According to research published by open banking platform Tink, there has been an increase in spending among Europe’s financial executives, with 47% saying their open banking budgets have risen in 2021.
This follows a challenging year in 2020, where financial institutions battled budget restrictions against the race to serve more customers digitally.
Tink’s research, based on 308 senior decision makers at financial institutions in 12 European countries, showed that the Covid-19 pandemic impacted budgets for 93% of European financial institutions. At the beginning of 2020 executives were expected to spend €50-100m on average to achieve their open banking objectives, instead the average spend landed at €32m.
However, Tink said that budgets have bounced back in 2021, with investments in payment initiation topping the priority list for over two thirds (72%) of financial executives.
A breakdown of the data revealed that wealth management firms are experiencing the strongest increase in budgets (58%). This is followed by wholesale banks (55%), credit providers (51%) and challenger banks (50%).
Tink said that payment related services top spending priorities for 2021. Specifically, 72% of financial institutions see payment initiation services as the most important use case to their business. This suggests increasing awareness of the need to develop payment solutions that provide more streamlined services for customers, Tink said.
Improving the customer experience and onboarding process was the second most important area of enhanced banking use cases this year – with account verification, identity verification and asset verification equally weighted amongst 71% of executives.
Daniel Kjellén, co-founder and CEO of Tink, said, “As open banking moves towards mainstream adoption, we’re not surprised to see investments in data-driven initiatives increasing.
“Financial executives have set their sights on a broad range of open banking use cases, from payments to credit assessments to carbon tracking, unleashing a new wave of value creation that both consumers and businesses will benefit from.”
Looking ahead to 2022, Kjellén said these finding suggest that financial institutions should move fast to keep a competitive edge, as “open banking is tearing down barriers and allowing new players to enter the market.”
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