Temenos recently published an interesting report in collaboration with the Economist Intelligence Unit (EIB) entitled: Open Banking: revolution or evolution? More than three hundred banking executives from around the world were surveyed and the statistics look promising. Almost half were ready to transform their digital infrastructure with around one third focused on open banking projects. Ensuring customers are confident in the security of open banking-enabled products is seen as important to their success, as well as ensuring that there are additional benefits for users. The report also found that regulation has been the driving force behind the implementation of open banking initiatives in many regions such as Europe and some Latin American countries, whilst the market has been the key influencer in others including China and the US.
These findings are in line with the results of other reports over the past few months. Open banking is gaining traction globally but for mass adoption to take place, customers need to be fully aware of its benefits. This is especially important considering the data sharing aspect which although secure and consent based, is still a significant change to the financial ecosystem. The Open Banking Implementation Entity (OBIE) has released its insights for January which show a steady increase in open banking activity in the UK. There are now more than three million people using open banking powered products and services. Regulated providers now amount to 299 and this is made up of 219 third party providers (TPPs) and 80 account providers. Out of these 105 have at least one proposition live with customers.
Consumers are unlikely to seek out information on open banking or to even have a passing familiarity with the term. Information on its benefits needs to filter through to them in everyday life. For traditional financial institutions keen to stop their customers moving to challenger banks, there are many ways they can educate them on any new open banking-enabled products they introduce. However, the window of opportunity is shrinking as flexible, adaptable, jargon-less fintechs launch every week with innovative, money-saving products and services. The audience may not be a captive one, but the fintechs have a flair for communicating with it. Mass adoption is likely over time but some apps might drive this more than others.
Pay iO’s articles do not constitute financial advice and are for information only.