Traditional banking is evolving to open banking for growth recognition to increase external parties’ relationships, produce new product offerings and business models, and extend customer demographics. Below, are the top four Open Banking and Platform trends to look out for in 2022 from our CFTE experts:
1. Open Banking Trend Paved a New Path for SME and MNC from Huy Nguyen Trieu
Huy Nguyen Trieu obtained a Msc in Technology and Policy. He is the Co-Founder of CFTE, CEO of the Disruptive Groupm Singapore Fintech Festival Ambassador, Venture Partner of Alma Mundi Ventures and Advisory Board in the Digital Tech Fund of the Expon Capital.
Instead of having companies vertically integrated, we have companies upscale and connect people. For example, Uber, an app that connects customers with drivers as good UX. 10 years ago, the top financial institutions were mostly banks. Now there are 5 banks and 5 leverage platforms, for instance: Visa, Mastercard, Ant Group, Paypal, and Tencent that have been conquering the finance world. The race is on for the organization to expand, for instance, Visa acquired Plaid on Jan 11 2020 for $5B to advance network strategy due to the open banking infrastructure of plaid. However, after a year, Visa abandoned the planned acquisition and bought Tink, Swedish fintech for $2.2B in June 2021.
Another is in Dec 2020, Intuit bought Credit Karma who follows Google Model but in Finance. The rise of embedded invisible finance into our daily activities such as Booking.com creates a fintech unit with 400 people to integrate payments and buyers. Companies are going to leverage open banking as it is like the iPhone momentum to facilitate companies in building up new products. For instance, after Whatsapp was acquired by Facebook, founders have been building companies on it.
2. How Open Banking Trend means Open Finance from Paolo Sironi
Paolo Sironi is the Global Research Leader of Banking and Financial Markets at IBM Consulting – Institute for Business Value, Innovation Advisory Board Member at NPL Markets and Net Insurance and a Co-host Fintech Podcaster at Breaking Banks Europe.
Companies need to discuss the business models before applying the technologies for higher business values. European countries are focusing on user-centric interfaces to build banking as a platform for strong trusted relationship communication between them to lead to conscious banking. Financial intermediaries want to have the market power to get superior information for more demand core banking as a service to become contextual banking. In 2010, the global banks represented 95% of market capitalization, but now in 2021, it is less than 75%. Now finance companies want to be super apps, win the platform economy shifting from output to outcome to take the lead in fintech unicorns. It is the opportunity to laminate frictions that makes banking contextualized and it is the need to demonstrate values for clients that makes banking conscious.
Learn the fundamentals of Open Banking and Platforms in under 40 mins!
3. Startups focusing on Open Banking trend to offer comprehensive solutions from Stephan Murer
Stephan Murer holds an MBA from University of St.Gallen and a PhD of Computer Science from ETH Zürich. He is currently a Non-Executive director of Yapeal, Board Director Member of Gravity Global AG, Owner of Murer Consulting, Senior Advisor of ti&m and LzLabs GmbH, Strategic Advisor of FTV Capital and Senior Lecturer of CFTE.
Europe consists of numerous growing open banking, doubled from January to December 2021. Focused on customer services, API banking offers new opportunities to corporate banking such as automated payments, direct access from the ERP to simplify credit management for a long time. New standardization makes mobile banking accessible for SMEs. Banks follow innovation to develop new services on top of existing features and to offer comprehensive services like API to attract stakeholders and individuals.
Open banking forces technology innovation but 3.0% of banks are not using public clouds due to limited understanding, 40% are planning to use and 57% are using public cloud. Predictions include that Open Banking will generate the most value in commercial banking, new players will be more focused than traditional banks to offer competitive solutions through the ecosystem and receive venture capital much easier. Survivors from the past will have invested in renewing the core and not just the interface to remain competitive. In many areas, banking will become invisible behind other business transactions with an impact on the banking brands.
4. Open Banking trends are Booming Around the World from Carlos Figueredo
Latin America has taken so many initiatives of the Open Banking trend, new investments for startups have taken the opportunity of sharing data for giving services to customers. Brazil is in the fourth and final phase to move to an open finance economy. Mexico was the first open finance in the world and is pushing 4,000 financial institutions to comply with the initiatives and regulations. In the UK, the community is going strong on moving towards open finance as they realize the opportunity of cross-sector data, better consumer offerings, direct consumer payments, and dominance of cards reduced. In the USA, President Biden has encouraged the CFPB to issue a rule allowing customers to download their banking data and take it with them. There might be a challenge as there are only 4 different regulators in the US but it is a good uptake by consumers and thus protecting consumer data. Overall, open banking is the ability to cooperate with fintech to create new services, vendor build, and direct consumer payments.
This pandemic may have forced financial institutions to allocate their budget away from physical in-person infrastructure but this accelerated towards new technology innovations by using the benefit of APIs and open comprehensive ecosystem to become clearer and efficient for 2022.