There is no consensus on open banking in Europe

 

An increasing number of bankers around Europe are embracing the opportunities enabled by open banking. At least that’s what the results from our survey of financial executives across 17 European countries indicate. But while the general trend shows the industry is opening up to the idea of opening up – it is clear that not every country is on the same page.

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The demand for better, more personalised digital experiences in the financial industry is growing. Customers worldwide are ready for a major overhaul in how they access and consume financial services. The ‘open banking future’ is undeniable, and regulations like the EU’s PSD2 are just a rubber stamp acknowledging (and preparing the industry for) this shift.

Although the entire financial industry across Europe is heading towards a new era, not everyone feels equally as prepared for – or enthusiastic about – what these changes could mean for their business. Here is what the country-level data from our open banking survey reveals about their differing stances on open banking.

Opposing views

The nations that feel most optimistic towards open banking are Finland and Sweden. Austria, Poland and the Baltic countries surveyed (Estonia, Latvia and Lithuania) tied for third place among those who are feeling good about what the new era of banking might bring.

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The most negative responses come from Portugal and Denmark, with Germany and Benelux (represented by Belgium and the Netherlands) following close behind.

Perhaps not surprisingly, respondents that are not as positive about open banking are more likely to consider regulations like PSD2 a threat to their business. This feeling is strongest in Benelux, the United Kingdom and Germany – places in which there has been significant resistance and political debate about open banking regulations.

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On the other hand, Nordic countries like Denmark, Norway, Sweden and Finland feel the least threatened by the legislative changes. Denmark also came on top when executives were asked whether they believe that open banking regulations are encouraging innovation – with a 60% result, compared to the UK’s lowest at 19%.

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United in opportunities and challenges

While not everyone has the same willingness to embrace the changing landscape, most countries seem to be in agreement when it comes to the opportunities and challenges ahead.

When asked what they see as the biggest opportunities brought about by open banking, respondents from almost every country point to “develop better digital services” as the most important one. The only exceptions were Finland, the UK, Spain and the Benelux nations, who instead rank “increase customer personalisation” as the biggest opportunity of open banking.

As for the challenges, modernising legacy IT environments is a major one across the board – especially in Spain, the United Kingdom and Italy. A shortage of talent to drive digital innovation was also a higher-than-average concern for Italy, Spain and Benelux.

Willing partners

Looking to the future, most of the surveyed financial executives are planning to partner up with fintechs to access the talent and technology they need. In fact, 74% of the respondents across Europe reported they are already in a partnership or hoping to form one in the next 12 months.

Some countries are ahead and have already taken important steps in that direction. Austria is leading the front, alongside the UK and Finland. The lowest number of financial institutions with a partnership were found in Benelux, Germany and the Baltics.

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Ready for what’s next

With the final PSD2 deadline just months away, there is a light at the end of the tunnel for Europe’s bankers. And collectively 91% feel relatively confident that they can comply with PSD2 regulations in time.

When asked if they feel prepared for what might be a turbulent next five years, France is by far the most confident, followed by the UK, Italy and Spain. Given its prominent economy, it’s surprising to see Germany almost at the bottom of the list.

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Jumping on board

It’s natural to expect some differences in the results, as each market has its unique challenges to deal with. The level of digital maturity in the financial industry and tech adoption by the different populations across Europe is far from uniform. But more than that, the continent seems to be equally fragmented in its thinking.

Despite their differences, the reported challenges and most sought-out opportunities are quite similar across nations. The largest divide seems to be in the readiness to embrace the changes and jump on the open banking freight train that is leading to a still-unknown, but definitely promising destination.

To read the full report with all of the survey data and related insights on how executives see the challenges, opportunities and threats of open banking, download your copy.

 
 

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