Temenos (SIX: TEMN), the software specialist for banking and finance, and Capgemini, a global leader in consulting, technology and outsourcing services, today released the results of Temenos’ ninth annual customer survey. This year’s report, entitled “Open for Business”, highlights the shifting attitude of banks towards open banking as they seek to foster customer loyalty, the retention of which, the report identifies, is the top industry challenge. The report’s data reveals 69 percent of respondents see open banking as more of an opportunity than a threat compared to 50 percent a year ago. Open banking is also now viewed as a priority by 51 percent of respondents, up from just 30 percent a year ago.
To leverage the open banking opportunity, banks are realizing that they must capitalize on their vast stores of customer data and strong position of customer trust to become digital advisors to customers enabling them to make smart financial decisions and introducing them to a broader-range of services through third parties. The report findings also show that banks believe that capitalizing on data is not an easy task as it requires banks to bring together disparate data sets and real-time useful insights. Data capitalization also is a chief topic for new regulation, such as the Payment Services Directive 2 (PSD2), which will require European banks to share customer data with third-party providers.
“One of the clearest indications of how the banking industry is changing is in its shift to embrace open banking and to partner with the FinTech community,” said Anirban Bose, Head of Global Banking and Capital Markets, Capgemini. “With the potential to turn disruptions to business opportunities, open banking has evolved from a CIO/CTO discussion and is now a CEO and Board of Directors level topic. The use of Application Programming Interfaces (PIs) to drive FinTech collaboration, in particular, provides ways to open up new channels, increase revenues and encourage innovation, all of which in turn, strengthen customer loyalty.”
Today, the use of cloud services is widespread in banking, especially for certain application types such as email (which more than 70 percent of institutions run in the cloud). For core processing however adoption is still much lower, at 5 percent, but now this is changing as banks’ concerns over data privacy and regulatory resistance continue to quickly diminish.
Correlating the Findings with Investment
As more and more banking services move to digital, it is not surprising that the survey found digital channels are the most commonly cited information technology (IT) investment priority at 24 percent, followed by product innovation (22 percent), and IT modernization (19 percent.) IT budgets are forecast to be up strongly again in 2017, with the gap between technology leaders and technology laggards expected to widen to unprecedented levels since this banking survey was first launched. .
Ben Robinson, Chief Strategy & Marketing Officer at Temenos, said: “As last year, there was significant year on year change in our survey results reflecting the rapid pace of change in the industry. We are not surprised that banks are placing much more focus on data since analytics are key to delivering the right level of customer experience and regulations like PSD2 will up the ante in the fight for banks to hold onto customers. What is more surprising is that respondents see less of a threat from external players, suggesting they see a path through open banking to take advantage of the innovation coming from the FinTech sector to ward off the threat from internet platforms.”
About the survey
For the past nine years, Temenos has conducted a comprehensive banking survey, covering areas such as banks’ corporate and IT priorities, their challenges, and their view of the competitive environment. Because the questions posed are largely consistent from one year to the next, our survey tracks how trends and attitudes have changed over time. Moreover, because the respondent sample is highly diverse, both in terms of types of banks and geographical location, the results give a broad view of banking sentiment.
This year’s survey canvassed the opinions of 235 senior bankers and the results are presented in association with Capgemini, a global leader in technology, consulting and outsourcing services.
 Open Banking is broadly defined as the use of Application Programming Interfaces (APIs) to make data and functionality available to any user interface and combine resources from other providers, both bank and non-bank to enrich a bank’s existing offering.
 Payments Services Directive 2 (PSD2) provides the legal foundation for the creation of a European Union-wide single market for payments. Member state have until January 13, 2018 to implement it into national laws.