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Investment in open banking grows in Europe

As financial institutions prioritize payments and the customer experience, there is an increase in investment in open banking, especially by retail banks and wealth management companies.

47% of European financial managers state that they have increased spending on open banking budgets during 2021. This is demonstrated by A study published by the open banking platform, Tink, according to which, there has been a recovery compared to the previous year’s budgets.

Taking as a sample 308 decision-makers in financial institutions in 12 European countries, the study reveals that the pandemic has had a direct impact on the budgets of 93% of financial institutions, of which 23% suffered a significant impact .

In this sense, if at the beginning of 2020, the managers planned to invest between 50 and 100 million euros in open banking, finally this figure was 32 million euros.

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However, in the case of retail banks and wealth management companies, investment in open banking continued to rise, reaching between 84 and 79 million euros, respectively. According to the Tink study, the reasons for this difference may be due to the need for these institutions to create APIs to comply with PSD2 regulations, as well as to review the infrastructure to adapt it to the needs of open banking.

Investment priorities in open banking

However, this 2021 investment has continued to rise led by wealth management companies and followed by wholesale banks, credit providers and challenger banks.

Payment-related services are the top spending priority for these investments. 72% of financial institutions consider payment initiation services to be the most important use case for their business, requiring the development of more agile payment solutions for clients.

The second of the areas for improvement is, for 71% of the managers surveyed for this study, the optimization of customer experience and the process of onboarding, as well as the verification of accounts, identities and assets. These are use cases that provide banks with decision-making with more information about their clients’ loans thanks to a holistic and real-time view of their data.

Along with this, 71% of financial executives highlight that risk-related use cases are the third priority for their investments. In addition, The sustainability It is also very present in the distribution of budgetary investments and 62% point to the calculation of the carbon footprint as the fourth priority.

These data show how open banking continues to move towards more widespread adoption. In this sense, the CEO and co-founder of Tink, Daniel Kjellén, highlights that this is leading to an increase in data-driven initiatives. “Financial managers have set their sights on a wide range of open banking use cases, from payments to credit assessments to carbon monitoring, sparking a new wave of value creation”, says the person in charge for whom both consumers and companies will benefit.

Tink’s report also sets its sights on 2022 and, given the unstoppable advance of open banking, highlights the importance of considering working with partners to create solutions in this field that add value in all areas of financial services. “Creating an ecosystem of actors working together will be crucial as we move into a new era of digitization and improved customer experience.”Kjellén adds.

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