Here is the second part of an article exploring how wealth management around the world is affected now, and will be in future, by what is called "open finance."

This article – the second of two parts (part one is here) – is from Raphael Bianchi, senior partner at Synpulse, a global professional services firm for banks and insurers, and the CEO of Synpulse8, the firm's financial and wealth-industry collaborative digital transformation offering. The editors are pleased to share these views; the usual editorial disclaimers apply. Email tom.burroughes@wealthbriefing.com if you want to jump into the conversation.

As we explored in the previous article of this series, there are many potential benefits of open finance’s adoption in the wealth industry which are starting to be recognised by some in the field. While there will certainly be kudos and first-to-market advantages for early adopters, reaching a critical mass of adoption is vital to the long-term success of open finance. This is because central to the open finance model is the shift towards an ecosystem mindset, where the more ‘nodes’ the system has and the greater the number of connections, the stronger and more powerful it becomes. 

This article delves into the ambition of the global expansion of OpenWealth standards, emphasising the imperative for the industry to navigate this evolution with three core principles: rigour, scale, and innovation.

Rigour above all
Switzerland stands as a testament to the success of OpenWealth adoption in a market entrenched with established wealth traditions, legacy systems, and stringent regulatory barriers. The Swiss experience demonstrates that, with rigour, even in well-entrenched financial landscapes, OpenWealth can carve a path to success. The meticulous adoption of open wealth principles in Switzerland can serve as a blueprint for other markets grappling with similar challenges. The commitment to precision and adherence to a market-driven standardisation with the support of the regulator and key industry players is paramount for a seamless transition to standardised OpenWealth practices, ensuring not only compliance but also fostering a robust and secure financial ecosystem and allowing for better cost efficiency.

Most crucially, Switzerland has a worldwide reputation as one of the most rigorous and experienced markets when it comes to regulation in wealth management. Essentially, it is a tough test market – if OpenWealth can be successful in Switzerland then it carries a hallmark of trust and quality which will make its standards accepted globally. 

Scaling for success
Also key to adoption rate is ensuring that solutions are scalable. The wealth industry is already poised to scale globally, as it is a highly globalised industry. Compared  parallel industries such as retail banking, many wealth management firms are habituated to operating across borders and applying standards globally within local contexts. This is because the clientele of wealth management tends to also be global – requiring services across multiple geographies with highly diverse regulatory, cultural, and technological landscapes.

The interconnectedness of the financial services industry as a whole also plays a part. For companies considering trialling an open finance approach, then one set of standards across borders creates an easy option to replicate this new approach across many countries. For example, some banks may have operations in Switzerland and Germany, which already benefit from their close geographical relationship and some language overlap. These may also see benefit in scaling their open finance approach across their wealth management services in both markets. 

Unlocking innovation
While proving the concept of open finance in markets with rigorous compliance and legacy players, the adoption of open finance in wealth management can also be spurred on by innovative markets. After all, while wealth firms want to be sure of giving customers secure and compliant services, they must also be new and bring additional value. 

This is where markets with innovation-first policy approaches to financial services – such as Jakarta and Singapore – can play a role. Less encumbered by legacy systems than their counterparts in some European markets, these markets can almost ‘fast forward’ into the open finance ecosystem and focus almost exclusively on new, digital-first approaches. 

By the same stroke, in these markets there is often a fast-growing affluent segment, which is looking for entry level wealth management products that are part automated and offered at scale. The convergence of an innovation-first culture and growing demand sets the stage for mass adoption of open finance models in the wealth management industries of these markets. Therefore, for the global adoption of OpenWealth, staying at the forefront of innovation is not merely an option; it's an opportunity for sustained relevance and success.

Finding a way forward for the global expansion of open finance in wealth
As OpenWealth transcends borders, its global expansion presents a unique set of challenges and opportunities for the wealth industry. Alongside building credibility in compliance-heavy legacy markets, it also needs to position itself in innovation-focused new markets. Both of these aspects will be required to onboard a variety of players into the ecosystem, delivering the scale which is required for an open finance model in wealth to achieve its true potential. While markets of rigour and markets of innovation may seem far apart, the wealth industry is by its very nature a globalised one, a strength which must be embraced to find shared opportunities. Globally, the industry stands on the brink of a transformative era – one where OpenWealth can take its place as a cornerstone of global financial practices.

About the author
Raphael Bianchi Senior Partner of Synpulse Group and CEO of Synpulse8, the global professional services provider to major banking and insurance institution. His previous work includes the initial setup of Synpulse's footprint in Asia and the expansion into nearshore capabilities. He focuses on projects in the area of open finance business models and is responsible for initiatives such as the OpenWealth Association.