Open Banking is one of the most radical changes in the recent history of financial services and has already dramatically impacted investment decisions within the industry, according to TLT.

The UK law firm’s new research, based on survey responses from 130 senior decision makers representing a range of financial firms across the UK, found that a vast majority (84 per cent) are investing in Open Banking products and services.

A further 44 per cent are also considering launching new products or services to improve the Open Banking experience for customers, while just over three quarters reckon Open Banking and PSD2 is one of the most radical changes in recent history for financial services.

However, more than half (53 per cent) of respondents said the industry has found it difficult to adapt to these new regulations.

Despite enthusiasm and investment, many firms - both banks and non-banks such as FinTechs and payment services providers - are struggling to formulate and implement comprehensive strategies to deal with Open Banking. Two thirds said they do not have a comprehensive strategy in place and 13 per cent have no investment strategy at all.

Financial services companies are also clearly worried about competitive threats in the wake of the implementation of Open Banking, according to TLT. In particular, banks see big tech companies - such as Google, Amazon, Facebook and Apple - as the biggest perceived competitive threat in the Open Banking space (63 per cent).

Two thirds of respondents believe the market will ultimately become more consolidated, with larger banks and corporates buying FinTech businesses and smaller banks to keep pace with the level of innovation and speed of product development required to make a success of Open Banking.

Even amidst the challenges and competitive threats, respondents suggested Open Banking is on track to achieve the aspirations of the regulators. More than two thirds said that once fully implemented, the rules will bring greater innovation to the industry, and more choice for customers, while half agreed it will enable greater customer control of banking data and services and easier industry collaboration.

David Gardner, partner in the financial services team at TLT, commented: "Our research reveals the true scale of disruption that financial services companies are grappling with, alongside the opportunities that these far-reaching changes have created – provided that companies can keep up with the pace of change.

"The race is on for every participant to identify their position and launch a ‘killer app’ or product to capture that opportunity,” he continued. “But there are considerable challenges for existing players and new entrants – from complying with regulatory technical standards to identifying market opportunities and potential partnerships and making sure that customer data is adequately protected.”

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