Banks set for major Open Banking investments
Written by Anthony Strzalek
All but one of 100 payments executives at large banks said they plan to make major investments in Open Banking initiatives by 2020, according to a new Accenture study.
Open Banking is an emerging service model that allows customers to share access to their financial data with non-bank third parties.
Banks can also use the Open Banking platform to offer plug-and-play financial products to third parties, such as retailers or FinTech companies, ultimately expanding their reach to new customers.
The survey found that nearly two-thirds (63 per cent) of banks in North America believe that implementing Open Banking is critical to competing with new entrants – such as FinTechs and tech giants – and will help banks remain relevant, compared to half (51 per cent) of executives surveyed in Europe and two-fifths (40 per cent) in Asia Pacific.
In fact, half (52 per cent) of all the bank executives surveyed believe that they will be forced to implement Open Banking in order to compete with traditional competitors that have invested in digital transformation.
In Europe, Open Banking is being driven by the revised Payments Service Directive (PSD2) – regulation taking effect January 2018 that will enable consumers to share their financial data securely with banks and third parties, making it possible for them to more easily transfer funds, compare products and manage their accounts without their bank’s involvement.
Alan McIntyre, a senior managing director at Accenture, said: “Unlike banks in Europe where it is mandated by regulation, those in North America and Asia Pacific have the luxury of deciding if, how and when they will implement Open Banking, and we expect many will do so as a way to more easily offer integrated financial services to customers.
“As European banks ready their networks for compliance, banks across the globe are identifying opportunities to drive new revenue streams by offering services to third parties, such as consumer credit checks and identity management, enabled by Open Banking.”