Temenos: European banks ‘taking advantage’ of Open Banking opportunities

Ellie Duncan
15 Feb 2024

European banks are “taking advantage of the opportunities afforded by Open Banking” in the fight back against challengers such as neobanks and payment providers, according to new research.

A study by Economist Impact, supported by Temenos, has revealed that 43% of Europe’s banks are investing in fintech startups, while 36% are building their own greenfield digital bank or fintech company.

More than a fifth (21%) of European banks also believe that cloud is a strategic priority, and are migrating core banking systems to public cloud and Software-as-a-Service (SaaS) in greater numbers than their counterparts in other regions.

European banks are the most likely to view neobanks as their biggest competitors in the next five years, compared to other regions, while payments is the space where they predicted new entrants will gain the most market share.

“Fintechs and neobanks took the lead in using new technologies to provide better customer experiences,” said Jonathan Birdwell, global head of policy and insights at Economist Impact. 

“European banks are now fighting back, emulating the way non-traditional players have used technology to reach consumers who had been underserved by traditional financial services, and to appeal to existing customers with support in managing their personal finances.”

Banks in Europe are also making artificial intelligence (AI) a key part of their technology investment strategy, with 75% of bankers in the region asserting that the banking sector will be significantly impacted by AI.

Kanika Hope, chief strategy officer at Temenos, called it a “shifting” competitive landscape.

“As neobanks and fintechs experience growing pains and face funding difficulties, Europe’s banks are taking advantage of the opportunities afforded by Open Banking by pursuing collaborations with their challengers to offer a wider range of better services to their customers,” said Hope.

“They are also investing in technology, using cloud-native banking platforms and SaaS to improve the customer experience and ensure their operations are agile and secure.”

The study was conducted by Economist Impact among 300 executives in retail, commercial and private banking spanning Europe, North America, Asia Pacific, Middle East and Africa, and Latin America.

In November last year, research by Temenos showed that North American banks are “betting big” on disruptive technologies to better compete with fintechs and non-financial companies, such as Big Tech firms.