Plaid has looked into how financial institutions are thinking about open banking and has shared insightful survey results.
In today’s digital world, consumers demand real-time financial services – from mobile banking apps to digital wallets and investment platforms.
The adoption of digital tools is no longer a convenience, but an “expectation.”
To meet these demands, financial institutions are adapting to an “evolving regulatory and technological environment.”
The finalization of U.S. open banking regulation is considered to be a key milestone for consumers and industry.
The rule establishes a strong consumer financial data right, highlighting the importance of secure data connectivity while presenting FIs with both challenges as well as opportunities.
To understand how banks are navigating this landscape, Plaid partnered with Research Results, a firm specializing in providing market research and data analytics services, and Brunswick Group, a critical issues advisory firm.
The firms conducted a survey of more than 200 bank executives about their digital and compliance strategies.
Plaid’s findings reveal that for banks of all sizes, open banking is more than a compliance requirement – it is “a strategic lever for innovation, customer engagement, and competitive differentiation.”
Main takeaways shared by Plaid are as follows:
- Regulatory Preparedness is a Priority, but Gaps Remain: New open banking regulatory requirements are among financial institutions’ top priorities. 61% of survey respondents rate open banking as a high priority for their company. Regulatory compliance is also top of mind for banks of all sizes, with 60% of executives identifying it as a top concern for their institution. Yet, readiness varies significantly among institutions. While nearly 9 out of 10 of C-suite executives reported feeling at least somewhat prepared to meet new open banking requirements, executives from the largest banks (those with over $100 billion in assets under management) reported the highest levels of preparedness. To address both regulation and business needs, bank executives report investing in new technology and tools (54%) and improving security (52%) as top priorities.
- Open Banking: A Catalyst for Innovation – Executives report open banking as more than a compliance obligation, embracing secure data connectivity as a competitive tool. Over half (57%) of executives view open banking as a business advantage, recognizing that it enhances customer experiences, provides greater convenience, and unlocks new strategic opportunities. Banks can increasingly leverage consumer-permissioned data from fintech accounts just as fintechs today leverage consumer-permissioned bank data to power their services. Approaching open banking with a two-way data strategy “can empower institutions to deliver more holistic, consumer-centric experiences and drive long-term growth.”
- Partnering for Success in the Open Banking Ecosystem: Working with a trusted open banking partner matters. Open banking compliance doesn’t need to be a solo effort. Bank executives report that working with the right partner gives them advantages across the board, whether it’s for compliance or innovation for their business – or both. Banks that use Plaid services report significantly higher confidence (61% very confident) in meeting regulatory requirements compared to non-Plaid users. Among survey respondents familiar with Plaid, 92% believe the company is well-positioned to guide organizations through the complexities of 1033.
- Regional and Smaller Banks Face Unique Challenges: Executives at regional and smaller banks report concerns about lagging in their open banking adoption and digital implementation for their business. Regional and smaller financial institutions (institutions with between $500M- $10B in assets under management) recognize the competitive necessity of adopting open banking, with 55% considering it vital for staying competitive. But many feel less confident in their readiness. Only 54% of executives at these banks report feeling prepared to leverage open banking in their business, compared to higher levels among larger peers. As consumer expectations for digital connectivity grow, small banks must prioritize investments in technology and tools to remain competitive.
- Driving the Future of Finance: Open Banking represents a transformative shift in the financial services industry. By aligning regulatory compliance with strategic innovation, FIs can “meet consumer expectations, foster trust, and achieve sustainable growth.”