Global Open Finance Report: Transition continues at the international level

Open Finance is a consolidated reality both at international and European level: to date, more than 40 countries have launched initiatives in this area.

The transition to Open Finance can take place through three prevailing approaches:

Prescriptive: in which the local regulator issues specific rules defining the regulatory and/or technological framework (e.g. the European Commission in the European Union).

Market-driven: in which market players design through co-creation interoperability standards (e.g. the United States of America).

Facilitative approach: which represents a middle ground to the first two in which local authorities issue guidelines to facilitate collaboration among industry players (e.g.Nigeria).

In Europe, the “Open” ecosystem has proven to be dynamic and attractive.

In 2022, the number of registered Third Party Providers increased significantly (535 – including UK; +12% compared to March 2021) along with the number of initiatives put in place by the European Commission to enhance services and business models based on data sharing, starting with the payments sector (e.g. Digital Finance Package, Open Finance Consultation, EU Data Act).

At European level, API-based offerings remain heavily focused on AIS and PIS services (55% of the total).

In this context, cases of innovative API-based services in Open Finance (e.g. Investment, Credit and Insurance) are also emerging, accounting for 15% of the total offering. The development of such services is also enabled by new deals and collaborations that are a testament to the strong dynamism of the market.

These are the main findings of “The Global Open Finance Report”, presented by CBI.

These services are offered to end customers, such as businesses, citizens, and Public Administration.

The Report, published by CBI with PwC Italia, aims to provide a comprehensive picture of the state of the art of Open Banking and Open Finance, highlighting trends and evolutions in the national and international market.

At a national level, the significance of the phenomenon is confirmed by a number of significant indicators: in 2022, the volume of API calls handled by CBI (approx. 90% of the domestic market) grew significantly compared to the previous year (+114%, 190 million total calls).

The strong and growing interest of the market is also confirmed by an increase in the number of players that have developed value-added services based on Open Banking logics (+8% compared to 2021).

The survey conducted on major Italian banking institutions outlines the set of main services that currently make up the Open Banking and Open Finance offering in the national context: Account Aggregation (85%), Check IBAN (62%) and Personal Financial Management (62%) are the three services with the highest usage rate, followed by the newer Variable Recurring Payments (31%).

For the future, however, banks say they will focus on Digital ID & Onboarding (80%) and Check IBAN Cross Border (35%) services to enrich their offerings. The survey also demonstrates that investments in commercial services are growing steadily (+23% annually) and reaching an average value per bank of nearly €1 million by 2022.

“In the last two years we have witnessed a real revolution in the payments market, with the entry of new players, the advent of technological innovations applied to the financial world, and an increase in demand for cashless services,” explains Liliana Fratini Passi, CBI Managing Director.

“Added to this are further innovative thrusts in the regulatory environment, especially at European level, with initiatives aiming at a revision of the PSD2 Directive, a regulation of the Open Finance framework and a strengthening of Instant Payments.”

“Open Finance is already a reality. Australia has included other products besides payments in their initial framework for banking, while in Brazil Open Insurance is already in the thick of things,” continues Paolo Gusmerini, Director of PwC Italia.

“In Europe we observe the development of premium API services and initiatives such as the SPAA Scheme contributing to the development of the reference market and fostering new collaborating initiatives.

At a regulatory level, we will have to wait for the publication of the Open Finance regulations planned in Q2 of 2023, which will dictate the future directions of the European Commission.

This future step will be extremely important to build new collaborative initiatives from what has already been done in Open Banking by maximising achievable synergies and partnerships where possible.

It will be equally important to acknowledge the different peculiarities of the sectors covered by Open Finance by  encouraging at the same time the development of cross sector use cases to maximise consumer benefits with the best user experience and the highest security.”

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