Nearly half (43%) of all large financial institutions have already adopted Open Banking according to a new report from API-driven identity management company Curity.
The ‘Facilitating the Future of Open Finance’ report surveyed 200 global financial institutions and employees who are managing the Open Banking process. The report reveals that the top three motivators for adopting Open Banking are to increase competitiveness (58%), to deliver new products and services (55%), and to meet customer demand (48%).
Despite these significant drivers for the Open Banking initiative, the results also show some hesitation regarding its adoption. Reasons for hesitation include compliance and security risk concerns (61%), a skills and knowledge shortage (51%) and changing business priorities (45%).
Curity’s findings come amid the exponential interest in Open Banking, with the global Open Banking market expected to reach $43.15 billion by 2026 according to the report published by Allied Market Research.
With customer acceptance growing, the fact that nearly three-quarters of organizations surveyed (71%) plan to adopt Open Banking in the next 18 months demonstrates the importance of continuing to build robust technical solutions, meet regulatory requirements and preserve business integrity.
The largest security concern amongst financial enterprises is outdated systems that don’t support data sharing (62%), meaning they are unable to comply with new data protection regulations that are imperative to new Open Banking products and services.
Travis Spencer, CEO at Curity, said: Our new report offers a level of insight that is crucial in understanding Open Banking and the impact it will have on financial institutions in the foreseeable future. 70% of financial institutions surveyed are planning to adopt Open Banking relatively soon so they must understand the regulatory requirements and security necessary to be successful.”
Nearly all financial institutions (96%) believe consumer adoption is crucial to the future of Open Banking. Organizations must communicate with customers in simple and concise ways about data privacy without relying on jargon to overcomplicate matters, ensuring customers feel confident in the way their data is handled and managed within the Open Banking process. Understanding the deployment of modern authentication methods is key to consumer adoption, according to over half of those surveyed (56%).
The Future of Open Banking is clear for financial institutions of all sizes if they are willing to embrace it. Larger enterprises have led the way with nearly half of those surveyed (43%) already adopting the technology but there are still opportunities to encourage smaller organizations to adapt and move forward with innovation for years to come.
