuck in old ways of thinking were cited as a potential barrier by 58% of UAE respondents, followed by development costs (49%) and regulations being too tight (49%).
     

“Our findings show how financial institutions are already benefiting from Open Banking and, new this year, a growing role for BaaS. We believe that these initiatives have already started paving the way to true Open Finance, helping financial services institutions to develop and enhance the services they provide to their customers,” said Eli Rosner, Chief Product and Technology Officer at Finastra. “For BaaS specifically, 81% of global respondents see it as a means to grow business, enhance their distribution channels, shorten time to market and streamline operations. Valuable insight from so many financial institutions sets the tone for the evolution of financial services as banks and their customers adapt beyond the pandemic and, together with industry support they provide, serve their communities better.”

Access the full report and findings here.

US

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Finastra survey finds that US financial institutions increased tech spend by 25% to fund innovation, Banking as a Service (BaaS) set to impact the global banking sector

  • 85% of respondents at global financial institutions believe Banking as a Service (BaaS) will make an impact over the next year; 40% believe the impact will be significant
  • More than 9 in 10 respondents agree that Open Banking is important to their organization; 97% of those that already use Open Banking recognize that it has provided benefits to their business
  • Financial institutions are more willing than ever before to collaborate and share data, with 4 in 5 banks (78%) reporting that shared data and infrastructure will quickly become the norm across the industry

New York, June 28, 2021: Finastra research reveals that global banks’ investment strategies for 2021 are shifting from defensive to offensive; defined by innovation, and with priorities centered on helping ‘cut costs or improve efficiencies’ (50%), ‘growing our business’ (46%), and ‘meeting current and future customer expectations’ (42%). In the same study conducted in 2020, ‘staying ahead of the competition’ was the number one driver of technology adoption and innovation. This year, beating out competitors didn’t even make the top three in a comprehensive survey of 785 professionals at financial institutions and banks in the US, UK, Singapore, France, Germany, Hong Kong and the UAE.

In the United States, financial institutions are tackling self-improvement initiatives with an average increase in technology spending of 25% (compared to a 9% increase globally). Still, budgets aren’t growing fast enough to match banks’ appetites for innovation. About 7 in 10 US financial institutions (69%) say their investments in technology and digital banking are constrained by cost pressures.

Meanwhile, Banking as a Service (BaaS) and embedded banking services are set to have a notable impact on the banking industry over the next 12 months, across all regions, with 85% of respondents at financial institutions anticipating this trend.

The ‘Financial Services: State of the Nation Survey 2021’, also finds that most organizations are now deriving the benefits of Open Banking and Open Finance, with the latter considered the natural evolution for the sector. Globally, 94% of those surveyed agree that Open Banking is important to their organization, with 63% reporting that it’s enabled them to improve customer experience and 59% stating that it’s helped attract new types of customers.

The research was conducted in March 2021 and explores the Open Banking and Finance landscape, the technology and initiatives set to make an impact in financial services over the next year, and how COVID-19 has impacted the sector.

Other insights include:

  • Alongside BaaS, mobile banking and artificial intelligence are identified as the other top technologies which will be improved or deployed in the next 12 months. 95% of organizations are forecasting that they will look to improve or develop technology in this period. The UAE (44%) and Hong Kong (42%) lead the way when it comes to interest in mobile banking, compared to an average of 36% across all seven markets.
     
  • Collaboration remains important to 94% of financial services institutions, though there remain several existing and new barriers surrounding regulation, security, and technology. Complex regulations have been identified as a significant barrier, with 40% of global respondents agreeing. France (47%), Singapore (45%) and Germany (44%) picked this as their number one barrier. An increase in security risk was identified as the top barrier by banks in the US, Hong Kong and the UAE (all 40%), while legacy systems and IT was cited as the top barrier to collaboration in the UK (48%).
     
  • COVID-19 has acted as an accelerator for businesses to adapt and invest in new technology and innovation, according to 8 in 10 global organizations. Respondents in Singapore (87%), the UK (82%) and the UAE (82%) are most likely to agree.
     
  • Financial services organizations are increasingly looking at their organizational purpose. 86% agree that ‘financial services and banking is about more than just finance, and we have a duty to support the communities we are serving’. At Finastra, we call this redefining finance for good.

“Our findings show how financial institutions are already benefiting from Open Banking and, new this year, a growing role for BaaS. We believe that these initiatives have already started paving the way to true Open Finance, helping financial services institutions to develop and enhance the services they provide to their customers,” said Eli Rosner, Chief Product and Technology Officer at Finastra. “For BaaS specifically, 81% of global respondents see it as a means to grow business, enhance their distribution channels, shorten time to market and streamline operations. Valuable insight from so many financial institutions sets the tone for the evolution of financial services as banks and their customers adapt beyond the pandemic and, together with the industry support they provide, serve their communities better.”

Access the full report and findings here.

Hong Kong

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Finastra survey suggests significant impact for Banking-as-a-Service in Hong Kong over next 12 months

  • Hong Kong among global leaders in deployment of Banking-as-a-Service (Baas) and embedded banking
  • 58%% say Open Banking is now a “must have”
  • 75% in Hong Kong have increased budgets in COVID-19 response

Hong Kong – 29 June, 2021: A global study by Finastra has found that 42% of those surveyed at Hong Kong financial institutions said their organization has been deploying or improving BaaS in the last 12 months – second only to Singapore (47%) – while Hong Kong was top in embedded banking deployment/improvement (44%). Hong Kong survey respondents are also some of the most optimistic, with around 9 in 10 expecting to see positive impacts from BaaS (92%) and embedded banking (89%) in the next 12 months.

Open Banking bears fruit

The ‘Financial Services: State of the Nation Survey 2021’ also reveals that Open Banking has become important to 97% of the businesses in Hong Kong, with a large majority (58%) calling it a “must have”. Respondents in the SAR said that Open Banking has provided a number of benefits, such as improving the customer experience (55%), delivering new services (73%) and improving internal systems (64%). As well as helping to attract new customers (73%), those who responded to the survey in Hong Kong also said Open Banking has helped to attract different types of customers (64%). Less than 1% of respondents in Hong Kong now think that Open Banking will not have any impact.

The research was conducted in March 2021 amongst 785 professionals at banks and financial institutions across Hong Kong, Singapore, the US, UK, France, Germany and the UAE. 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 how COVID-19 has impacted the sector.

Barriers to innovation

The adoption and integration of technology and innovation is a priority in Hong Kong, with 85% agreeing this should be at the forefront of the financial services sector. However, a number of barriers to innovation persist, showing little change compared to Finastra’s 2020 survey:

  • 51% said management or decision makers are stuck in old ways of thinking (no change from 2020)
     
  • 43% said regulations are too tight (no change from 2020)
     
  • 54% cited the cost of development/expense of R&D (vs 55% in 2020)
     
  • A notable exception is that 25% less respondents think there is not enough industry or government support to foster innovation this year compared to 2021 (39% vs 62%)

COVID response

Almost 8 in 10 (78%) of those surveyed in Hong Kong said that Coronavirus had acted as an 'accelerator' for the integration of new technology and innovation, reflecting the rapid shift towards digital services seen last year. This acceleration has translated into increased overall investment/budgets in response to the pandemic for three quarters (74%) of Hong Kong respondents, while adapting to the challenges brought by the pandemic was the second biggest driver of the adoption of technology (49%), just behind cost cutting and efficiency (53%).

“Banking-as-a-Service is clearly emerging as the next evolution in financial services, particularly in Hong Kong. As well as having some of the highest levels of deployment in the last year, 68% of finance professionals in our survey said BaaS is already disrupting the sector, highlighting the forward-thinking nature of Hong Kong’s finance sector,” said Luc Hovhannessian, Managing Director for APAC, at Finastra. “Initiatives such as BaaS, as well as embedded banking and Open Banking, are making finance truly open and helping financial institutions to transform the way they operate and, in turn, the services they provide to their customers.”

Access the full report and findings here.

Singapore

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Singapore leading in Banking-as-a-Service adoption according to Finastra survey

  • Almost half of respondents at Singapore financial institutions have invested in Banking-as-a-Service in the last year
  • Singapore saw largest increase in digital banking investment in response to COVID-19
  • 97% say Open Banking is important to their business

Singapore – 29 June, 2021 - A global study by Finastra suggests Singapore is leading the way towards the next evolution in financial services, Banking-as-a-Service (BaaS), with almost half of respondents (47%) having deployed or improved their BaaS capabilities in the last year and a similar proportion (45%) looking to do so in the next 12 months – higher than in any other market surveyed. This investment activity is accompanied by some of the highest confidence globally in BaaS, with 87% of those surveyed expecting to see benefits in the coming year.

Open Banking bears fruit

The ‘Financial Services: State of the Nation Survey 2021’ also reveals that Open Banking has become important to 97% of Singapore respondents’ businesses, with over half (56%) calling it a “must have”. The Singapore audience said that Open Banking has provided a number of benefits to their organization, including improving the customer experience (79%), delivering new services (93%) and improving internal systems (57%). As well as helping to attract new customers (71%), Singapore finance professionals also stated that Open Banking has helped to attract different types of customers (64%). Less than 2% of respondents in Singapore now think that Open Banking will not have any impact.

The research was conducted in March 2021 amongst 785 professionals at banks and financial institutions across Singapore, Hong Kong, the US, UK, France, Germany and the UAE. 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 also how COVID-19 has impacted the sector.

Barriers to innovation

Almost 90% (89%) of those surveyed in Singapore agreed that adoption and integration of technology and innovation should be at the forefront of the financial services sector. However, a number of key barriers to innovation persist, showing little change compared to Finastra’s 2020 survey:

  • 56% said management or decision makers are stuck in old ways of thinking (vs 58% in 2020)
     
  • 53% said regulations are too tight (vs 56% in 2020)
     
  • 44% said there is not enough industry or government support to foster innovation (no change from 2020)
     
  • 56% cited the cost of development/expense of R&D (vs 51% in 2020)

COVID response

In line with the rapid shift towards digital services last year, 9 in 10 (87%) of those surveyed said Coronavirus had accelerated the integration of new technology and innovation. In Singapore, this translated into the largest average increase in digital banking investment of any market (25%) and the highest proportion of respondents globally saying their bank increased overall investment/budgets in response to the pandemic (84%). In fact, adapting to the challenges brought by the pandemic was the third biggest driver of the adoption of technology (47%), just behind cost cutting and efficiency (54%) and business growth (48%).

“Our research uncovered an overwhelming recognition in Singapore that Banking-as-a-Service has the potential to help financial institutions grow their business, bring new services to market faster and streamline company operations. The level of Banking-as-a-Service deployment in the last year shows that Singapore’s financial services sector is living up to its progressive reputation when it comes to technology,” said Luc Hovhannessian, Managing Director of APAC at Finastra. “Through initiatives like Banking-as-a-Service and Open Banking, financial institutions in Singapore are laying the foundations for truly Open Finance, enabling banks to level up their technology capabilities like never before and provide ever more innovative and competitive services.”

Access the full report and findings here.

1 785 professionals (at managerial level) at financial institutions and banks across France, Germany, Hong Kong, Singapore, the UAE, the UK and the US, are included in our 2021 research. These financial institutions represent a gross total of just over USD$34 billion in turnover over the last 12 months, employ approximately 2.4m staff and have approximately 237 million client/customer/member relationships.
2 As a result of rounding up percentage results, the answers to some questions might not always add up exactly to 100%. Respondents were also able to select more than one answer for some questions.
3 Comparative analysis was made from results of similar surveys run by Finastra in January 2020 and March 2019 which were also conducted online amongst financial institutions and banks across the same markets (the 2019 survey did not include the UAE or Hong Kong).
4 Research was conducted by Savanta via an online panel (during March 2021).

For further information contact: PR@finastra.com