Research amongst 785 professionals at global financial institutions and banks reveals that most organisations are already deriving the benefits of Open Banking and BaaS.
Open Finance is also considered the natural evolution or the next stage of Open Banking for the sector, with the Asian markets being at the forefront of this.
Looking at wider technological trends, the research finds that Banking as a Service (BaaS) and embedded banking services will have a notable impact on the financial services sector.
With evidence that these initiatives have already started ‘paving’ the journey to true Open Finance and helping to develop and enhance the services financial institutions are able to provide to their customers.
Banking as a Service (BaaS) is anticipated to have a significant impact on financial services in the next 12 months
Despite continued widespread agreement that current global regulatory frameworks are hindering innovation, this is not anticipated to have an impact on the improvement and development of new technology – which is expected to continue at pace for most businesses.
Mobile banking, BaaS and AI have been identified as the core technologies which will be improved or deployed in the next 12 months.
With the world adapting to a new normal and a likely ‘hybrid’ way of working for many organisations in the future, the research finds that collaboration remains important to financial services institutions, though there remain several existing and new barriers surrounding regulation, security, and technology.
Banking as a Service (BaaS)
Considering wider trends for the next 12 months, BaaS is anticipated to have an impact on 85{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} of global financial institutions, of which 40{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} say there will be a significant impact.
Whilst all markets broadly expect BaaS to be impactful, Hong Kong (92{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}), the UAE (90{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}) and Singapore (87{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}) expect the impact to be greatest.
The benefits of BaaS are clearly recognised by financial institutions with three quarters or more of global respondents agreeing with 5 out of the 6 statements outlined in the chart.
Attitudes around whether BaaS is already disrupting the financial services sector suggest the concept is still embedding itself in the industry, with 66{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} of respondents of this belief.
As seen in previous research, there are differences on a market level, with the UAE and Asian markets (Hong Kong and Singapore) broadly being more likely to identify and agree with the benefits of BaaS.
The UK and Germany generally ranked benefits lower, relative to all the other markets, suggesting these markets might be taking a slightly more cautious approach to adopting BaaS and recognising the benefits it can provide.
A comparable proportion (87{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}) also anticipate that embedded banking services will impact the financial services sector in the next 12 months – with 35{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} anticipating a significant impact.
Similar to the results seen for BaaS, the UAE (98{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}), Singapore (91{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}) and Hong Kong (89{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}) expect this impact to be greatest; along with France (91{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}) and Germany (90{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}).
When it comes to these two initiatives, a third of respondents (35{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}) have improved or deployed BaaS and 32{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} of financial institutions having improved or deployed embedded banking service technologies within their business in the last 12 months.
Financial services institutions are also most likely to do this in collaboration with another organization as opposed to resourcing this process internally (via own internal departments or teams).
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