Two fifths (39%) of European financial institutions view the arrival of Open Banking regulation as the biggest current threat to their business model and 56% fear that consumer loyalty towards banks will be significantly reduced as they are forced to provide third parties with access to customer data.
14th September this year will bring the final deadline for EU financial institutions to comply with Open Banking legislation, opening up access to their data to third party providers looking to create new and innovative financial products.
Banks are approaching the looming deadline with a mix of fear and optimism, according to a survey of 269 senior decision makers in financial institutions across Europe conducted by PFM app Tink.
While concerns about the impact of Open Banking remain prevalent in the short term, the data reveals cautious optimism in the long term. Over half (55%) of European financial institutions are positive about Open Banking, and just under half (45%) see it as an opportunity for their business.
With the final deadline to comply with the PSD2 Regulatory Technical Standard (RTS) fast approaching, significant challenges still remain. Regulatory compliance (91%), and access to tech (91%) and talent (91%) top the list of barriers to embracing the Open Banking opportunity.
The other factors seen as moderate or major challenges associated with Open Banking include:
• Finding and collaborating with new partners in the fintech space (90%)
• Technology, e.g. modernising IT systems (88%)
• Overcoming resistance from internal stakeholders (87%)
• Commercialising open banking opportunities (87%)
Fintech partnerships are seen as a key element in the incumbents' battle to recruit and retain customers in the face of new competition. Almost half (49%) see fintech partnerships as helping them deliver a better customer experience. Other benefits include access to the latest technology (42%); quicker time to market (40%); and access to talent and knowledge (38%).
As a result, almost a quarter (23%) of financial institutions surveyed are already in a partnership with a fintech, while 51% are planning a partnership in the next 12 months.
Daniel Kjellén, co-founder and CEO, Tink, comments: “Encouragingly we are seeing a pioneering new generation of banking leaders rising to the Open Banking challenge - leapfrogging legacy tech, embracing partnerships and bypassing traditional ways of working. They see an opportunity to exemplify the true spirit of the open banking movement - transforming business models and creating the truly customer-centric services of the future.”