Banks’ appetite for open banking is growing, but its full implementation will take financial institutions many years to accomplish. This is what emerges from the new research, published today by Tink, the leading open banking platform in Europe, and previewed by milanofinanza.it.
The survey of 308 financial executives across 12 European countries revealed that 40% of these believe their organization will take 5 to 10 years to achieve their open banking goals and a further 37% believe it may take more than a decade. These cautious timelines reflect the scale of the work involved and highlight how many organizations are embarking on complex large-scale open banking transformation projects that will take several years to complete.
The most optimistic when it comes to timing? Challenger banks and wealth management firms, as 75% and 74% respectively believe their institutions’ open banking goals can be achieved in less than a decade. The most cautious? Only 55% of mortgage providers, 56% of credit providers and 57% of payment service providers believe they can reach open banking maturity within a decade.
In Italy, 23% of financial executives predict that it will take more than a decade to complete their open banking goals. Another 43% believe it will take 5-10 years and 34% think it will take less than 5 years. Italy is one of the most optimistic countries in Europe on the timing of open banking. This reflects a more limited scope of open banking strategies in this market, such as in Spain and France, where the focus is more on compliance-based short-term use cases than large-scale open banking transformation projects. .
While legacy infrastructures and technological challenges could slow the pace of transformation generated by open banking, Tink’s survey shows that Italian financial institutions are willing to embrace its benefits as soon as possible. More than three in four Italian financial executives (77%) believe that open banking is having a revolutionary effect on the financial services sector and the positive sentiment towards open banking continues to grow in Italy: from 57% in 2019 to 71% this year.
The most inclined towards open banking are financial institutions in Belgium (87%), the Netherlands (85%) and the UK (81%). Not surprisingly, what all three markets have in common is a competitive and innovative financial services ecosystem with a collaborative relationship between TPPs and historical financial institutions. Financial institutions across Italy, however, are starting to understand the benefits of open banking, recognizing how immediate business opportunities can be obtained by improving the customer experience (according to 36% of respondents), by launching new digital services (for 35 %) and increasing revenue (for 34%).
“Looking at the survey results, we can only be happy to find that the vast majority of European financial institutions are eager to embrace the true potential of open banking but we know that a revolution will not happen overnight, also because in markets like Italy it is still important to understand how open banking use cases are not limited to compliance but can truly transform the sector on a large scale “, underlined Marie Johansson, Country Manager of Tink in Italy. “Nonetheless, many have already understood this and are grappling with complex transformation projects that could take more than a decade to bring about a concrete result.”
Such long lead times are not attributable to financial institutions as to legacy infrastructures or the technological challenges that hold them back and this is where fintech partnerships can come into play. “Creating an open banking infrastructure is not easy: more than embarking on in-house transformation projects that may require a sunk investment, institutions can shorten the time and break away from the dependence of legacy systems by relying on fintech partnerships, being able to collect fruits of open banking sooner than they think, “explained Marie Johansson. (All rights reserved)