Low Open Banking Awareness in Finance Industry

by | Apr 2, 2020

Our recent modernization survey provided observations about current or recent mainframe users. We surveyed over 160 individuals in various job functions and organizations. By far, the most interesting survey find was low awareness of open banking and related topics among fintech and insurers.

For example, 87% of respondents in the banking and finance space say they are not at all familiar with the rollout of FedNow, a service that will support real-time payments (RTP) in the United States. Given the market’s anticipated shift to RTP, a lack of awareness about FedNow raises questions about whether companies are thinking forward.

Similarly, 77% of survey respondents are not at all familiar with the EU’s PSD2 legislation, or the revised Payment Services Directive. PSD2 enables banking customers to give third-party providers permission to use their data. When asked to rate how important preparation for FedNow or Open Banking is to their company, over 65% of respondents replied “Not at all.”

Open banking, PSD2, and FedNow are part of a growing trend for interoperability and transparency in finance. Open banking is the concept of making personal banking data available to third-party developers through the use of APIs. Its purpose is to provide consumers with more control over their personal data. Essentially, PSD2 is legislation in Europe that promotes open banking. The development of FedNow is driven by open banking initiatives in the US.

In terms of their data, all three initiatives aim to put consumers in the driver’s seat. Open banking and PSD2 give individuals control over their personal data. FedNow gives consumers immediate access to their money through real-time payments.

In short, industry leaders should prepare to hear more about open banking in the upcoming months.

DOWNLOAD: See how this global bank uses its mainframe for real-time fraud detection.