Open banking adoption among large financial institutions continues to grow; according to the latest Curity report.
The API-driven identity management company surveyed 200 financial institutions and employees who are managing the open banking process.
An increased competitive edge, the ability to offer new products and services and adhering to changing customer demand were all factors identified behind why institutions would seek to adopt open banking.
Fifty-eight per cent cited increased competitiveness, 55 per cent said it allowed them to deliver new products and services and 48 per cent said that it was helping them to meet customer demand.
Despite the positive motivators behind its adoption, the results also show some hesitation, with reasons including compliance and security risk concerns (61 per cent), skills and knowledge shortage (51 per cent) and changing business priorities (45 per cent).
Curity has provided this on-the-fence view amid the exponential interest in open banking, with the global market expected to reach $43.15billion by 2026 according to Allied Market Research.
With customer acceptance growing, the fact that 71 per cent of the organisations surveyed plan to adopt open banking in the next 18 months demonstrates the importance of continuing to build robust technical solutions, meet regulatory requirements and preserve business integrity.
The largest security concern amongst financial enterprises is outdated systems that don’t support data sharing, being cited by 62 per cent of respondents, meaning that they are unable to comply with new data protection regulations emerging around new open banking products and services.
Speaking on how its report offers an insight into understanding open banking and its associated benefits, the company’s CEO Travis Spencer affirms “the impact it will have on financial institutions in the foreseeable future,” and emphasises its understanding on “the regulatory requirements and security necessary [for open banking] to be successful.”
Consumer adoption is crucial to the future of open banking; something that 96 per cent of the respondents agreed on.
In order for open banking to enjoy true, widespread adoption, the report states that organisations must communicate with customers in ‘simple and concise ways’ about data privacy to reassure customers that their data is being handled and managed within the open banking process appropriately.
Likewise, 56 per cent of those surveyed said that understanding the deployment of modern authentication methods is key to consumer adoption.
Larger enterprises have led the way, with 43 per cent of those surveyed having already embraced the technology. In this light, the report remains hopeful that opportunities to encourage smaller organisations to adapt and move forward with innovation will soon emerge.