European open banking report reveals huge growth potential for the sector

A report by open banking firm Yolt Technology Services (YTS) has found that up to 40% of banking customers across the continent are not currently using an open banking solution.

The report – titled the European Open Banking Outlook (EOBO) – was conducted by YTS in partnership with the Centre for Economics and Business Research and experts from around Europe. The EOBO sought to track the progress of open banking across Spain, the UK, Italy, the Netherlands, France and Germany and surveyed opinion from more than 1,000 banking customers in each of these countries.

According to YTS, the survey used four pillars to harvest opinion, measuring openness, availability, engagement and impact to understand the appeal and sentiment surrounding open banking. The study also examined the differing practical, operational and cultural circumstances present in each market as key contextual factors for assessing the development of open banking.

The report found that over half of all respondents in the UK and Germany were not using financial products or services facilitated by open banking, while Spain was identified as having the smallest percentage of banking customer respondents not using open banking at 23.5%. However, the latter market attained the highest score for the engagement pillar (86 out of 100).

Up to 33% of banking customers across the six markets said they were supportive of using open banking products are services in the future, with a further 30% demanding to see more financial products and services that make use of open banking become more mainstream.

The majority of respondents – 67% – said the ability to view transactions or savings across multiple accounts was ‘very useful’. However, other benefits of open banking such as setting saving objectives, sharing information for credit access and including the ability to group transactions are less well known to banking customers.

The UK was rated as having the highest overall score for openness due to its ‘supportive regulatory environment’ that seeks to stimulate innovation in banks and third-party providers. The study discovered that only the UK have policymakers and regulators that have extended the legal and regulatory foundation for open banking and created a cooperation-based framework – this includes the creation of the Open Banking Implementation Entity, which seeks to encourage collaboration across the banking industry to promote open banking.

The UK also received a high rating on availability, due to its dominance of third-party provider registrations – there are currently at least 274 active TPPs registered in the six surveyed countries, with 173 of them registered in the UK.

YTS CEO Nicolas Weng Kan said, “Our findings reveal the need and growing appetite for open banking, but the variation in levels of understanding and adoption show that much more work needs to be done to help customers enjoy the full benefits of open banking-facilitated products and services.

“Recent months have showed the power and impact of digitalised services, and in the wider financial services sector these have largely emerged due to consumer demand. Our Impact pillar shows that the demand is also there for open banking, and it’s now up to the financial services industry to meet that demand.

“There will be huge commercial rewards for banks and technology providers able to play an active role in this process – while those that fail to do so risk losing market share, profits and, eventually, any relevance to the needs of the growing numbers of bank customers who are embracing open banking.”

Recent research by Zopa found 4 in 10 UK consumers would use open banking to apply for credit if it boosted the chance of getting an offer or gave them access to better rates than banks.

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