To date, Open Banking has not created a tsunami of disruption. In some markets, banks have become complacent about the threat it poses to traditional business models.
But a wave of change is coming as Open Banking initiatives and regulations mature and enable the creation of the open data economy. When the wave arrives, change will be exponential. The super app will be here sooner than you think.
One early indication is the rapid growth of third-party providers (TPPs) in Europe, which is at the forefront of the Open Banking paradigm. There, TPPs have grown from around 100 to more than 450 in under two years, and their focus has expanded from payments and transactional retail banking to encompass the entire financial value chain.
New analysis from Accenture, built on data sets covering 20 of the largest economies responsible for over 75% of global GDP worldwide suggests that as much as $416 billion in revenue will be at stake as the open data wave arrives. This revenue is likely to be captured or defended by agile players who recognize the opportunity early.
With such high stakes, fintechs, neobanks, bigtechs and other non-traditional players are all preparing to take on banking incumbents for a stake in this new market. But despite this flurry of activity, many banks around the world have been slow to respond. The belief that a wait-and-see approach is safest may be dangerous. Banks that are not yet considering their place in the open data economy risk yielding the market to more agile competitors. After all, one of the key attributes of the open data economy is a blurring of the lines between industries.
Different markets, different moments
The Open Banking wave will break at different times around the world—and look different in each instance. To understand the regional nuances, Accenture measured four dimensions of market readiness in Europe, North America, Latin America, and Asia-Pacific: customer readiness, regulatory approach, technology, and competition.
Three kinds of markets emerged from this analysis:
- Consumer-enabled markets, like China, are defined by digitally savvy consumers ready to embrace new-age financial services and products.
- Regulator-directed markets like the European Union and Australia show lower relative consumer readiness despite regulatory focus on Open Banking.
- Market-led markets like the US are seeing incumbent banks and other financial services organizations drive Open Banking in the absence of market infrastructure or regulatory mandate.
Core open data capabilities
We anticipate that most banks will eventually master four capabilities to become significant players in the age of the super app.