Financial services are getting more collaborative thanks to open finance

By Puja Sharma

Open finance could reshape the global financial services ecosystem, change the idea of banking, and increase pressure on incumbent banks.

Around 85% of professionals at financial institutions agree: open finance is already making the financial services industry more collaborative and is having a positive impact. Research by Finastra revealed a sneak peek at its annual State of the Nation Financial Services research. Results point to the significant progress the industry has made around open finance and collaboration, despite the challenging market conditions of the last few years.

“These compelling figures speak to a marked industry shift towards ‘open’ and reflect our journey, creating ways to innovate at scale and pace, and accelerate innovation through collaboration,” said Simon Paris, CEO at Finastra. “In 2018 we declared that the future of finance is open. And we weren’t just talking about Open Banking, but true open finance – disrupting and reshaping the foundation of financial services. That future is now, and we can simply say: finance is open.”

According to the study by Mckinsey, Non-bank companies could get a leg up in the financial services sector if they had access to open financial data. As digital adoption soared by years in just several months, many eCommerce, tech, and social-media companies have gained a huge advantage in customer attention.

In the future, open finance could reshape the global financial services ecosystem, change the idea of banking, and increase pressure on incumbent banks. Customers who are unhappy with their current accounts, earn uncompetitive interest rates on savings accounts or pay higher mortgage rates do not switch providers because switching is difficult or they lack visibility into better alternatives, according to the UK’s Financial Conduct Authority.

In the last few years, the industry has seen the unbundling of banking, with institutions offering products procured outside of their organisation, a move to contextual and conscious banking services which meet the customer at the point of need, and a greater desire from many companies to do well by doing good. All of these form part of the shift to open.

The research takes in views from 758 professionals at financial institutions and banks across France, Germany, Hong Kong, Singapore, the UAE, the UK, and the US,

Key findings

• Around 85% of professionals agree that open finance is already making the industry more collaborative and is having a positive impact
• The industry has seen the unbundling of banking, with institutions offering products procured outside of their organization
• 8 in 10 consider the sector open to collaboration, with 87% recognizing this as an improvement compared to five years ago
• Open finance could reshape the global financial services ecosystem, change the idea of banking, and increase pressure on incumbent banks
• Conscious banking services that meet the customer at the point of need, and a greater desire from many companies to do well by doing good.