How Open Banking in UAE Can Shape the Future of Banking by 2035

 

This report about the future of banking in 2035, based on a project by Economist Impact and sponsored by SAS looks at the big picture and five mega-trends impacting the banking sector by Open Banking.

Focuses on how major forces such as digitization, climate change, economic fragmentation and social inequality are reshaping the banking sector by 2035. 

 

There are three possible scenarios for how banks could evolve their mission and business models to deliver value to customers, shareholders, communities and the environment.

Scenario 1: transformed banks regain trust: 

How fintech and big tech disrupted the banking industry and how banks adapted

The first scenario is called "transformed banks regain trust". In this scenario, fintech and big tech companies have taken over the banking industry in Europe and the US by offering a superior customer experience built around trusted smartphone apps and free, frictionless mobile payments. 

 

Traditional banks have responded by embracing radically different business models based on open banking innovations.

Banks now open their data and related insights to third parties within external data-driven innovation ecosystems. Customers enjoy a frictionless, unified digital platform that encompasses their entire financial life. 

 

The challenges and opportunities for banks in this scenario, such as updating legacy systems, downsides of AI, re-establishing trust, making services more equitable and accessible, seizing data-driven benefits and unlocking new business models.

Scenario 2: climate action paradigm shift

How global climate action transformed the economy and society

The second scenario is called "climate action paradigm shift". In this scenario, the world is on track to limit global warming to 1.5°C above pre-industrial levels by the end of the century, preventing the most catastrophic effects of climate change. Substantial adjustments to the ways that individuals live and interact, and how businesses operate, have made this climate transition possible.

The digital revolution that began transforming the nature of communities, connectivity and work decades earlier is helping societies reach climate goals. The path to 2035 in this scenario, such as ESG investing acceleration, carbon tax introduction, technological breakthroughs powered by public-private partnerships and consumer and investor pressure.

The challenges and opportunities for banks in this scenario, such as internal culture change, short-term/long-term tradeoffs, managing climate risks and financing the transition.

Scenario 3: a fragmented world: How globalization gave way to regionalism and multi-polarity

The third scenario is called "a fragmented world". In this scenario, the period of globalization that steadily integrated markets around the world after the cold war is over. That liberal economic order has faded, fragmented by a deeply multi-polar geopolitical landscape.

Bilateral and regional trade agreements now dominate rather than the WTO. US hegemony of the global financial system has been fractured by rivals’ alternative payment systems as well as the rise of digital currencies. 

 

The global fragmentation began mounting in the years following the covid-19 pandemic as the EU, the US and China protected their respective, divergent interests rather than co-operating via multilateral trade.

The challenges and opportunities for banks in this scenario, such as rising intermediation costs, rising reputational and cybersecurity risks, maturation of digital currencies and new customer pipelines.

One certainty amid a range of possibilities

Conclusion and recommendations for banks

It emphasizing the importance of designing a great banking experience that fulfills the customer expectations of security, trust, speed and convenience. It also urges banks to be data-driven, customer-focused and innovative in their banking strategies. To be a champion for people and the planet, reaching a sustainable future that’s built to last. And deliver on the possibility of how conscientious banking can change the world for everyone – today through 2035 and beyond.

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Bankable API is a revolutionary new solution that is set to change the way banks and third parties connect and do business. Bankable API is a cutting-edge and innovative solution that has the potential to significantly impact the banking industry. 

 

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