Open Banking has been on the agenda of the Swiss financial sector for around four years. One of the initial drivers was the EU regulation PSD2, which has been valid for all member states since 2018. Switzerland has so far pursued a market-driven approach to implementing Open Banking. But what is the Swiss financial sector's understanding of Open Banking? Which use cases have the most potential? What is the significance of the concept for companies in the financial sector's immediate environment or for the public sector? What are the success factors that influence the effective implementation of Open Banking in Switzerland?
What is the understanding of Open Banking in the Swiss financial sector?
Open Banking creates simplified and efficient cooperation between banks and third-party providers (TPPs) through open and standardised APIs. At the centre of the concept is the end customer, who can decide independently on how to handle his (banking) data. Open Banking not only enables the further development of one's own business model but also fosters cross-sector innovations in digital ecosystems.
Which Open Banking use cases have the most potential?
Overall, the potential of all Open Banking use cases included in the survey is considered to be rather high to very high. Nevertheless, there are noticeable differences both between the use cases and between different banking areas. The mental affinity to PSD2 and thus to the area of payment becomes clear in the feedback. Contrary to expectations, the use case with the highest potential, "Reuse of identity and basic data", is a trans-sectoral use case. The advisory intensity of the processes means that the banking areas of provisioning and financing tend to fall to the lower places.
How important is Open Banking for companies?
The importance of Open Banking for the financial industry is rated as high by all target groups. Board and management members of technology providers rate it highest for their companies. The survey participants from the banking sector expect Open Banking to expand their bank’s range of services and increase customer satisfaction. For all respondents, concrete use cases in the form of "proofs of concept" (POC) are needed in order to address Open Banking in a purposeful manner within the company. Networking with other companies and the formulation of an Open Banking strategy are not only prerequisites but also success factors for implementation. Ultimately, most companies are prepared to open up without major restrictions and strive for a position as "early follower" or even "first mover". Among the banks, on the other hand, a strategy of selective and opportunistic opening is pursued. Here, only 6% position themselves as "first movers".
What success factors are important for the implementation of Open Banking in Switzerland?
Standardised APIs accepted by all market participants are named by all target groups as the most important success factor of Open Banking. These provide companies with investment protection, guarantee efficient implementation (time-to-market) and ensure the necessary scalability of Open Banking use cases. In this context, most of the survey participants also identified the regulatory obligation of banks as a success factor. On the one hand, according to the experts, it is important to base regulation on empirical values from abroad (e.g. PSD2, Open Banking UK) and, on the other hand, to leave the market the greatest possible freedom in the design of regulatory framework conditions. Finally, around 60 % of the respondents assume that Open Banking will be part of everyday processes (consumption, health, mobility, living, entertainment, etc.) in 5 to 6 years at the latest. In this context, it is important to develop new service and product innovations with partners to improve the customer experience and maximise the focus on the customer's needs.
Comment of the OpenBankingProject.ch
In summary, it can be said that Open Banking enjoys a significant status among the survey participants and offers considerable potential. For the Swiss financial centre, however, there is currently a visible discrepancy regarding the acceptance and practical implementation of Open Banking in the market. The overall rather high to very high assessment of the potential of the various Open Banking use cases shows that Open Banking, or the development of ecosystems, must be considered in its entirety and that there will not be the "one" Open Banking use case. By raising awareness and transmitting knowledge, but also by implementing concrete use cases, the possibilities of Open Banking can be explored, and the mindset can be further developed. Only in this way will banks and financial market participants succeed in positioning themselves closer to their customers and to companies from outside the sector in the sense of "embedded finance". Furthermore, the importance of a regulation-driven approach to the implementation of Open Banking is regarded as mixed. The consensus principle anchored in Switzerland should also be applied in the case of Open Banking, so that all players use this regulatory gap and shape it with a coordinated approach. One way forward is to set clearly defined data standards. A possibly more targeted option would be to focus on the standardised and secure storage of data in a trust network. The revised Data Protection Act (nDSG) in 2023 and the European Data Protection Regulation (GDPR), which further focus on the importance of data and the self-determined handling of it, could serve as a foundation in this context.
Financial service providers are still very reluctant to pass on their customer data to third parties, also for the mentioned regulatory reasons. However, the utilisation of data in combination with Open Banking can increasingly lead to the formation of new business models. A standardised and efficiently organised data exchange via APIs is an essential part of this. Only through the cross-organisational use of data can customer centricity in digital ecosystems take place and new customer experiences be created. Financial service providers will have to continue to rethink to take advantage of the opportunities for improved customer proximity, increased customer loyalty and product innovation in these ecosystems.
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