Discover Global Network Study Finds Open Banking Relevant to 78% of Fintechs

The survey revealed more than 60% of fintechs have a strong interest in partnering with payment networks to implement emerging payment technologies

The second annual research study by 451 Research, a part of S&P Global Market Intelligence, and commissioned by Discover® Global Network identifies emerging trends shaping the fintech ecosystem, including connected commerce, open banking, embedded finance and real-time payments.

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Emerging payment trends: Perspectives on the future of payments from consumers and Fintechs (Graphic: Business Wire)

According to this year’s Fintech State of the Union, 78% of fintechs said that open banking technology is “relevant” to their business. This is likely because of the positive consumer sentiment that fintech institutions are experiencing with regard to open banking technology. In fact, the research from Discover and 451 revealed that 68% of consumers like open banking because it results in faster credit approvals. The study also revealed that over 6 in 10 fintechs (63%) show a strong interest in partnering with a payment network to develop open banking solutions.

“Fintechs are constantly looking for new ways to innovate and deliver for their customers and this year’s study revealed emerging trends like open banking and connected commerce have remained top of mind,” said Kiran Pookote, director of business development at Discover. “As fintechs look towards the future of the payments ecosystem, Discover Global Network will be a strong partner when it comes to offering global payment solutions and expertise.”

The research also unveiled compelling insights about customer sentiment, revealing that 87% of U.S. consumers have at least one fintech app on their smartphone, with 49% having three or more, up from 36% in 2021.

“Adoption of current-generation experiences like digital wallets and buy now, pay later has been ignited by the digital acceleration that has occurred throughout the pandemic,” said Jordan McKee, director of fintech research & advisory at 451 Research. “This has created a foundation for further innovation by increasing consumer comfort with handling their finances digitally and through different types of intermediaries.”

Discover’s Kiran Pookote, 451’s Jordan Mckee and other members of both teams will be at Money 20/20 in Las Vegas and able to discuss the findings from the Fintech State of the Union in greater detail. Join Kiran and Jordan at booth 2704 at 11:30 on October 24^th to hear a discussion on the data.

A few key findings are below and more insights on emerging trends can be found here.

Open banking is top of mind for fintechs and consumers alike

- Nearly 80% of fintechs (78%) say that open banking is relevant to their business and open banking is the top area where fintechs are most interested in partnering with a payment network (63%). In addition, open banking use cases that garnered the most consumer interest are receiving faster credit approvals (68% are interested) and receiving a consolidated view of financial accounts (also 68%).

Fintechs see payments networks as strong partners for jointly developing emerging payment experiences.

- Fintechs indicated emerging payment experiences were relevant to their business, as 63% show strong interest in partnering with a payment network to develop open banking solutions, 60% show strong interest in partnering with a payment network to develop cryptocurrency solutions and 60% show strong interest in partnering with a payment network to develop embedded finance / banking-as-a-service solutions.

Embedded finance and banking-as-a-service (BaaS) are driving collaboration opportunities for banks and fintechs

- Three in four fintechs (75%) say embedded finance / BaaS is relevant to their business. Six in ten of consumers are interested in a loyalty program that provides them access to personalized financing options, rising to 75% of both Gen Z and Millennials.

Consumers and fintechs see an opportunity to integrate payments into commerce experiences.

- Two thirds of consumers (66%) are interested in paying automatically for purchases by walking out of the store and 58% are interested in having connected devices automatically make purchases on their behalf. Nearly eight in ten fintechs (79%) indicate that connected commerce is highly relevant to their business.

For a deeper dive into these findings, join Discover and 451 Research for a webinar on November 9 at 10-11am ET. Jordan McKee from 451 Research along with representatives from Discover will discuss the key business priorities facing fintechs and provide perspective on the digital payments space. For more information and to register, visit the event page.

* S&P Global Market Intelligence, Emerging payment trends: Perspectives on the future of payments from consumers and fintechs, October, 2022

About the Survey

A global survey of 4,037 consumers and 852 fintech vendors in VP, C-suite and founder roles was commissioned by Discover Global Network and conducted by 451 Research, part of S&P Global Market Intelligence, an independent research firm, in Q2-Q3 2022. Markets surveyed include Canada, China/Hong Kong, Germany, India, Singapore, the U.K. and the U.S.

About Discover

Discover Financial Services (NYSE: DFS) is a digital banking and payment services company with one of the most recognized brands in U.S. financial services. Since its inception in 1986, the company has become one of the largest card issuers in the United States. The company issues the Discover® card, America's cash rewards pioneer, and offers private student loans, personal loans, home loans, checking and savings accounts and certificates of deposit through its banking business. It operates the Discover Global Network® comprised of Discover Network, with millions of merchants and cash access locations; PULSE®, one of the nation's leading ATM/debit networks; and Diners Club International®, a global payments network with acceptance around the world. For more information, visit www.discover.com/company.

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