The gospel of open banking diffuses more widely
Open banking promises a seamless connection into the wider eco-system and access to innovative services, benefits increasingly recognized on a broader scale
Open banking has opportunities beyond just retail banking, according to a recent study by Accenture, which discovered that an ecosystem that allows the free flow of information between systems through APIs (application programming interface) is key to improving commercial and corporate banking services.
In fact, of the banking respondents that participated in Accenture's survey, 93% of banks in the Asia-Pacific region saw huge opportunities created through open banking for SME and corporate banking customers. As a result, 90% of large banks in Asia Pacific said they planned to provide opening banking services for their clients, with half of the banks in the region expecting open banking to bolster their revenues by as much as 10%.
On the client-side, the Accenture study found that 75% of large corporates and 63% of SMEs in Asia-Pacific were interested in joining an open banking platform with their banks.
"Much of the focus so far when discussing open banking has been on the retail market, but value-creation can be just as big, if not bigger, in the commercial banking side," says Fergus Gordon, managing director at Accenture and banking practice lead for Asia Pacific. "Demand from businesses is clearly there for innovative services and banks have a lot to gain by tapping into those opportunities."
Multiple parties see significant universal benefit of open banking with SMEs (small medium-sized enterprises), believing it would help them gain access to convenient and innovative banking services. Moreover, large corporates see the most benefit in reducing complexity and implementation cost for bank connectivity.
Financial regulators in the region are quite optimistic about the impact of open banking. For example, earlier this year, the Hong Kong Monetary Authority (HKMA) published open API framework for banks looking to deploy these types of seamless solutions in the overall industry.
Opportunity certainly exists to increase banking revenues via open banking, the development could also be a game changer for institutions looking to onboard flows from "new economy" companies such as the likes of Alibaba or Grab, as discussed by The Asset recently.
6 Dec 2018