Open banking?
The Open Banking State of the Market Report 2020 shows the benefits of letting consumers direct how they manage their money — and how you can implement it
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See the highlights
Why open banking?
Open banking’s growth
is exponential
Mitigate emerging
threats while maximizing opportunities
How to create bank ecosystems
01
02
03
04
Why open banking?
It opens up banking functions so that third parties can provide new products and services to banking customers — putting them in control of their finances
Who benefits from open banking? Pretty much everyone
Banks
How much do you really know about
Fintechs and Third Party Providers
Bank customers
Unbanked or Underbanked
Allows banks to recenter themselves in a new digital economy by applying innovative business models.
Enables the delivery and embedding of financial services into a broader supply chain that creates new business opportunities and meaningful customer experiences.
Fosters tailored financial services by diversifying and personalizing the product and service range, so that customers can get the value they want, when and where they want it.
Creates access to financial services, builds credit and generates financial health.
Open banking’s growth is exponential
Open banking has been introduced in some parts of the world through regulatory requirements. In other regions, it’s a market-driven approach. However, banks must allow key functionalities to be exposed via Application Programming Interfaces (APIs)
423
Open banking platforms
2,845
Open banking API products
269%
Annual growth rate
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Mitigate emerging threats while maximizing opportunities
Banks may thwart individual risks, but they sometimes miss the chance to establish a powerful position through their manoeuvring
Regulatory Compliance
Neobank and fintech upstarts
Loss of Small and Medium Enterprise (SME) customers
Tech giants
Regulation mandating open APIs for core functionalities
Bank response
Lost opportunity
Create open APIs that meet regulatory needs.
Create open APIs that meet regulatory needs.
How to create bank ecosystems
To take advantage of open banking’s opportunities, organizations need to be willing to let go of their old business models
Ecosystem recommendations
Clearly define the platform
01
Ensure C-level and Line of Business buy-in on the platform model.
Brainstorm the types of revenue models that will be enabled by working with a platform model.
Calculate forecasts from new revenue streams to demonstrate value.
Decide on the type of fintech partnership models that match your bank’s platform vision.
Clearly define the platform
01
Build supply in proportion to demand
02
Learn more about the benefits of open banking
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At a global scale
262
Open banking platforms
Europe & Scandinavia
1,048
Open banking API products
368%
Annual growth rate
Summary
All European and Scandinavian banks in the top 20 by market cap, as of the end of Q2 2020, have open banking API platforms.
There are a growing number of banks that seek to move beyond the essential and create new business models, such as partnerships with fintech and banking-as-a-service offerings.
Click on to explore
23
Open banking platforms
UK
132
Open banking API products
209%
Annual growth rate
Summary
Top U.K. banks by market capitalization all offer open banking API platforms.
Barclays and RBS are both opening APIs that demonstrate they understand the needs of fintech as business partners. For example, both offer utility APIs that let third parties receive notifications on their API integrations, and receive performance metrics via an API.
25
Open banking platforms
North America
121
Open banking API products
317%
Annual growth rate
Summary
Eight of the top 12 U.S. banks by market cap (67%) have an open banking platform. Unlike other regions, the majority of U.S. banks with open banking API products are commercial or investment banks rather than retail banks.
There are a growing number of banks that are seeking to move beyond the essentials and create new business models, such as partnerships with fintech and banking-as-a-service offerings.
11
Open banking platforms
Latin America
54
Open banking API products
225%
Annual growth rate
Summary
Both Brazil and Mexico have strong open banking regulatory drafts.
Brazil’s focus extends more to open finance, and tight timelines have been set to require banks to expose product catalogues via APIs.
In Mexico, some banks have already implemented API strategies, mostly to improve customer engagement. This year, clearing houses and credit bureaus must submit their API plans to the Central Bank.
77
Open banking platforms
Asia Pacific
1,350
Open banking API products
182%
Annual growth rate
Summary
Seventeen out of the top 20 Asian banks by market cap (85%) have open banking platforms.
Banks in Asia Pacific average 17 API products per bank, with some banks having a small number of open APIs and a handful of banks publishing 100 or more.
31
Open banking platforms
Middle East & Africa
129
Open banking API products
800%
Annual growth rate
Summary
Numbers of API banking platform growth are skewed in 2020 for Africa, as the banking group Standard Chartered created an API developer portal that exposes four or five APIs in each of countries where it has banks.
Our open banking data model treats each country as an independent market, given that each is governed by their own open banking regulations. But when a large banking group takes a significant step forward with all of their subsidiaries, as Standard Chartered has done, this can look like a massive growth amongst all market players in the region.
Accounts and payments dominate the availability of API products, although Standard Chartered also makes available trading information and account profile management services via API, and Utilities APIs that help customers manage their accounts and notifications.
Creating a wider set of open APIs that generate new value opportunities.
Using open API infrastructure to build new partnerships with innovative market entrants.
Neobank and fintech upstarts
Bank response
Lost opportunity
Some updated user experiences in their apps modeled on what they have learnt from the upstarts.
Acquisitions to take over competition.
Investing in creating their own neobanks still built on the traditional bank business model.
Managing acquisitions as line businesses within the bank group rather than a new platform partners.
Not leveraging the new acquisition’s relationships to build out embedded finance and platform opportunities.
Loss of Small and Medium Enterprise (SME) customers
Bank response
Lost opportunity
Allowed attrition.
Some moves to widen online banking services for businesses, but no ecosystem approach.
Unbalanced approach to supporting government COVID-19 support loans.
Supporting SMEs as channels to deliver their financial services to end customers.
Supporting SMEs to access riskier alternative lending services through partnerships.
Creating platforms through which they can study what services and products SMEs need in a digital economy.
Tech giants
Bank response
Lost opportunity
Ignore them as a threat.
Partner with them on vanity projects, such as branded credit cards.
Use their cloud technologies for neobank offshoots.
Creating a platform model in which they build resilient, diverse ecosystems that can withstand industry shocks in an age of transformation.
The threats:
Take a staged approach
03
Accelerate success with the right talent
04
Shift the mindset and be agile
05
Value word of mouth
06
Recognize that the scalability of the technology
is key
07
Collaborate to increase the gravity of the platform
08
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Build supply in proportion to demand
Identify key API products with high transaction volume potential or that extend the value of regulatory APIs to new provider partners.
Balance an understanding of your end customers with what partner providers will need to support those customers.
Work with business and enterprise customers to understand which APIs would add value to their ERP processes.
02
Take a staged approach
Identify examples for key use cases and identify which APIs will be necessary for most examples.
Build these first and work with select external customers to test and ensure value is being generated through these APIs.
Measure onboarding and retention.
03
Accelerate success with the right talent
Build product manager teams and API expertise.
Create internal resources, such as governance structures and style guides, to assist teams to work quickly and use internal standards in a cohesive manner.
Collaborate with talent that understands the platform economy.
04
Shift the mindset and be agile
Be prepared to make mistakes.
Create small projects and test regularly rather than build whole new digital banks to start.
Aim to identify what your customers and partners need as a service they can integrate and build, and test that.
Measure the value being generated from your APIs as you go.
05
Value word of mouth
Ensure product managers speak with consumers and understand whether the APIs are perceived as user-friendly.
Build metrics systems that measure time to value for new products.
06
Recognize that the scalability of the technology is key
Use Architectural Decision Records to keep track of scalability decisions.
Take an API-first approach to ensure a modular, future-proofed approach to architecture.
07
Collaborate to increase the gravity of the platform
Be prepared to help promote partners and build their success.
Note that the more your customers use their products, the more revenue you generate through the new business models.
Recognize that you cannot be all things to your customer, and instead work to ensure you have a central hub built out from your banking platform.
08
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Open banking platforms
Open banking API products
Annual growth rate
Summary
Open banking platforms
Open banking API products
Annual growth rate
Open banking platforms
Open banking API products
Annual growth rate
Summary
Summary
Open banking platforms
Open banking API products
Annual growth rate
Open banking platforms
Open banking API products
Annual growth rate
Summary
Summary
Open banking platforms
Open banking API products
Annual growth rate