The concept of open banking is no longer restricted to payment services. Open finance has widened its scope to include mortgages, wealth management, insurance, savings, and capital markets. These use cases are giving rise to concepts such as embedded finance, buy now pay later, and super-apps, which will allow banks to deliver hyper-personalized products and become more customer-centric. Open finance can disrupt traditional banking models and give rise to innovative models such as marketplace banking.
Additionally, regulators across geographies are implementing regulations and data sharing agendas to synergize banks and FinTechs. This will give rise to open data, which will allow customers to share data across multiple industries. In turn, enterprises and providers are building new solutions, establishing partnerships, and undertaking mergers and acquisitions to strengthen their position in the marketplace.
In this report, we assess 26 Banking and Financial Services (BFS) IT service providers’ vision & capability and market impact and position them on Everest Group’s PEAK Matrix® as Leaders, Major Contenders, and Aspirants. Each provider profile provides a comprehensive picture of its service focus, key Intellectual Property (IP)/solutions, domain investments, and case studies.
In this report, we:
Scope:
LEARN MORE ABOUT Open Finance IT Services PEAK Matrix® Assessment 2023
The PEAK Matrix® provides an objective, data-driven assessment of service and technology providers based on their overall capability and market impact across different global services markets, classifying them into three categories: Leaders, Major Contenders, and Aspirants.
The deal was expected to bolster Wipro’s presence in the banking, financial services & insurance (BFSI) space, its largest vertical contributing about 30% to the total revenues.
Report describes current BFSI uses cases, transformative potential, and challenges of the Web 3.0 industry, Metaverse, and Decentralized Finance; seven steps to prepare for the future of financial services.
DALLAS, October 31, 2022 — The future of financial services will be reshaped by exponential technologies such as Web 3.0, metaverse and decentralized finance (DeFi), and the evolution has already begun, according to Everest Group. Enterprises and service providers are anticipating these technologies will drive product innovation as well as new channel strategies and business models, fueling what could potentially be a trillion-dollar market opportunity.
Web 3.0 is a next-generation exponential technology based on blockchain and the third generation of internet in which users can exchange money and information in a secured, trusted, and open model with lower intermediary operations. It is also a critical building block to enhance and monetize various use cases of the metaverse, an immersive online world in which people use avatars to shop, work, socialize and play. DeFi is an evolving business model that leverages emerging technologies to build a connected yet decentralized financial system that offers services that are more accessible, resilient and transparent than centralized, middlemen-focused processes.
Leading enterprises are increasingly investing in Web 3.0 technologies and metaverse platforms. Additionally, customers are increasingly demanding revamped payments, sophisticated financial products, ease of access to credit, and smooth onboarding and advisory services.
“BFSI leaders recognize that these technologies—Web 3.0, metaverse and decentralized finance—are going to reshape their industry by transforming the way they interact and engage with customers,” said Ronak Doshi, partner at Everest Group. “And yet they are also cautious about role of intermediaries and decentralization as well as the speed with which policy makers can accommodate new business models with revamped regulatory approaches. Accordingly, we believe that this shift will be evolutionary rather revolutionary, driven by customer demands and pragmatic product innovation. The journey has begun, with many current applications and innovative proofs-of-concept underway.”
Everest Group provides numerous use cases of Web 3.0, metaverse and DeFi in the banking, financial services and insurance segments in its Market Report, “Future of Financial Services – Web 3.0, Metaverse, and Decentralized Finance.” This report highlights recent investments that big market participants have made in BFSI, how technology and service providers and enterprises can differentiate themselves in the market, Web 3.0 and metaverse use cases that BFSI firms can explore, and regulatory and security challenges in Web 3.0 adoption.
Everest Group advises enterprises to pay close attention to developments in this area and to engage in these strategic steps:
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About Everest Group
Everest Group is a research firm focused on strategic IT, business services, engineering services, and sourcing. Our research also covers the technologies that power those processes and functions and the related talent trends and strategies. Our clients include leading global companies, service and technology providers, and investors. Clients use our services to guide their journeys to maximize operational and financial performance, transform experiences, and realize high-impact business outcomes. Details and in-depth content are available at www.everestgrp.com.
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Digital Levers in Banking & Financial Services
On November 13, Google announced that it will partner with Citigroup and a credit union at Stanford University to launch a checking account that will be linked to Google Pay.
Citi and the credit union will be taking care of the financial and compliance aspects, while Google will ensure that customers can access their accounts via the Google Pay app. This partnership is similar to others – like Apple’s co-branded credit cards with Goldman Sachs, and Uber and BBVA joining hands to launch banking accounts on the Uber app for drivers – wherein big technology companies make inroads into the financial services sector by front-ending the program while the bank manages the finer aspects of regulations and compliance.
This partnership is yet another sign that the future of banking is slowly changing as BigTechs enter into the financial services industry. Indeed, tech firms’ ability to consume the APIs that are exposed from the banks’ core systems is rendering banking a plug-and-play service. Banks are now providing an as-a-service platform to help third parties integrate with them. The focus is on enhancing the customer experience and bringing in a single view of the customer. This is turning banks into ecosystem enablers, while the technology companies are entering and embedding themselves in this ecosystem.
Even though banks are rich data houses, they struggle with analyzing and gaining insights from data. Because of their demand for digital experiences, customers are increasingly embracing the financial services offered by technology companies. Banks understand the need to partner with these companies to remain in the ecosystem and retain their customers. Indeed, the Stanford credit union defined its recent partnership with Google as “critical to remaining relevant and meeting consumer expectations.”
By their very nature and design, the BigTechs have built a comprehensive ecosystem that gives them access to data on their customers’ behavior, choices, and habits. However, the data on customers’ finances still eludes them. As strict regulations and managing compliance prove to be barriers, collaboration is the only way they can get a foot in the door.
The partnership trend will continue, because both the banks and the tech firms stand to gain so much from them. But the tech firm side of things is a bit troubling. Getting access to the goldmine of banking customers’ financial data will make them nearly invincible. They’ve targeted the front-end of banks’ target operating model, where customer-facing applications, and thus customer stickiness, live.
Further, what is stopping technology players from offering other allied banking services like issuing loans and providing interest payments? Even though lawmakers and regulatory bodies would meticulously scrutinize such models, we are fast-moving to a world where alliances between technology firms and banks will become more frequent.
Of course, it remains to be seen how customers adapt to this new way of working. We are already seeing privacy concerns arise over the financial data in such partnerships. This will lead to the emergence of a data exchange platform to control data access and set terms of use.
The next wave of change in the banking ecosystem will be when banks move to an as-a-lifestyle model. In that model, banks will define an IT strategy with customers at the center, and integrate with allied businesses. But to be successful, banks would need to ensure that they are able to influence the customer experience over all channels…theirs and third parties’. With technology players entering the financial services space, the banking IT landscape is already undergoing a shift. To remain relevant, banks will have to move upstream and coordinate the entire ecosystem while getting integrated into everyday transactions.
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