BankingOpen BankingOpen Banking usage accelerating globally, new report details

Open Banking usage accelerating globally, new report details

Open Banking has been expanding around the world and the UK, Australia, and the EU are at the forefront, with other countries following behind.

According to the Open Banking Report 2019, the United Kingdom, Australia, and European Union (EU) are the pioneers in Open Banking based on factors like the spread of Open APIs, regulatory requirements, standardization initiatives, and the presence of a central TPP regulatory body. These four different factors rank countries in five different types: Pioneers, Followers, Converts, Risers and Beginners in the research conducted by LearnBonds.

Pioneers, according to the research, are countries with regulated Open Banking environments.

The report also highlights that United Kingdom is leading the way in Open Banking which explains why so many UK-based challenger banks and tech startups like Revolut, Monzo, Starling, Curve are thriving in the UK’s banking sector.

Follower countries that are working on regulations include Japan, Hong Kong, South Korea, and Brazil. Meanwhile, Mexico, Singapore, Malaysia and Canada are described as converts – countries that are unregulated but who have open APIs and standards. Some of the risers, countries that are unregulated but with evolving Open APIs and standards, are Switzerland, India, and China. Beginners, countries that are small or which have no progress on regulation or standards include the United States, New Zealand, and Chile, among others.

Open Banking going places

The report points out that more than 87% of countries currently have some form of Open APIs in place, reaching over 10,000 institutions around the world. This shows that Open Banking is becoming a robust phenomenon that is being replicated across borders.

As per the report, Open Banking is expanding in many different regions. To understand that, there are four key drivers pushing banks to open themselves to third parties.

These four factors include changing customer behavior, increasing networking among banks, the rise of ecosystems, and the emergence of new supporting API technologies.

There are some markets, including the EU, in which regulators provide the necessary conditions to accelerate this migration. However, in other regions without clear regulations, market participants have to follow their voluntary standards.

In countries with a precise regulation, banks tend to offer Open APIs. Seven major markets are currently working on this segment of the industry.

A global trend

Open Banking is a global trend that banks and institutions are currently following in order to interconnect digital services. At the same time, Open Banking represents next-generation business models in an open data economy.

Open Banking reflects how the financial ecosystem in the country is growing and moving forward.

The United States, instead, shows that they are lagging behind as an Open Banking beginner. The country has no actively ongoing process in the sector, and it could eventually make it more difficult for companies to compete around the world.

Oliver Dlugosch, the CEO and co-founder of the startup Ndgit in Munich explained that the ultimate goal for Open Banking has to be the formation of ecosystems that offer services to different players in the market.

At the same time, with Open APIs, banks can be linked to fintech firms using related services from a single dashboard using specific applications on a smartphone.

The full story on the report can be read here.

In an interview with The Global Treasurer, Anders Olofsson, Head of Payments at Finastra felt: “I think treasurers are already procuring or consuming services that is based on Open Banking. The ecosystem of treasurers, ERP vendors, the TMS systems, the banks and the banking technology vendors, as an industry, are moving and we’re not always moving at the same pace. And that can be a problem – it’s important that a treasurer understands how they actually can support the business and the changing business model with technology that makes a tangible difference.”

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