At least that is what the respondents of a small global survey have indicated about the growth of various financial trends
In Aug/Sep 2022 an online survey of 758 professionals at managerial level at financial institutions and banks across France, Germany, Hong Kong, Singapore, the UAE, the UK and the US was conducted, involving topics such as Open Banking and open finance landscapes (DeFi); the technologies and initiatives set to make an impact in financial services over the next year; and the growing importance of environmental, social and governance (ESG) issues.
Respondents were able to select more than one answer for some questions, and the overall data has led to the conclusion that “Open Banking is now universally and unequivocally regarded as a key part of a bank’s landscape.”
Global views on open finance were also maturing in respondents, compared to those in a similar survey in Jan 2020 and March 2021.
Key insights
The survey report authors summarized five key trends among global respondents:
- Banking-as-a-Service (BaaS) and “embedded Finance” had become a norm, based on the numbers of respondents indicating that BaaS and embedded finance were already expected/demanded by their customers, and by the level of BaaS investments in the past year.
- Business growth continued to be a top-three driver of technology adoption, similar to levels in a 2021 survey. However, the other top drivers in 2021 — cutting costs and adapting to changes brought about by the pandemic — had been taken over by more forward-looking drivers such as “preparing for opportunities arising from BaaS and embedded finance” and “meeting current and future customer expectations”.
- The current economic situation has led to further investment constraint among respondents.
In 2021, 81% of respondents in Singapore had indicated their technology and digital banking investments were being constrained by cost pressures. In the current year’s survey, 84% indicated that the current economic situation had tightened spending.
Also, while 44% of different respondents indicated in 2021 that they were planning to improve or deploy BaaS in next 12 months, this year’s survey saw 38% indicating their organizations had actually done so. Still, 77% of these respondents expected a resumption of tech investments to resume by the end of H1 2023. - A unique paradox was observed in Singapore respondent’s mode of cloud adoption. For all other markets, where cloud adoption was higher than average (“all or most” software being hosted on cloud solutions), these markets also revealed lower-than-average use of on-premises solutions, and vice versa. However, Singapore respondents had a far higher than average number (43% vs 32% global average) that indicated that their software stack was split equally between cloud and on-premises solutions. This trends may be indicative of the banking landscape in Singapore, which is dominated by incumbent banks. Whereas digital players tend to be cloud-native, large incumbents have complex systems that are difficult to migrate fully off on-premises solutions.
- Global respondents showed widespread support for ESG, with Singapore and the UAE having the highest level of support, recognizing “green lending” as an opportunity for growth and revenue generation.
According to Simon Paris, CEO, Finastra, which commissioned the survey: “Over the years that we have conducted this survey, we have seen open finance grow from an emerging idea to a clear priority for institutions across the world, enabling, as it does, business model shifts such as embedded banking, as well as financial inclusion and equality.”
