Finastra research has revealed that Open Banking is now a key part of a bank’s landscape, with 99% of respondents considering it either a ‘must have’ or ‘important’, up from 94% in 2021. The proportion of global financial institutions that consider it a ‘must have’ has risen to 61%, a notable increase from 2021 (51%).

The ‘Financial Services: State of the Nation Survey 2022’ finds that views on Open Finance are also maturing with some 94% of financial institutions regarding it as either a ‘must have’ or ‘important’ in the context of data sharing (up from 91% in 2021). Almost half (48%) of respondents now consider Open Finance a ‘must have’, a notable rise from 2021 (38%). The increase is significant across all territories, but particularly pronounced in the UAE (up from 50% in 2021 to 71% in 2022), the UK (up from 33% to 47%) and the US (up from 45% to 56%).

This suggests that the sector globally is actively investigating products and services that would benefit from an ecosystem model. Some 85% of professionals agree that Open Finance is already making the industry more collaborative and is having a positive impact on the industry. More information on the survey The research was conducted amongst 758 professionals at financial institutions and banks from August to September 2022 across France, Germany, Hong Kong, Singapore, the UAE, the UK, and the US.

It explores the Open Banking and Finance landscape, the technology and initiatives set to make an impact in financial services over the next year, and the growing importance of ESG. Other insights include: Banking-as-a-Service (BaaS) and Embedded Finance have become an industry norm – 83% of institutions agree that BaaS and embedded finance is already expected/demanded by customers. More than a third (35%) of institutions surveyed have improved or deployed BaaS in the past year.

A fraction less (33%) has deployed embedded finance. Growing our business (48%), meeting current and future customer expectations (45%), staying ahead of our competitors (42%), and cost cutting (42%) are all key drivers. Half of institutions (50%) now have all or most of their software stack on cloud-based solutions, with a further third (32%) splitting equally between cloud and on-premises solutions.

Global financial institutions are being prudent with their technology investments – with 82% noting constraints compared to 2021. Support for ESG is widespread – almost 9 in 10 organisations (86%) agree that it’s important for the financial services and banking sector to support environmental, social, and governance initiatives. Linked to this, 82% of respondents agree that green lending presents an opportunity for growth and revenue generation, with the UAE (94%) and Singapore (88%) showing the strongest appetite.

Why is Open Finance becoming a popular topic? Companies will be able to assist customers in creating investment and savings programs as the potential of Open Finance develops. Companies may, for instance, specify that a certain sum of money be sent automatically from a purchase to a savings or investing account. Payroll and HR, utilities, mortgage lenders, and pension funds can all profit from the development of Open Finance technology in a variety of ways, but the technological possibilities will also be helpful in the larger ecommerce environment.

Opportunities will arise to develop cutting-edge products that use artificial intelligence (AI) to access data in real-time, creating hyper-targeted consumer recommendations, and providing smarter, more streamlined payment solutions that better suit the needs of niche or small businesses. As Open Finance matures and fintech providers as well as traditional banks continue to explore its potential. In addition to enabling the level of customisation that contemporary customers demand, Open Finance will give businesses the chance to easily implement omnichannel payment gateways that include all of the newest payment alternatives, enhancing user experiences and increasing conversion.

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