Open banking may have divided market stakeholders about how successful the initiatives have been so far, but that hasn’t stopped financial firms from spending a lot of dosh on it.
Simply put, open banking is a way in which customers can essentially choose who their banks share their data with. Some startups has hoped that the data sharing through application program interfaces (APIs) would create massive opportunities for new players in the FinTech space, whereas others, like Monzo founder Tom Blomfield, have lamented that these opportunities have so far failed to manifest.
Nevertheless, new research from Swedish open banking company Tink suggests that businesses around Europe are ramping up their efforts to adopt open banking solutions.
Last year, the financial executives around the continent said their median spending on the technology laid somewhere between €50m and €100m and 63% of financial institutions said their spending has increased from last year. Moreover, 43% said they had spent over €100m on open banking in the last year.
So when would they reap the benefits of this investment? Well, most of them said they expect a return on the investment in the next four years.
Still, the researchers also noted that barriers to the implementation of open banking solutions still exist, notably legacy systems, regulatory restrictions and a lack of urgency holding back investments
“The size of these investments prove that open banking has moved firmly from compliance challenge to commercial opportunity in the minds of financial institutions,” said Daniel Kjellén, co-founder and CEO of Tink. “Not only has it become integral to the digital transformation of financial institutions and been embedded across all parts of the organisation – it has also emerged as a key driver of revenue growth and an important differentiator when it comes to customer engagement and experience.
“Today, as we wrestle with the new social and economic realities of life with COVID-19, it is vital that financial institutions continue to prioritise the development of innovative open banking use cases that support their customers in new ways and provide financial services seamlessly over digital channels.”
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