Connect with us
Finance Digest is a leading online platform for finance and business news, providing insights on banking, finance, technology, investing,trading, insurance, fintech, and more. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.

FINANCE

Lack of partnerships holding back open banking innovation, report finds

Published On :

Financial services leaders say finding the right partners is a major challenge

As the first anniversary of open banking and PSD2 arrives, a report from law firm TLT finds that partnerships will be key to winning the race to launch successful open banking products.

However, the report also finds that selecting the right partners is the second biggest issue faced by financial services companies investing in open banking, affecting more than a third (34%).

The study reveals that many significant open banking developments to date have been managed in-house, rather than through collaboration and partnerships, as banks and other market participants work towards regulatory compliance and proof of concepts. Looking forward, it finds there will be a significant upswing in partnerships and collaborative projects as the market matures.

The report – Opportunity Knocks – is based on the views of 130 senior decision makers across the UK financial services sector including banks, building societies, challengers, fintechs and payment service companies.

Partners of choice

Though in-house development has been popular so far, TLT’s report reveals how many different types of open banking collaborations are already occurring. Banks are partnering with external consultancies and technology providers (32%), outsourcing services (28%) and buying in technology via service agreements and white-labelling (16%).

Non-banks are also partnering with external consultancies (39%), buying in technology (13%) and outsourcing services (10%).

Just 7% of banks and 4% of non-banks have so far obtained technology by corporate acquisition, but the majority (67%) of companies believe the market will become more consolidated, as larger companies look to buy smaller ones to remain competitive and keep up with the pace of change.

The challenge to identify the right partners is set against a backdrop of increasing competition and mounting pressure to quickly identify the right open banking strategy and move on it. A significant 84% of companies now have new open banking products and services due to launch or in development, many of which will come to market during 2019.

David Gardner, partner at TLT, says:

Collaboration is critical as the open banking market matures, because the core proposition favours input from multiple parties. Established players offer extensive customer reach, resources and experience, while new providers bring exciting new ideas, technology and techniques to the table, including data-driven insights into customer behaviour. When they work together, different players can maximise their respective strengths, creating new products that are more than the sum of their parts.

Much of the focus in 2018 was on compliance projects – particularly for the banks – and proof of concepts, but we are now moving into a new year with far more collaboration and customer-facing innovation on the horizon.

Choosing the right legal and commercial model for partnerships and clearly documenting the parties’ responsibilities – particularly in key areas such as IP rights, data management and regulatory permissions – is vital to establishing a successful relationship, which allows the parties to realise their commercial objectives while managing legal and reputational risks.”

Continue Reading

Recent Posts