The Banking Executive Magazine - Issue 150, June 2021

Open Banking ADOPTION OF OPEN BANKING More and more countries, including Australia, Brazil and the United Arab Emirates, are now progressing with their Open Banking regulations. However, there is currently no global API standard, which leads to com- plexities when processing transac- tions between countries. There are two main drivers for the adoption of open banking: • The pandemic driver: The COVID- 19 pandemic has accelerated the ongoing digitisation of all indus- tries. Consumers are now demand- ing accessibility, speed and convenience in payments. Banks need to meet the increasing de- mand for online and mobile solu- tions, and open banking can be used as a vehicle for this. • The technology driver: Technology companies are now beginning to work with banks more openly, sim- plifying and providing greater transparency in the financial-ser- vices industry, and collaborative ecosystems can help speed up the digital transformation. In assessing open banking adoption, banks can be grouped into three clusters: • Banks with Minimum Compliance: These are banks that do not believe in a tangible business impact from open banking regulations. • Banks with Defence Mode On: These are banks that think that open banking negative impact is marginal and can be offset by stan- dard defensive banking tools such as retention activities, adjusted pricing, and increased pressure on own sales units. • Open Banks: These are banks ex- ploring the possibilities of an open framework in which they are will- ing to share data and authorize third parties to access bank ac- counts information. ISSUE 150 JUNE 2021 the BANKING EXECUTIVE 13 Figure 4. Challenges facing Open Banking Adoption Source: EU Consultancy on Open banking and INNOPAY analysis Crosslinx Framework Six common challenges for banks when embedding Open Banking in their daily operations