Most AsiaPac Banks Plan to Offer Open Banking Services to Commercial Customers, with Many Expecting Double-Digit Revenue Growth as a Result, Accenture Research Finds

Most large banks in Asia Pacific said that providing Open Banking services for their commercial clients is a key strategic initiative in their digital transformation programs, and many expect Open Banking to help them achieve double-digit revenue growth, according to a global research report by Accenture (NYSE: ACN).

Open Banking enables financial services commercial customers to share their financial data securely with banks and third parties, making it possible to easily transfer funds, compare products and manage accounts using application program interfaces (APIs).

According to the study, 90 percent of large banks in Asia Pacific said they plan to provide Open Banking services for their commercial clients, with half (50 percent) of the banks in the region expecting Open Banking to help them grow their revenues up to 10 percent and another one-third (33 percent) expecting it to help them grow their revenues up to 20 percent. The report, “Opening Up Commercial Banking, The Brave New World Of Open Banking in APAC,” is based on a global survey of more than 750 executives at global banks, small- and medium-sized enterprises (SMEs), and large corporations.

Among other key findings: Commercial bank customers in Singapore often want the same things that retail bank customers want — more-innovative processes and a better customer experience — which Open Banking can facilitate. When asked to identify the most significant benefit of using an Open Banking ecosystem platform, respondents most often said gaining access to convenient and innovative banking services, cited by 30 percent of executives at large corporations and SMEs.

Commercial bank customers in Singapore also expect Open Banking to reduce complexity and implementation costs for bank connectivity (cited by 25 percent of large corporations and SMEs) and enable them to reach more clients and partners (cited by 23 percent of large corporations and SMEs). When asked to identify the business areas that could be most improved in partnership with their bank through Open Banking, respondents at SMEs in Singapore cited cash management, integration with accounting package and finance, while large corporations said treasury and liquidity management and finance.

“There’s been a lot of focus on retail consumers when discussing Open Banking, but some of the solutions will create a fundamental change in the corporate banking world,” said Divyesh Vithlani, a managing director at Accenture and ASEAN financial services lead. “Value-creation for SMEs and large corporate clients can be just as big an opportunity, if not bigger, than what banks will experience in the retail banking market, so financial firms need to actively pursue those prospects.”

The vast majority of large banks in Asia Pacific ― 80 percent ― have invested in Open Banking initiatives for their commercial customers or plan to do so next year, less than the 87 percent global average. But banks in the region plan larger investments than global counterparts to build out their Open Banking commercial platforms, offer third-party services and explore Open Banking use cases, with 39 percent planning investments of more than US$20 million, compared with 21 percent of banks in North America and 14 percent in Europe looking to spend that amount.

The study also found that one-third (33 percent) of commercial bank customers in Singapore already participate in Open Banking platforms and another 35 percent plan to do so in 2019, below the average in AsiaPac for 41 percent and 37 percent respectively. When asked who they would prefer to partner with on Open Banking initiatives, nearly three-quarters (72 percent) of large corporate clients and SMEs cited their bank; only 15 percent of commercial clients would prefer a non-bank technology provider.

“The opportunities for banks in Singapore are clear and they should leverage the strong trust among corporate clients to continue innovating and offer cutting edge Open Banking solutions that are relevant and important to SMEs and large businesses alike,” Vithlani said. “Banks here have recognized early on the benefits of offering open APIs and other Open Banking solutions, but they shouldn’t rest on their laurels because fintechs and other digital rivals are also actively looking for ways to expand into the market.”

Accenture Research surveyed executives at 100 global banks, 330 small- and medium-sized businesses and 330 large corporations in 11 countries —  Australia, Canada, China (Hong Kong), France, Germany, Italy, Singapore, Sweden, Thailand, the U.K., and the U.S. — to determine their expectations and plans for implementing Open Banking. The online surveys were conducted in September 2018.