Open Banking, 2021 Update - Thematic Research

Open Banking, 2021 Update - Thematic Research

Summary

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.

Scope

• The UK has the highest number of open banking licenses issued to payment initiation service providers (PISPs), which enable users to withdraw money directly from their accounts; same for account information service providers (AISPs), which let users see all their payment account information from different bank accounts in one place (i.e., aggregation).
• Globally, 70% of 75+ customers do not want third-party access to accounts regardless of what the service benefit may be (insight, credit, etc.), with that number falling to 20% for younger customers.
• Where customers do want open banking, it’s primarily for heightened security, such as more secure online payments through PISPs for online purchases.

• Understand key technology, macroeconomic, and regulatory trends characterizing open banking.
• Access the latest consumer survey data on evolving channel behavior, provider preferences, and product holdings.
• Identify the leading digital transformation efforts based on cost income and customer satisfaction metrics.
• Access firm-level/case study insights on leading players within the open banking theme.

Companies Mentioned

Amazon
Google
Facebook
Apple
Alphabet
Tinkoff Bank
AIB
Capital One
MyBank
Monzo
NatWest/RBS
Danske Bank
DBS
TSB
BBVA
Citibank
mBank
Revolut
Credit Agricole
Barclays
CreditLadder
NovaCredit
Experian
Equifax
TransUnion
Tink
Bud
Plaid
TrueLayer