New research has revealed that the median Open Banking investment budget for European financial institutions is typically between €50 million and €100 million, with spend exceeding €100 million for nearly half (45 per cent).

Open Banking platform Tink teamed up with market research firm YouGov to survey 290 financial executives from 12 European countries between 28 January and 3 March, finding that 63 per cent think budgets have grown since last year, with annual spending rising by between 20 and 29 per cent - while only 10 per cent of institutions have slowed their investments in Open Banking.

The opportunity to improve customer experience was the biggest driver for such investments — cited by 44 per cent of the financial institutions surveyed. This was followed by IT modernisation (39 per cent) and process optimisation (34 per cent).

Yet barriers persist, with legacy IT seen as the top inhibitor of investment by a third of respondents. Meanwhile, 32 per cent cited more important business priorities as a blocker and 31 per cent believed regulatory restrictions stifled spending.

This backs research published yesterday by Finasta, which found that while 86 per cent of global banks are looking to use open Application Programming Interfaces (APIs) in the next 12 months, regulation is perceived to be tighter than when the firm carried out a similar survey a year ago. Close to half (48 per cent) of those surveyed believed that regulators are holding back innovation - although this sentiment was higher in Hong Kong (62 per cent), France (50 per cent) and Singapore (49 per cent) than in the UK (38 per cent).

The Tink report found that financial institutions are still optimistic about Open Banking return on investment though, with half projecting a payback period of less than four years and 69 per cent expecting the benefits to outweigh the costs in less than five years.

Revenue growth from new customers emerged as the most important success metric for Open Banking investments among 44 per ent of respondents, followed by revenue growth from new products and services (39 per cent) and the monetisation of data by offering developer services or APIs (37 per cent).

Daniel Kjellén, co-founder and chief executive of Tink, said: "The size of these investments prove that open banking has moved firmly from compliance challenge to commercial opportunity in the minds of financial institutions.

"Not only has it become integral to the digital transformation of financial institutions and been embedded across all parts of the organisation - it has also emerged as a key driver of revenue growth and an important differentiator when it comes to customer engagement and experience.”

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