New research published by Open Banking platform Tink has revealed that European financial institutions still have significant concerns about Open Banking impact, according to thepaypers.com.
Two fifths (39%) see Open Banking regulation as the biggest current threat to their business model and 56% fear that consumer loyalty towards banks will be reduced as a result of Open Banking.
Nevertheless, the report – based on a survey of 269 senior decision makers in financial institutions across Europe – suggests that financial institutions are also waking up to the importance of innovating to remain competitive in the new world order. Over two thirds (68%) recognise that financial institutions must now enhance their services to attract and retain customers, while 61% believe that financial institutions who only do the minimum required to comply with Open Banking regulation (PSD2) will lose out to more innovative competitors.
As a result, despite short-term concerns, 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.
Barriers persist as Open Banking deadline approaches
With the final deadline to comply with the PSD2 Regulatory Technical Standard (RTS) fast approaching in September 2019, 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, eg modernising IT systems (88%)
. Overcoming resistance from internal stakeholders (87%)
. Commercialising Open Banking opportunities (87%).
Seizing the opportunity to innovate through partnership
For the majority, partnerships are now seen as an important route to overcoming the challenges associated with Open Banking. 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.