This new environment requires new ways of operating and thinking. Faced with deadlines, many banks initially focused on a sprint to compliance, only to find they are facing a marathon of sustained change. The introduction of PSD2 and Open Banking has been one of the biggest compliance tests the financial services industry has ever faced. These regulations aim to create an industry-wide framework for accessing financial information, with the aim of improving customer satisfaction and encouraging competition between banks. A case in point is the introduction of the European Banking Authoritys Second Payment Services Directive (PSD2) in Europe and Open Banking regulations in the UK, which are set to spark a significant evolution in how institutions think about, provide, and commercialise financial services. Driven by changing consumer expectations and the development of new technologies, this transformation is being further spurred with regulatory initiatives. Mainstream banking is in the midst of its biggest transformation since computerisation first took root in banks half a century ago. But does that reflect the view from within the banks themselves? That’s what we wanted to find out when we undertook some research (with independent research firm LM Research) into senior banking executives’ priorities, challenges, and future plans.Nick White, Fiserv: Fully leveraging APIs will give banks the insights to deliver intelligent experiences to customers We asked senior figures at 15 major UK banks and other financial institutions about the issues that keep them up at night, their perspectives on the impact of Open Banking and competition in the retail banking sector, and their attitudes towards investment in innovation.

The results point to a conflicted and divided industry.Ĭonfusion and contradiction over regulation, Open Banking, and the shifting competitive landscape is typical of an industry in transition. Those that are preoccupied with their peers are holding on to notions of banking as a protected industry where the barriers to entry (such as regulation and security) are too high to allow new players in. Others are looking further ahead and seeing that banking could be set to face the same fate as so many other industries that have been upended by the rapid rise of digital-only entrants.

The pressures of ensuring they remain compliant with complex and ever-changing financial services industry regulation are the biggest thing keeping senior decision-makers awake at night, with 60 per cent putting this at the top of their list of worries. That’s ahead of competition (53 per cent), fraud and criminal activity (53 per cent), and their organisation’s Net Promoter Score (53 per cent). What is surprising, though, is that, despite transparency and competition being at the heart of the CMA’s introduction of the Open Banking regime, only 27 per cent of senior figures actually believe Open Banking will enable their business to become more competitive, and only 13 per cent believe it will allow them to offer their services to customers of other banks. Preoccupied with the same old facesĭespite the swirling hype around recent entrants into the consumer banking market and the potential for even more organisations to tool up as financial services providers once the Open Banking regime comes into force, the incumbents are more concerned with looking over their shoulder at traditional rivals than they are about the new competitors coming over the horizon. Tech legacy and leadership prompt further confusion 80 per cent see their traditional banking rivals as their main competition for the future, and only 33 per cent anticipate emerging digital-only players such as Atom Bank and Monzo, or larger businesses such as Amazon or Facebook applying for banking licenses under Open Banking, turning into their primary challengers. It’s all but impossible to have a conversation about digital services and transformation with anyone in the banking sector without hearing about the problems caused by banks’ continuing reliance on legacy technology systems - so it was surprising to see only one-fifth of senior figures in financial services name outdated or failing technology as a key business challenge keeping them awake at night.

Finkit for open banking