Press release

World FinTech Report 2019: The Industry is Transitioning from Open Banking to “Open X”

Sponsored by Businesswire

The World
FinTech Report (WFTR) 2019
, published today by Capgemini
indicates that even though Open Banking has yet to reach maturity, the
financial services industry is entering a new phase of innovation –
referred to as “Open X” – that will require deeper collaboration
and specialization. The report advocates that banks and other financial
services ecosystem players must begin to plan accordingly and evolve
their business models.

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Capgemini's World FinTech Report 2019 Infographic (Photo: Business Wire)

Capgemini’s World FinTech Report 2019 Infographic (Photo: Business Wire)

The WFTR 2019 identifies a dual challenge: FinTechs are
struggling to scale their operations and banks are stalling on FinTech
collaboration. As a result, industry players are looking to leapfrog
beyond Open Banking towards Open X, which is a more effective,
structured form of collaboration, facilitated by Application Program
Interface (API)1 standardization and shared insights from
customer data. The era of Open X will create an integrated marketplace,
with specialized roles for each player that will enable a seamless
exchange of data and services, improving customer experience, and
expediting product innovation.

Key findings of the report include:

Open X will transform industry norms and assumptions

The advent of Open X is being driven by four fundamental shifts:

  • A move away from a focus on products to an emphasis on customer
  • The evolution of data as the critical asset
  • A shift from prioritizing ownership to facilitating shared access
  • Emphasis on partnering to innovate instead of buying or building new

Open X will lead the financial services industry to a shared ecosystem
or marketplace, in which the industry reintroduces the re-bundling of
products and services, and both banks and FinTechs must re-evaluate
their strategy for innovation and serving customers.

APIs will be critical Open X enablers

APIs, which allow third parties to access bank systems and data in a
controlled environment, will be catalysts to creating the Open X
marketplace. While customer data is already widely shared and leveraged
in the industry, standardized APIs are not commonplace. Although
requirements and regulations are complex, standardization will help to
reduce fraud, improve interoperability, increase speed to market, and
enhance scalability.

The WFTR 2019 also finds that industry players are looking at two
potential monetization models for APIs – revenue-sharing (which 60% of
banks and 70% of FinTechs think is feasible) and API access fees
(supported by 46% of banks and 55% of FinTechs). However, only about a
third of banking executives said they are currently well equipped to
monetize APIs.

Privacy, security and collaboration concerns may slow progress

While banks and FinTechs said they understand the importance of
collaboration, apprehension over privacy and security remain top of
mind. When asked what concerns them about Open Banking, the vast
majority of banks identified data security (76%), customer privacy
(76%), and loss of control of customer data (63%). FinTechs were more
optimistic about Open Banking, but 50% expressed fears over security and
privacy, and 38% over the loss of control of customer data.

When asked about roadblocks to effective collaboration, 66% of banks and
70% of FinTechs pointed to a difference in the other’s organizational
culture/mind-set, 52% of banks and 70% of FinTechs mentioned process
barriers, and a lack of long-term vision and objectives were listed as
gates by 54% of banks and 60% of FinTechs. Only 26% of bank executives
and 43% of FinTech leaders said they had identified the right Open
Banking collaboration partner. These responses suggest that many banks
and FinTechs remain unprepared for Open Banking, let alone for the
increased demands of data sharing and integration that Open X will bring.

Open X participants must choose strategic, specialty-based roles

Within the Open X marketplace, banks will need to enhance their
integrated (traditional) model first and then focus on areas of
specialized strength. The WFTR 2019 identifies three strategic roles
expected to evolve as a part of Open X:

  • Suppliers will develop products and services;
  • Aggregators will amass products and services from the
    marketplace and distribute them through internal channels, holding
    onto customer relationships;
  • Orchestrators will act as market connectors and coordinators,
    facilitating partner interactions.

According to the report, integrated firms2 are likely to
struggle to match the time to market of an ecosystem of specialists and
find it challenging to meet the unique demands from customers. Within
the Open X marketplace, many incumbents may not be best positioned to
compete as an Orchestrator and their strengths may lead them to other
roles. No matter what role they assume in Open X, however, they must
recruit the right talent, leverage data and technology, and collaborate
with FinTechs to first ensure better internal capabilities for
competitive delivery of relevant services in the current Open Banking

“Open Banking has long been regarded as transformational for
financial services, but this report shows it is just one part of a much
bigger picture,”
said Anirban Bose, CEO of Capgemini’s Financial
Services and Member of the Group Executive Board. “The industry is on
the verge of a more comprehensive evolution, where there is opportunity
to leapfrog into an integrated marketplace that we are calling Open X.

In Open X, there will be seamless sharing of data, and ecosystem
partners will be able to collaborate in a far more comprehensive way.
Our research suggests that banks and FinTechs need to prepare themselves
for a more radical change than many previously anticipated.”

“The findings of the report could not be clearer: collaboration will
be the foundation of the future of financial services,”
said Vincent
Bastid, Secretary General of Efma. “In the era of Open X, ecosystem
players will have to work together more effectively than they have
previously. Only by embracing collaboration and new, specialist roles
can both banks and FinTechs thrive and best serve their customers. It’s
clear that many barriers to collaboration still exist, and there is an
urgent need to overcome them for collective benefit.”

Report methodology

The World FinTech Report 2019 is based on a global survey
encompassing responses from 116 traditional financial services firms and
40 FinTech firms including banking and lending, payments and transfers,
and investment management. Questions sought to yield perspectives from
both FinTech and traditional financial services firms— exploring the
emergence of Open Banking in the financial services industry. It sheds
light on the impact the new ecosystem will have on all the stakeholders,
the challenges and concerns that firms will face, and the emergence of
new businesses and monetization models in this space.

About Capgemini

A global leader in consulting, technology services and digital
transformation, Capgemini is at the forefront of innovation to address
the entire breadth of clients’ opportunities in the evolving world of
cloud, digital and platforms. Building on its strong 50-year heritage
and deep industry-specific expertise, Capgemini enables organizations to
realize their business ambitions through an array of services from
strategy to operations. Capgemini is driven by the conviction that the
business value of technology comes from and through people. It is a
multicultural company of over 200,000 team members in more than 40
countries. The Group reported 2018 global revenues of EUR 13.2 billion.

Visit us at
People matter, results count

About Efma

A global non-profit organization, established in 1971 by banks and
insurance companies, Efma facilitates networking between
decision-makers. It provides quality insights to help banks and
insurance companies make the right decisions to foster innovation and
drive their transformation. Over 3,300 brands in 130 countries are Efma

Headquarters in Paris. Offices in London, Brussels, Andorra, Stockholm,
Bratislava, Dubai, Milan, Montreal, Istanbul, Beijing, Tokyo and
Singapore. Learn more

Application programming interface (API) refers to a set of functions and
procedures that a player opens to the external world to allow the
creation of applications that access the features or data of an
operating system, application, or other service.
Integrated firms refer to the firms that perform all the functions on
their own without collaborating or leveraging other firms in the
ecosystem. Many of the banks in the current ecosystem are integrated
firms as they build, produce, and distribute their own products for all
business lines (without leveraging FinTechs or other players in the