Open Banking, 2021 Update - Thematic Research
Open banking is a clear global trend, but paths and progress vary markedly depending on whether openness is delivered top-down, bottom-up, or with some combination of the two. It’s not just the style of intervention that differs, but the scope also, with substantial variations evident regarding which entities and products they apply to, what information is accessible by third parties - such as transactional information, product data, or aggregated statistics - and whether operations, such as account-to-account payments or contracting new products, are included.
However, wherever open banking does happen, it presents the same opportunity: multiple routes to market. Leading banks will operate in multiple modes concurrently: direct-to-consumer, with open banking-enhanced onboarding, credit assessment, etc.; as-a-service, by isolating pieces of otherwise fixed-cost infrastructure and distributing business-to-business; marketplace seller, whereby providers distribute their products through third partners; and platform owner, the inverse of the former, whereby incumbents will offer best-of-breed products across their entire ecosystem - and not just with financial products but a hub to support broader life goals.
This report discusses the disruptive potential of open banking in consumer financial services as well as related initiatives in other industries leading toward ‘open data.’ It covers the key gridlines of change - in terms of key technology, macroeconomic, and regulatory trends - then looks at how paths and progress toward open banking vary across countries. Analysis includes a timeline of how the theme has developed, key M&A activity, and firm-level analysis of which providers, both incumbents and new entrants, are best positioned to succeed as the theme evolves.
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