Open Banking and collaboration: State of the nation survey 2020

Open Banking Collaboration Survey 2020 ReportOpen Banking Collaboration Survey 2020 Report

Finastra research of over 750 global banks and financial institutions reveals that the appetite for Open Banking is picking up pace, with 86% looking to use open APIs to enable Open Banking capabilities in the next 12 months. It’s an encouraging trend that paves the way for the next wave of innovation in financial services being created through collaboration on open platforms. But some barriers to Open Banking and collaboration remain and not all markets are progressing at the same pace.

Download the summary findings report here to learn more.

 

Global

Press release

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
  • Banks believe regulators are stifling innovation: almost half (48%) believe ‘regulation is too tight’ and that there is ‘not enough government or industry support to foster innovation’

London, UK - May 26, 2020 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, Singapore, France, Germany, Hong Kong and UAE1, shows a maturity of API adoption and calls for the harmonization of regulations between geographies.

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 FusionFabric.cloud, 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.”

To see the findings summary report, click here

How is Open Banking evolving?

Finastra research of over 750 global banks and financial institutions reveals that the appetite for Open Banking is picking up pace.

France

Press release

For 86% of French banks, collaboration is a lever for success, according to a Finastra study

  • 87% of banks plan to use open APIs to facilitate Open Banking in the next 12 months
  • 52% of French institutions encourage regulators to "provide financial incentives or subsidies dedicated to innovation" to foster collaboration
  • French banks cited open APIs (42%) and AI (40%) as the technologies they are most likely to implement during the next 12 months

Paris, France - May 26, 2020 – A Finastra study1 reveals that 89% of global financial institutions and 86% of French banks see collaboration with fintechs as a lever for success. In France, 87% of banks plan to use open APIs in the next twelve months. This collaboration, between financial institutions or banks and technology providers (fintechs), aims to improve the customer experience while reducing operational costs.

The findings are revealed in Finastra’s ‘Open Banking and Collaboration: State of the nation survey 2020’, which was conducted among 774 financial institutions in the US, Singapore, Germany, France, the UK, Hong Kong and the United Arab Emirates. The respondents represent a total of just over €4,355 trillion in revenues over the last 12 months. 110 responses were collected in France. Carried out before the Coronavirus outbreak, this study does not take into account the changes that will undoubtedly mark the sector but reflects a fundamental trend that remains relevant for analyzing the fintech market.

For French banks, the benefits outweigh the cost of collaboration

Nearly 4 out of 5 French banks (79%) believe that the benefits of working with fintechs and partners outweigh the costs involved. Among the factors that may encourage collaboration, almost all French financial institutions (96%) say that "technology" and the regulator (94%) play key roles.

APIs, AI, blockchain: the winning combination

To exploit the capabilities of Open Banking, 87% of the French banks surveyed plan to leverage their open APIs, far ahead of their German (75%) and, to a lesser extent, UK (85%) counterparts.

When asked what technologies their organization plans to improve or deploy in the next 12 months, French respondents most frequently cited open APIs (42%), but also AI (40%) and blockchain (34%) on a par with the digital transformation of the organization (34%).

Creating the right ecosystem: less regulation, more support

Is innovation being stifled in France? This is the observation of 50% of French banks, who regret "the lack of government or industry support to encourage innovation". This is 18% more than in 20192.

Regulation is not to be outdone: French financial institutions encourage their government to "better understand the impact of regulation on innovation in the sector". This opinion is shared by nearly one-third of French respondents (28%), more than in any other country.

On the other hand, only 23% of French respondents believe that the "change of culture" is an obstacle to the development to collaboration. Compared to the average results of all respondents (31%), these responses reflect a favorable ground and mindset for the establishment of partnerships between French financial institutions and fintechs.

Chirine Ben Zaied, Director of Innovation at Finastra said, "It is encouraging to see that the principles of collaboration and Open Banking enjoy strong support within the financial community in France. We believe that this will be the first step towards Open Finance, which will see the next wave of innovation in financial services being created on open platforms, using open APIs and open software solutions. We foresee a future where fintechs, systems integrators and academic institutions will work with banks to create new applications in all areas of financial services, incorporating the latest technologies such as machine learning, artificial intelligence and blockchain.

To see the findings summary report, click here

Germany

Press release

Finastra research reveals banks in Germany risk falling behind in Open Banking

  • Only 40% of German banks perceive Open Banking as a must-have, compared to an average of 64% across other countries
  • The adoption of new technologies is driven by the need to stay ahead of competitors (46%) and cut costs (44%)
  • Growing the business (35%) and meeting current customer expectations (34%) come further down the priority list but are important to a third of banks

Frankfurt am Main, Germany - May 26, 2020 Finastra research1 reveals that 75% of German banks are looking to use open APIs in the next 12 months to enable Open Banking, compared to 88% in other countries. Meanwhile, Open Banking is considered a must-have for 64% of banks in other countries, compared to only 40% in Germany, reflecting a slower take up in this region.

The findings are revealed in Finastra’s ‘Open Banking and Collaboration: State of the nation survey 2020’, which was conducted before the Coronavirus outbreak amongst 774 financial institutions in Germany, France, United Kingdom, Hong Kong, Singapore, the USA and the United Arab Emirates. 119 responses were gathered from financial institutions in Germany.

Improving efficiencies and saving costs are German banks’ focus

The focus for banks in Germany is currently on improving efficiency and cost savings. The use of new technologies is justified above all by greater competitiveness (46%) and cost reduction (44%). Slightly less important, but still a priority for around one third of German banks, are corporate growth (35%) and meeting customer expectations (34%). Accordingly, the use of innovative technologies is also prioritized: AI (39%) and mobile banking (37%) will be implemented or further improved by more than a third of the institutions in Germany in the next twelve months. Cloud computing (32%) and APIs (31%) have slightly lower priority overall.

Regulation is seen as an obstacle to collaboration and innovation

German banks perceive a lack of support from the industry and the government as the main hurdle to collaboration and innovation (44%); and this impression has increased since 20192 (from 38%). The next most frequently cited challenge for collaboration is regulation (40%), which is also most frequently cited in other regions.

USA and Hong Kong lead the way in collaboration with fintechs

Global averages show that Open Banking and collaboration are highly valued overall. For example, 89% of all respondents identified collaboration as a key driver of business success, and 84% said it made their business more efficient.
A country comparison shows that the US and Hong Kong are ahead of European countries in terms of collaboration with fintechs: 97% of financial institutions in the USA and 95% in Hong Kong see collaboration as an important factor for corporate success.

Achim Thienel, General Manager Germany 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. In an era where customers have little loyalty towards a bank brand, and the ability to switch banking providers at the click of a button, German banks must take advantage of the power of collaboration and open APIs to create better services for their customers and stay relevant.”

To see the findings summary report, click here

US

Press release

US financial institutions have a strong appetite for fintech collaboration, Finastra survey finds

  • Despite desire to work with external fintechs, limited technology understanding and skills present a barrier to maximizing collaboration

New York City, US - May 26, 2020 – A global survey from Finastra reveals that US financial institutions are ready to collaborate with fintechs and start-ups. The research was conducted prior to the Coronavirus outbreak and surveyed 774 global financial institutions and banks including 110 from within the US.

Nearly all (97%) US financial institutions surveyed agree that collaboration with third-party entities and fintech firms will serve as a driver of their businesses’ successes, higher than any other country surveyed. Adding to the business incentive for collaboration, 93% note it has made their business more efficient. American institutions are ready to collaborate, but they also recognize barriers exist. Half (51%) of US financial institutions report a lack of technology understanding or the necessary skills to enact the proper actions for collaborative efforts as barriers for collaboration.

“The financial industry’s eagerness to collaborate is accelerating a transition to Open Banking in the US, as we have seen in the rest of the world,” said Chris Zingo, SVP and GM of Americas Field Operations, Finastra. “Unlike in other regions, where Open Banking has been driven by regulatory mandates, the US market is adopting Open Banking in order to drive innovation and remain competitive. The survey illustrates a real willingness for US financial institutions to share data and ideas in order to deliver tech-forward services to their customers.”

In fact, 64% of those surveyed expressed an interest in technology that would make it easier for start-ups and innovators to access financial institutions to fuel better collaboration and integration.

Another 61% are interested in technology to improve openness and data sharing between financial institutions. About three-quarters (74%) of US financial institutions believe better sharing of ideas and joint ventures with external parties will accelerate an appetite for collaboration - an attitude that is 28% higher than the global average of surveyed participants.

“New ideas and innovation don’t thrive in a vacuum. To win the tech race and create the banking solutions Americans are demanding, especially in the current environment, financial institutions must collaborate with fintechs and problem solve with their peers,” said Chris. “Finastra’s FusionFabric.cloud platform plays a fundamental role in this new collaborative age, creating a platform where banks can work in tandem with fintechs and seamlessly integrate cutting edge technology into their products.”

To see the findings summary report, click here

Infographic

An appetite for Open Banking in the US

97% of US financial institutions surveyed agree that collaboration with third-party entities and fintech firms will serve as a driver of their businesses’ successes, higher than any other country surveyed.

Hong Kong

Press release

Hong Kong financial institutions leading on AI deployment but barriers to tech innovation remain

  • Finastra survey shows Hong Kong leads global financial hubs, including Singapore, UK and US, in AI deployment plans for next 12 months
  • Hong Kong’s enthusiasm for Open Banking is strong, with 9 in 10 institutions looking to use open APIs in the next 12 months
  • More than half believe government and industry support for innovation is lacking

Hong Kong - May 27, 2020 – A global survey released by Finastra reveals that Hong Kong financial institutions are leading markets including Singapore, the US and the UK in their intentions to deploy Artificial Intelligence (AI). The research found that 58% of financial institutions in Hong Kong are looking to deploy the technology in the next year, at least 11% higher than any other market surveyed.

The research was conducted prior to the Coronavirus outbreak amongst 774 financial institutions and banks across the US, UK, Singapore, France, Germany, Hong Kong and UAE, 107 of which are in Hong Kong.

Furthermore, the research found that 95% of financial institutions in Hong Kong view fintech collaboration as a contributor to their success. Open Banking and connecting to third parties through open APIs appears to be an accelerating trend, as 89% of Hong Kong respondents either have adopted, are currently adopting or are looking to adopt open APIs in the next 12 months. Around half of those surveyed (53%) said Open Banking is already enabling them to deliver new services and, therefore, new revenue streams.

Wissam Khoury, Senior Vice President and General Manager, APAC and MEA at Finastra, said, “Competition from nimble challengers has given incumbents a greater imperative than ever to collaborate with fintechs in order to adopt new, innovative technologies. As our survey has shown, not only are Hong Kong’s institutions leading in their deployment plans for AI in the coming 12 months, they also recognize the importance of Open Banking. These banks will be better placed than ever to modernize their operations and offer new digital services to their customers. The findings indicate a positive direction of travel for Hong Kong’s banking industry and the levels of service that customers can expect to receive in the future.”

Whilst collaboration between banks and fintechs in Hong Kong is increasing, barriers persist. Regulatory complexity was cited by half of respondents as the largest barrier – more than any other country in the survey - while 62% believe there is not enough government or industry support to foster innovation.

Wissam added, “In a customer-led, highly competitive market such as Hong Kong, the successful adoption of Open Banking – coupled with greater fintech collaboration and technology innovation – will be key to success for its financial institutions. This makes a supportive regulatory framework all the more important. With the right environment, Hong Kong will continue to be an innovation leader in financial services.”

To see the findings summary report, click here

Infographic

How is Open Banking evolving in Hong Kong?

A global survey of over 750 global banks and financial institutions by Finastra reveals Hong Kong financial institutions are leading in their intentions to deploy Artificial Intelligence

Singapore

Press release

Finastra survey reveals financial institutions in Singapore back Open Banking - but barriers to innovation remain

  • 86% of financial institutions plan to use Open APIs to enable Open Banking in next 12 months
  • Over half believe ‘regulations are too tight’; call for global harmonization to boost innovation
  • Mobile banking emerges as top technology to be deployed in the year ahead, followed by AI and open APIs

Singapore - May 27, 2020 – A global survey by Finastra shows financial institutions in Singapore are supportive of the Open Banking movement and fintech collaboration, with 86% either committed to or considering opening their APIs in the next 12 months. Nearly all respondents (98%) said Open Banking is important to their organization, with 89% believing that collaboration has made their business more efficient.

The research was conducted prior to the Coronavirus outbreak amongst 774 financial institutions and banks across the US, UK, Singapore, France, Germany, Hong Kong and UAE. 110 organizations in Singapore were included.

However, the survey also found that a number of financial institutions believe regulation is currently limiting progress. More than half of Singapore participants agreed that ‘regulations are too tight’ (56%), while 90% called for greater global harmonization of regulation on innovation. Two thirds of respondents (66%) also want to see regulators create standardized best practices across the industry to help foster collaboration.

Wissam Khoury, Senior Vice President and General Manager, APAC and MEA at Finastra said, “It’s encouraging to see that financial institutions are embracing the Open Banking model enabled by open APIs, and that collaboration is already helping so many become more efficient. It’s clear, however, that regulation needs become a facilitator rather than a barrier going forward. I’m excited to see the industry make further strides towards enabling a truly collaborative model to drive the industry forward and enable true open finance.”

As Singapore gears up to announce the successful applicants for its new digital banking licenses in the second half of 2020, the research also reveals mobile banking as the top technology to be deployed by financial institutions in the next twelve months, followed by Artificial Intelligence (AI) and open APIs.

Wissam added, “Financial institutions are looking to seize new opportunities in spaces such as mobile banking and AI, particularly as digital banking continues to accelerate in Singapore. Combined with increasing appetite for collaboration and Open Banking, this bodes well for the future of the industry as financial institutions here – incumbents and disruptors alike – race to provide seamless, digitally-enabled customer experiences.”

To see the findings summary report, click here

Infographic

How is Open Banking evolving in Singapore?

Finastra research of over 750 global banks and financial institutions reveals that the appetite for Open Banking is picking up pace.

UAE

Press release

Finastra research reveals strong interest in Open Banking among UAE banks

  • 88% of UAE banks expect to enable Open Banking and open API capabilities in the next 12 months as they promise improvements in customer service and delivery of new financial services
  • 61% of UAE banks say better customer service and experience capabilities would motivate them to collaborate more with other financial institutions and developers

Dubai, United Arb Emirates - June 8, 2020 Finastra research1 reveals that nearly nine out of ten (88%) financial institutions in the UAE plan to enable Open Banking in the next 12 months. The demand from UAE banks for further collaboration is driven by innovation in customer service and the customer experience. However, the main factors challenging greater industry collaboration in the region, according to those surveyed, include potential reduced control indecision-making (48%), complex regulation (47%) and legacy systems (46%).

The findings are revealed in Finastra’s ‘Open Banking and Collaboration: State of the nation survey 2020’, which was conducted before the Coronavirus outbreak amongst 774 financial institutions across the United States, United Kingdom, Singapore, France, Germany, Hong Kong and the UAE. More than 100 responses were gathered from financial institutions in the UAE.

Key UAE findings include:

  • Banks believe a way in which future collaboration can be fostered is by ‘standardizing best practices’ across the industry, via regulators (69%) and by technology (53%)
  • Respondents are overwhelmingly favorable towards the principle of collaboration: 94% agree or strongly agree it has been a driver for success in their organization, while 91% agree or strongly agree it has helped make their business more efficient
  • Open Banking will have the greatest impact on corporate banking (57%) followed by retail banking and payments (both 51%)
  • Just under half (48%) of UAE financial institutions find ‘reduced control in decision making’ a barrier to collaboration, the most out of every country surveyed

Wissam Khoury, SVP and General Manager MEA and APAC at Finastra said, “It is encouraging to find strong levels of support for the principles of industry collaboration and Open Banking within the UAE banking community. The biggest benefit for the end customer is that Open Banking changes how banks handle their financial information, putting control back in the hands of the customer. We believe that it will be the first step towards true Open Finance which will see the next wave of innovation in financial services being created on open platforms, using open APIs and open software solutions. And we foresee a future where fintechs, systems integrators and academic institutions will work with banks to create new applications across all areas of financial services, incorporating the latest technologies such as machine learning, AI and blockchain.”

To see the findings summary report, click here

Infographic

Finastra reveals strong interest in Open Banking in the UAE

Finastra research of over 750 global banks and financial institutions reveals that the appetite for Open Banking is picking up pace.

1 Research was conducted online between 21 - 24 January 2020, amongst 774 financial institutions and banks across United States, UK, Singapore, France, Germany, Hong 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 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, the US, Singapore, France and Germany (March - May 2019).

For further information contact: PR@finastra.com