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Open Finance and Open Banking Firmly Indispensable Finastra Finds

Open banking and open finance continue to conquer the finance industry as growing numbers come to recognise collaboration as fundamental to the practice of banking. 

Open banking and open finance are quickly becoming dominant features of the global financial industry. And Finastra‘s latest survey suggests that they’re services the industry can’t live without.

Its survey was conducted between August and September of this year among 758 professionals working for financial institutions and banks. It gathers sentiments from across the open finance and banking landscapes of the US, UK, UAE, France and Germany. The survey also spans Asia with respondents from Hong Kong and Singapore.

Topics included the most impactful technology initiatives making an appearance over the next year, including environmental, social and governance (ESG).

All but one per cent of survey respondents now view open banking and open finance as essential to a financial institution; marking a five per cent increase year-on-year (YoY).

The proportion of global financial institutions that consider it a ‘must have’ has risen to 61 per cent, a notable increase from 2021’s 51 per cent.

Open finance takes centre stage

In this spirit, the survey also delves into current attitudes toward open finance. It found that 94 per cent recognise its importance in the context of data sharing. These figures were also up, climbing three per cent on last year.

Regionally, the United Arab Emirates (UAE) is realising open finance the quickest. The survey shows that 71 per cent now regard it as fundamental; a 21 per cent YoY increase.

The UK followed with a YoY increase from 33 to 47 per cent. Across the pond, the US experienced a similar rise from 45 to 56 per cent.

These figures appear to confirm the advancement of open finance and open banking’s global reputation.  And as related products and services come into increasing use, the benefits of an ecosystem model will likely become more pronounced.

Eighty-five per cent of professionals agree that open finance is encouraging collaboration within the industry, generating positive consequences in the process.

Simon Paris, Chief Executive Officer at Finastra Open finance banking
Simon Paris, chief executive officer, Finastra

Finastra CEO, Simon Paris, describes open finance as “the key to unlocking the potential of people, businesses and communities everywhere.”

“Over the years that we have conducted this survey, we have seen open finance grow from an emerging idea to a clear priority for institutions across the world,” he comments.

Paris says that this evolution of opinion has shifted business models towards “embedded banking, financial inclusion and equality.”

ESG and BaaS

The financial services and banking sector has become pivotal in achieving ESG globally. Among Finastra’s other findings was an 86 per cent agreement that the sector should be involved in ESG initiatives.

When asked about green lending, 82 per cent view it as an opportunity for growth and revenue generation. The UAE leads the figures again with a 94 per cent consensus, having previously displayed a strong partiality towards ESG investing.

In other areas, the survey analyses the similar trajectory of banking-as-a-service (BaaS) and embedded finance.

It finds that 83 per cent of institutions agree on the growing customer expectation around offering BaaS and embedded finance.

Thirty-five per cent have improved or deployed BaaS in the past year and just a fraction less have deployed embedded finance.

Author

  • Tyler is a fintech journalist with specific interests in online banking and emerging AI technologies. He began his career writing with a plethora of national and international publications.

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