Finastra global survey shows evolution of Open Banking and growing appetite for open finance

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Dec 06, 2022, 05:00 ET

Almost half of financial institutions (48%) regard open finance as a 'must have' (up from 38% in 2021); 85% agree it's making financial services more collaborative
83% of institutions concur that Banking as a Service and embedded finance is expected by customers; 35% have improved or deployed BaaS in the past year

LONDON, Dec. 6, 2022 /PRNewswire/ -- Finastra research reveals that Open Banking is now universally and unequivocally regarded as a key part of a bank's landscape, with 99% of respondents considering it either a 'must have' or 'important', up from 94% last year. The proportion of global financial institutions that consider it a 'must have' has risen to 61%, a notable increase from 2021 (51%).

The 'Financial Services: State of the Nation Survey 2022' finds that views on open finance are also maturing with some 94% of financial institutions regarding it as either a 'must have' or 'important' in the context of data sharing (up from 91% in 2021). Almost half (48%) of respondents now consider open finance a 'must have', a notable rise on last year (38%). The increase is significant across all territories, but particularly pronounced in the UAE (up from 50% in 2021 to 71% this year), the UK (up from 33% to 47%) and the US (up from 45% to 56%). This suggests that the sector globally is actively investigating products and services that would benefit from an ecosystem model.

Some 85% of professionals agree that open finance is already making the industry more collaborative and is having a positive impact on the industry.

The research was conducted amongst 758 professionals at financial institutions and banks from August to September 2022 across France, Germany, Hong Kong, Singapore, the UAE, the UK and the US. It explores the Open Banking and Finance landscape, the technology and initiatives set to make an impact in financial services over the next year, and the growing importance of ESG.

Other insights include:

Banking as a Service (BaaS) and Embedded Finance have become an industry norm – 83% of institutions agree that BaaS and embedded finance is already expected/demanded by customers. More than a third (35%) of institutions surveyed have improved or deployed BaaS in the past year. A fraction less (33%) have deployed embedded finance.
Drivers for technological adoption remain consistent with previous years

Growing our business (48%), meeting current and future customer expectations (45%), staying ahead of our competitors (42%), and cost cutting (42%) are all key drivers
Interestingly, half of institutions (50%) now have all or most of their software stack on cloud-based solutions, with a further third (32%) splitting equally between cloud and on-premises solutions.

Global financial institutions are being prudent with their technology investments – with 82% noting constraints compared to 2021. Despite the current economic uncertainty and wider cost pressures, the majority (74%) forecast that they will have resumed their full investments by the end of H1 2023.
Support for ESG is widespread – Almost 9 in 10 organizations (86%) agree that it's important for the financial services and banking sector to support environmental, social and governance initiatives. Linked to this, 82% of respondents agree that green lending presents an opportunity for growth and revenue generation, with the UAE (94%) and Singapore (88%) showing the strongest appetite.

"Finastra has always championed open finance as the key to unlocking the potential of people, businesses and communities everywhere," said Simon Paris, Chief Executive Officer at Finastra. "Over the years that we have conducted this survey, we have seen open finance grow from an emerging idea to a clear priority for institutions across the world, enabling, as it does, business model shifts such as embedded banking, as well as financial inclusion and equality."

Access the full report and findings here.

Survey Methodology

758 professionals (at managerial level) at financial institutions and banks across France, Germany, Hong Kong, Singapore, the UAE, the UK and the US, were surveyed. These financial institutions represent a gross total of just over USD$28 billion in turnover over the last 12 months, employ approximately 1.9m staff and have approximately 147 million client/customer/member relationships.
As a result of rounding up percentage results, the answers to some questions might not always add up exactly to 100%. Respondents were also able to select more than one answer for some questions.
Comparative analysis was made from results of similar surveys run by Finastra in March 2021 and January 2020 which were also conducted online amongst financial institutions and banks across the same markets.
Research was conducted by Savanta via an online panel (end of August to early September 2022).

For further information please contact:
Sarah Mason
Acting Global Head of PR, Finastra
T +44 (0)20 3100 3613
E [email protected]

About Finastra

Finastra is a global provider of financial software applications and marketplaces, and launched the leading open platform for innovation, FusionFabric.cloud, in 2017. It serves institutions of all sizes, providing award-winning solutions and services across Lending, Payments, Treasury & Capital Markets and Universal Banking (Retail, Digital and Commercial Banking) for banks to support direct banking relationships and grow through indirect channels, such as embedded finance and Banking as a Service. Its pioneering approach and commitment to open finance and collaboration is why it is trusted by ~8,600 institutions, including 90 of the world's top 100 banks. For more information, visit finastra.com.

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SOURCE Finastra