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CO-WRITTEN / PARTNER | Staff Reporter, Singapore

Finastra platform enables Asia-Pacific banks in their open banking transformation

Singapore's readiness for open banking scored 8.1 out 10 according to Finastra's index.

When more than 100 banks in the Asia-Pacific region were asked about their three-year plan for open banking, three key themes emerged: acceleration, business transformation and a platform-centric approach.

"In a world of distributed knowledge and capabilities, financial institutions can benefit from building platforms that enable innovation in collaboration with a wider financial ecosystem," Finastra said in its Open Banking Readiness Index, which measures how banks in Asia-Pacific countries are adopting APIs, embracing third-party partnerships and progressing in their data-based innovations. (To download the Open Banking Readiness Index, kindly click on this link.)

More than 4 out of 5 banks in the region agree that a platform will be critical to binding the customer, business and technology capabilities together – an essential task in moving towards open banking and unlocking new ways to reach customers and create revenue streams. Addressing the need for a platform that easily integrates third-party partners whilst ensuring robust security, Finastra has developed FusionFabric.cloud as a Platform-as-a-Service solution, enabling financial institutions to deploy innovative applications more quickly and at lower costs by drawing on the strengths of all connected partners.

“A bank needs a strong infrastructure capability that not only manages APIs but also provides security without compromising speed of execution. Issues around infrastructure uptime, availability, and cost of development will be important as the volume of API and data usage increases,” Finastra said.

In fact, more than half (58%) of banks prefer the bank as a platform approach in addressing open banking as it drives open standards connectivity; creates low-code development environment; sets up an app marketplace and reduces downtime.

FusionFabric.cloud tries to deliver such a platform experience by assisting banks in the key processes critical to open banking: the platform’s FusionCreator, for example, enables creators to build applications in a low-code environment, cutting down the development time. Once these applications go live, the platform’s FusionOperate system ensures a smooth deployment and management of applications on MicrosoftAzure. Banks can then monetise their applications by making the array of applications they have developed with partners available through the platform’s FusionStore.

Finastra has also developed FusionFabric.cloud with unique Asia-Pacific needs in mind. Unlike in Europe, where the shift to open banking is driven by regulators, banks in Asia-Pacific appear to have more control over the partnerships they forge with trusted third parties, prompting Finastra to create a platform that facilitates open and collaborative development.

“With Open Banking, banks can create new forms of distribution channels and servicing capabilities, generate new direct/indirect revenue streams, and expand their customer base through third parties. They will also be able to innovate by partnering with more agile fintechs, without having to spend significant time, effort and resources themselves,” Finastra said in its report.

Based on the average scores of banks in the index, Singapore emerged as the most ready in the Asia-Pacific for open banking, scoring an 8.1 out of 10, due primarily to its open API, data infrastructure maturity and data monetisation dominance. For banks in Singapore, Finastra’s platform can further assist in driving data monetisation by promoting the app to Finastra customers globally without the need to build a dedicated internal sales team, and payments are automated for every app sold.

Australia placed second with a 7.1 score amidst a strong regulatory push for open banking. Countries like Hong Kong (6.6 score), New Zealand (6.4), China (6.4), Malaysia (6.2), South Korea (6.2), and India (6.1) ranked in the middle of the pack, with their moderate adoption of new technologies and innovation, and need for further improvement. Banks in these countries can focus on scaling using the Microsoft Azure-powered Finastra platform.

Meanwhile, at the end of the Open Banking Readiness Index, several countries including Vietnam (2.3), Indonesia (4.0), and the Philippines (4.7) scored below the Asia-Pacific average of 5.8, indicating low capabilities in both internal and external APIs and preparedness to leverage open banking. In these countries, the FusionFabric.cloud platform provides the solid starting kit to begin building their first successful applications.

"So far, the Asia-Pacific style of open banking appears to be a combination of capabilities, with different markets taking different paths,” said Finastra. “Whichever approaches are taken, it is clear the capabilities will converge on providing more collaborative, innovative, and responsive banking services.” 

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