In the ever-evolving landscape of financial services, a powerful force is shaping the future of transactions and interactions. Open finance, with its transformative capabilities, is redefining the way financial services engage with account holders. From Banking as a Service (BaaS) to embedded finance, these pioneering exchanges are meeting new digital consumer expectations, while also showing promise of emerging revenue models.
In fact, a recent Twimbit analyst report predicted a trillion-dollar growth opportunity created by open finance globally. This should be of no surprise to most, as open finance is kickstarting a new and appealing-to-consumers digital ecosystem, highlighted by large digital transformation investments in legacy firms meeting and seamlessly interacting with agile FinTech innovations. Its true value lies in making the everyday life of the consumer easy and frictionless. There is an opportunity for open finance to become globally ubiquitous and democratize access to financial services. Exciting times, for sure.
Yet, amid a promising frontier with vast potential, within the open finance realm lie sizable challenges, like how the massive volumes of API calls generated can cause security issues—in addition to increasing performance and reliability costs in legacy environments. Plus, ensuring compliance with strict regulations gets more challenging with each passing year—due to standards such as the European PSD2 (Payment Services Directive 2) directive for electronic payment services or the U.S. Personal Financial Data Rights announced last year by the CFPB.
With the associated challenges of open finance in mind, I’ve prepared the following list of imperatives to consider for success.
Banking and financial services organizations that do not invest properly in open finance risk being outmaneuvered by competition and could lose significant market share, as well as being much more vulnerable to increasingly complex cyberattacks. Securing APIs and ensuring high API performance and availability, while navigating compliance requirements, are critical components to open finance success.
F5 partnered with the research analyst firm Twimbit to put together compelling global research around open finance. Check out this infographic to learn more about The State of Open Finance.