The opening of banking platforms for third-party providers has a great future in Switzerland. But banks are reluctant to share their data with third parties.
Open banking has been on the radar of the Swiss financial sector since the EU's PSD2 regulation was applied to all member states in 2018. Unlike the EU, however, Switzerland has taken a market-oriented approach to «hurdle-free» banking. But how well does this juxtaposition of market forces work in conjunction with typical Swiss self-regulation?
A survey conducted by Open Banking Project, in which more than 170 people from various industries were interviewed, is revealing. Around 60 percent of respondents expressed confidence that open banking will be part of everyday processes in the next five to six years - from consumption to health and mobility to housing and entertainment. Nearly 90 percent said data sharing will have a great or very great impact on payments.
Well-Guarded Data
While the technological possibilities seem endless, the actual application and implementation are limited by not only data privacy, but by banks' willingness to share customer data.
In banking, survey respondents expect expanded service offerings to increase customer satisfaction, but the banking sector is proving to be more cautious than other industries with the majority pursuing a strategy of selective and opportunity-oriented openings. Only six percent of banks see themselves as first movers fully prepared to share their customer data with third parties. Cautious indeed.
Open banking seeks to create simplified and efficient collaboration between banks and third-party providers through open and standardized APIs. The focus is on the end customer, who can independently decide how to handle their banking data. Ideally, open banking not only enables the further development of a bank's business model but promotes cross-industry innovations in digital ecosystems.
Consensus vs. Regulation
Respondents cited API standardization for Switzerland as a critical success factor to ensure efficient implementation, investment protection, and scalability of open banking use cases. The Swiss financial center can claim some success in this area. After some initial teething problems, Swiss exchange SIX has created a connection hub between banks and third-party providers with its bLink service. Nevertheless, policymakers must also look at how other countries regulate this area, the survey found.
The findings echo those of a 2021 study conducted by Mastercard, which found open banking was no longer seen as a luxury, but as inevitable for financial institutions.
Psychological Resistance
According to the study, nearly half of the Swiss consumers surveyed are willing to change their main bank or enter into a new banking relationship to benefit from at least one open banking-enabled service.
On the provider side, centrifugal forces against traditional banks are also increasing. Big tech companies in particular are moving much faster than the established financial industry, so there is growing concern about being left behind by third-party providers.
In addition, there is a more profound resistance in the banking industry, such as losing one's job because of technological upheavals.
