Key Highlights:
- Open bank hub initiatives, giving customers the option to connect their bank data with third-party providers, were the second most chosen innovation strategy by respondents in a 2020 global banking survey conducted by The Economist Intelligence Unit (EIU).
- Open banking could benefit banks greatly by making it easier for them to leverage their own data internally for better service personalisation, a top priority for nearly a third (32%) of respondents in the EIU survey. Banks could also play a leading role in digital identification.
- Regulation has been the main driver in many regions, notably Europe and some Asian and Latin American countries. Meanwhile in others, open banking has evolved owing to market forces and new competitors including e-commerce giants in China and nimble challengers in the US.
- Although 87% of countries reportedly have some form of open APIs in place, laying the foundation for further development of open banking depends on the degree of customer confidence in sharing their data, interoperability, enhanced user experience, and the added value of products and services.
- The UK is leading the way in open banking owing to regulatory requirements and a dedicated central programme and platform, the Open Banking Implementation Entity, funded by the country’s nine biggest banks. Other regions are following suit, notably Hong Kong, with the APIX API platform; and Scandinavia, with the Nordic API Gateway. Australia, Mexico and Brazil have introduced open-banking legislation, while Canada has started the second phase of its “consumer-directed finance” consultation.
- The Covid-19 pandemic has boosted open banking and the financial technology ecosystem. In the UK, for example, the user base of the Open Banking Implementation Entity platform doubled between April and September 2020, reaching 2m.
