Senior banking executives agree on the need to react fast to market changes and customer expectations

Oracle Financial Services has today released its latest report into the challenges presented by open banking and how senior executives at major banks are responding.

For Open Banking: The Race to Deliver Banking-as-a-Service, MIT Technology Review Insights interviewed senior executives directly involved with open banking from some of the world’s leading financial institutions including Citi, HSBC, ANZ, Standard Chartered Bank, 11:FS, N26 Group, BBVA and Sumitomo Mitsui Financial Group.

Key insights include:

• Adoption is still in the early stages but those that move quickly stand to win: While many banks are still developing strategies, launching APIs and monitoring competitor activity, the overarching sentiment from the panel indicates that those banks or fintechs that are able to move quickly and develop a long-term open banking strategy stand to win market share.

HSBC’s head of innovation and strategic investment Frank Tong said: “Not reacting rapidly enough to open banking could result in another party, either a competitor bank or fintech, innovating more quickly and eroding trust or relationships.”

• Regulators are driving innovation, rather than responding to it: Interviewees also noted that regulators are brokering open banking innovation through collaboration with banks to develop the frameworks needed to move forward – not only in progressive markets like the U.K. and Singapore but around the world.

Claire Beatty, Editor for MIT Technology Review Insights and one of the authors of the report said: “While regulation usually plays a ‘catch-up’ role when it comes to technology, our interviews revealed a fascinating trend of regulators setting the pace for banking innovation. We’re seeing a strong collaboration between governments, regulators, incumbent players and fintechs to ensure the right framework is developed to give customers greater control over their data and provide a more seamless financial services user experience.”

• Competition and consumer demand continue to accelerate banking digitization: Fintechs’ ability to quickly deploy services and consumers’ ever heightening expectations for speed and convenience have forced traditional banks to embrace open banking and build smarter, more relevant digital experiences at every point of the customer lifecycle.

Sonny Singh, SVP and general manager of Oracle Financial Services said: “Open banking is no longer an option, but an inevitable reality. Banks that tap into an expanding ecosystem of potential digital partners, embrace APIs and leverage cloud-ready solutions, will get ahead in the race to efficiently deliver a broad range of financial products and services to their customers.”

The process of designing customized APIs and exposing them for consumption can take between 12 to 24 months, depending on the complexity of the banks’ IT landscape. With a cloud-ready platform like Oracle Banking APIs, banks can tap into a prebuilt repository of more than 1,500 Representational State Transfer(REST) APIs.