A survey by FinTech giant Finastra has found banking-as-a-service (BaaS) is set to make a substantial impact on financial services over the next 12 months.
According to Finastra, 85% of survey respondents at global financial institutions believe BaaS will make an impact over the next year, with 40% believing the impact will be significant.
While the majority of markets anticipate BaaS to have a strong impact, Hong Kong, the United Arab Emirates and Singapore expect the impact to be greatest – standing at 92%, 90% and 87% respectively.
The survey found that more than 9 in 10 respondents believe open banking is important to their organisation. Meanwhile, 97% of those that already use open banking recognise it has provided benefits to their company.
Open banking was also included in the survey, with 94% of those surveyed agreeing that open banking is important to their company with 63% stating its enabling them to boost customer experience, while 59% claiming its helped them attract new kinds of customers.
The research involved 785 financial professionals across the UK, the US, Singapore, Germany, France, the UAE and Hong Kong.
The survey also found that alongside BaaS, the areas of mobile banking and AI were identified as key technologies that will be bolstered or deployed over the next year.
For example, 95% of firms are forecasting they will look to improve or develop technology in this 12-month period. Meanwhile, the UAE and Hong Kong are leaders when it comes to overall interest in mobile banking – ranked at 44% and 42% respectively.
In addition, 94% of financial services institutions saw collaboration as important, though the survey highlighted that there remain several existing and new barriers, including regulation, security and technology.
Complex regulations were identified as a major barrier, with 40% of global respondents agreeing with the matter. Of these respondents, France (47%), Singapore (45%) and Germany (44%) chose this as the chief barrier.
Security risk was also found to be a key barrier by US, Hong Kong and UAE-based banks – with 40% of all choosing this as an impediment. Legacy systems and IT were cited as the top barrier to collaboration in the UK market at 48%.
The black swan event that was Covid-19 has been viewed as an accelerator for business to adapt and invest in new technologies and innovation, according to 8 in 10 global organisations. Singapore, the UK and the UAE agreed most with this argument, at 87%, 82% and 82% respectively.
Also, 86% of respondents agree with the sentiment that ‘financial services and banking is about than just finance, and we have a duty to support the communities we are serving’.
Finastra chief product and technology officer Eli Rosner said, “Our findings show how financial institutions are already benefiting from Open Banking and, new this year, a growing role for BaaS. We believe that these initiatives have already started paving the way to true Open Finance, helping financial services institutions to develop and enhance the services they provide to their customers.
“For BaaS specifically, 81% of global respondents see it as a means to grow business, enhance their distribution channels, shorten time to market and streamline operations. Valuable insight from so many financial institutions sets the tone for the evolution of financial services as banks and their customers adapt beyond the pandemic and, together with the industry support they provide, serve their communities better.”
The survey can be read in full here.