Open Banking viewed as big opportunity for UK FinTechs, with many looking outside financial services to collaborate with tech firms
22 March 2018
• 94% of UK FinTechs see Open Banking as a major area of opportunity
• 59% are now reconsidering who they collaborate with: 74% believe new competitors such as tech companies will become more important
• Almost a third (29%) of FinTechs are already fully prepared and ready to share data for customers who consent
UK FinTechs see Open Banking as a major area of opportunity for 2018, according to the EY UK FinTech Open Banking Snapshot, launched at today’s HMT FinTech conference. The majority (81%) are actively getting ready, with 29% saying they are already fully prepared.
FinTechs look to tech firms to collaborate
In a survey of 31 UK-based FinTechs, which have collectively raised approximately £500m in equity investment and employ 2,500 staff, it emerged that 59% of participants see Open Banking as an opportunity to review their collaboration strategies. Almost three-quarters (74%) of participants believe that new competitors such as tech firms will become increasingly important over time.
Hamish Thomas, EY’s Open Banking & Payments Leader, comments: “It’s great that FinTechs are embracing Open Banking and recognising the world of opportunities it will open up. Such a significant initiative naturally means that many FinTechs are re-looking at their strategies and analysing which types of companies could be potential partners in the future. However, whether it’ll be other emerging FinTechs, more established banks, technology companies, or a combination of these, it will be fascinating to see what new products and / or services are launched over the coming months and years, which will transform our daily financial lives.”
FinTechs have the talent to resource Open Banking teams
FinTechs are actively resourcing teams to ensure they are in a position to take full advantage. Almost a third of survey participants (30%) claimed to have teams of 10-plus working on Open Banking projects, which is significant for firms with a workforce of 50-250 employees. Resourcing talent was only the fourth biggest challenge according to participants, who cited customer adoption, identifying which propositions to invest in, and actually developing the products as more challenging.
Tom Bull, Director in EY’s FinTech practice, adds “The talent within FinTechs is there – recruiting staff to roll out Open Banking is not seen as a huge concern, which speaks volumes for the innovation and skill that some of the UK’s top FinTech firms already have within their four walls.”
Educating consumers will be top challenge
Despite the clear opportunities, FinTechs are realistic about the potential challenges, with the ability to achieve customer adoption ranked as the biggest obstacle. In terms of what could be done to help ensure Open Banking is a success, customer education was identified as the most important area, followed by agreed industry standards outside the nine banks identified by the CMA.
Tom Bull concludes: “As with all new technological developments, it will take time to bed down and for people to get comfortable with the concept of sharing their financial details. Over time, however, as education improves, it is hoped that increased transparency will be seen as a positive move, helping people make more informed financial decisions. It should also serve to further increase innovation and competitiveness across the sector, which can only be a good thing for consumers.”
Enhancing and building new products and services
FinTechs are focused on both enhancing their current products and services (94%), and building new propositions (81%) for Open Banking, with almost a quarter (23%) prioritising account / data aggregation.