SINGAPORE (Dec 4): Providing open banking services is on the cards for the majority of large banks in Asia Pacific, according to a new global research report by Accenture Research.
Open banking is a concept based on the principles of using open application program interfaces (APIs) such that third party developers can, using open source technology, build applications and services around financial institutions.
The process enables financial services commercial customers to share their financial data securely with banks and third parties, thus making it possible to easily transfer funds, compare products and manage accounts using APIs.
Based on the survey of 100 global banks, 300 small- and medium-sized businesses and 330 large corporations across 11 countries including Singapore, a significant proportion of respondents are expecting open banking to help them achieve double-digit revenue growth.
In particular, the vast majority (80%) of large corporations in Asia Pacific are have either invested in open banking initiatives for their commercial customers, or plan to do so next year.
While this still falls below the global average of 87%, Accenture notes that Asia Pacific banks tend to plan larger investments than their global counterparts to build out their open banking commercial platforms, offer third-party services and explore open banking use cases.
39% of Asia Pacific banks said they were planning investments of over US$20 million ($27.3 million), compared to just 21% and 14% in North America and Europe, respectively, looking to spend that amount.
Among the commercial bank customers surveyed in Singapore, the report found that respondents most often identified “gaining access to convenient and innovative services” as the most significant benefit of using an open banking system platform, as cited by 30% of executives at large corporations and SMEs.
They also expect open banking to reduce complexity and implementation costs for bank connectivity (25%), as well as enable them to reach more clients and partners (23%).
In terms of business areas that could see the most improvement from partnership with their bank through open banking, SME respondents viewed cash management , integration with accounting package and finance as the top areas – while large corporations said treasury & liquidity management and finance.
“The opportunities for banks in Singapore are clear and they should leverage the strong trust among corporate clients to continue innovating and offer cutting-edge open banking solutions that are relevant and important to SMEs and large businesses alike,” says Divyesh Vithlani, a managing director at Accenture and ASEAN financial services lead.
“Banks here have recognised early on the benefits of offering open APIs and other Open Banking solutions, but they shouldn’t rest on their laurels because fintechs and other digital rivals are also actively looking for ways to expand into the market,” he adds.