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Last Updated : Sep 18, 2019 08:43 PM IST | Source:

Banks remain reluctant to embrace Open Banking: Capgemini report

Many incumbents are more fearful than optimistic about the pace and direction of change.

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Many banks remain reluctant to embrace Open Banking via data sharing, ecosystem partnerships and open platforms, with multiple incumbents, still being cautious of change as global non-cash transactions competition flourishes. Instead, they perceive Open Banking as a potential challenge when it is a necessity for improved customer experience and retention in the long-run according to Capgemini’s World Payments Report 2019, which tracks and analyses non-cash transaction volume, regulatory and industry initiatives, and digital transformation across the global payments market.

The report finds that the transaction volume of non-cash payments is growing rapidly, particularly in developing markets within Asia (32 percent growth) and CEMEA: Central Europe, Middle East and Africa (19 percent growth). It is projected to top 1,046 billion non-cash transactions globally by 2022, which equates to a compounded annual growth rate of 14 percent. Yet in a market defined by innovation, many incumbents are more fearful than optimistic about the pace and direction of change.

In numerous cases, they cite the threat of BigTech challengers alongside only embracing Open Banking to the extent that regulators require, rather than seeing it as an opportunity for offering differentiation, customer retention and market leadership.


Developing markets are leading the growth in the non-cash payment sector, projected to rise by a compound annual growth rate (CAGR) of 23.5 percent between 2017 and 2022. Emerging markets will soon dictate and shape the global payments landscape in terms of innovation, transaction capacity handling, and industry trends.

The payments landscape is growing more complex as new market participants and emerging technologies spur disruption. Also, changing consumer expectations and regulatory demands are forcing banks to evolve their business models for payments, but many remain wary of change.

Although banks are gradually, though too slowly, moving towards a more open, data-led and cloud-based approach, there remains a reluctance to fully embrace Open Banking. 90 percent identified ecosystem-based business models as key to long-term success, yet only 44 percent expressed interest in building and orchestrating an ecosystem of their own.

The shift towards a converged payments ecosystem has partly been driven by regulatory changes focused on standardization and interoperability. These have included a shared digital identity platform, interoperability guidelines, and real-time payments clearing.

Most digital transformation efforts at 60 percent of banks are in response to regulatory compliance. Adoption of APIs beyond what regulation requires has been sluggish: a majority of banks have no plans to implement APIs that expose data in areas including an intra-bank statement (53 percent), conditional payments (53 percent) and branch/ATM location (67 percent). Where banks are not being mandated to share more data, they are generally choosing not to do so. Open API is seen as a regulatory compliance game rather than a growth opportunity.

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First Published on Sep 18, 2019 08:43 pm
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