Global Banks Plan Investments in Open Banking

Global Banks Plan Investments in Open Banking

A recent Accenture research found that payments executives at large banks said their banks plan to make major investments in Open Banking initiatives by 2020.

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A recent Accenture research found that payments executives at large banks said their banks plan to make major investments in Open Banking initiatives by 2020.

Open Banking is a service model allowing customers to share access to their financial data with non-bank third parties. According to Accenture`s press release, the organizations provided with this data can use it to offer the customer a better banking experience. Furthermore, banks can use the Open Banking platform to give third parties like retailers or financial technology companies a chance to use plug-and-play financial products.

As the survey found, about two-thirds (63 per cent) of banks in North America believe that implementing Open Banking is important for competing with new entrants like financial technology companies and technology companies.

“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.”, said Alan McIntyre, a senior managing director at Accenture and head of its Banking practice.

While European banks prepare their networks for compliance, banks across the world are seeing opportunities to receive new revenue streams by offering services to third parties like consumer credit checks, as McIntyre added.

In Europe, Open Banking is related to the Revised Payments Service Directive (PSD2), a regulation that will enter into force in January 2018. The regulation will make it possible for customers to transfer funds more easily, compare products and manage their accounts without their bank`s involvement.

Most bank executives who were surveyed think that Open Banking provides more opportunities than threats. However, many said that Open Banking would introduce more interfaces that can lead to more security and fraud vulnerabilities.

As Accenture wrote, the survey findings are listed as follows:

  • More than two-thirds (71 percent) of respondents at European banks view Open Banking as more an opportunity than a threat, versus 63 percent in Asia Pacific and 60 percent in North America.
  • The majority (71 percent) believe Open Banking will make it easier for customers to access more targeted banking products and offers.
  • According to the results of the survey, some banks can already distribute third-party banking products to consumers with whom they do not have a primary relationship: 37 percent in North America, 29 percent in Europe and 23 percent in Asia Pacific.
  • Half (50 percent) of all respondents, and nearly two-thirds (63 percent) of those in Europe, believe that implementing Open Banking will increase the level of risk in the banking industry.

“Open Banking provides myriad opportunities for banks to generate new revenues and offer new products; however, it also puts banks at risk of becoming back-end, transactional players, with their products and brands buried deep in another transaction.”, as McIntyre commented as quoted by the press statement.