3 per cent of FS firms ready for Open Banking deadline

Just 3 per cent of financial services (FS) organisations are confident they are prepared for the next major Open Banking enforcement deadline according to new research.

A survey of 100 tech leaders in the banking and insurance industry in EMEA and APAC by DevOps data company Delphix found that despite the Second Payments Services Directive (PSD2) and Strong Customer Authentication (SCA) requirements -which were initially slated to take effect September 2019- and then delayed by two years to September 2021- the majority of FS organisations are still not ready.

The study also reveals that only 2 per cent have met all of their Open Banking requirements to date, while 69 per cent say they have met half or less.

Most banks have a long way to go to support Open Banking and face significant hurdles, the survey found, with 62 per cent of respondents citing protecting sensitive data across multiple systems and APIs as the biggest data privacy and compliance challenge.

Others are struggling with effectively protecting sensitive information without limiting timely access to data (40 per cent) and ensuring that compliance measures preserve the quality and usability of data (39 per cent).

When it comes to opening up APIs to third parties in order to drive innovation, the biggest challenge for 60 per cent of respondents is the time and effort needed to maintain and preserve the integrity of data.

Meanwhile, more than half (52 per cent) of FS organisations report limited capability to accelerate the development of quality APIs and API-driven features to market.

Overcoming these hurdles will be challenging, and the vast majority of respondents (92 per cent) predict their organisational operations will be disrupted as they roll out Open Banking APIs.

Open Banking is widely seen as a way to encourage innovation and modernisation in traditional banking.

A total of 88 per cent of respondents believe it will increase the number of innovative banking services available to customers in the next three years.

In addition, over half (51 per cent) believe Open Banking will significantly or completely change how traditional financial services are delivered and consumed during the same period.

“The financial services sector is undergoing a massive transformation with data at the core. For many banks that rely on legacy systems, however, data privacy and compliance are proving to be major obstacles,” said Daniel Graves, CTO of Delphix. “Open Banking Application Programming Interfaces (APIs) could open up a whole new world for FS organisations, enabling them to use data to drive transformational services and power superior customer experiences.”

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