Global Open Banking Market by Services (Banking & Capital Markets, Payments, Digital Currencies, Value Added Services), By Deployment(Cloud, On-premise), Distribution Channel (Bank Channels, App Markets, Distributors, Aggregators), By Region and Companies - Industry Segment Outlook, Market Assessment, Competition Scenario, Trends, and Forecast 2024-2033

Report Overview

The projected value of the global Open Banking Market is anticipated to be USD 30.9 billion by 2024 and is expected to witness substantial growth, reaching USD 203.8 billion by 2033. The market is poised for a remarkable surge, with a projected compound annual growth rate (CAGR) of 23.3% during the forecast period from 2024 to 2033.

“Open banking” is an term that aims to revolutionize the traditional banking system by encouraging transparency as well as competition and innovating by sharing financial information. It involves using APIs (APIs) that allow third-party developers access and use customer bank information, subject to the customer’s consent. Open banking permits customers to safely share their financial details with trusted third-party service providers which allows for new services to be offered and enhancing their overall experience of banking.

The main objective of open banking is to help consumers by giving them more ability to control their finances information and encouraging competition between lenders and other financial institutions. In allowing customers to securely share their personal data open banking facilitates the creation of new solutions and financial services to are tailored to the needs of specific customers. It also encourages the use of open standards as well as collaboration in the financial sector.

The open banking market is a fast expanding sector within the financial industry that is reshaping traditional banking practices and driving innovation. Open banking is the sharing of financial information, with their consent, by means of APIs (APIs) with third-party service providers. This market is driven by changing consumer demand for personalized financial services, more convenient access to credit and seamless payments.

Key Takeaways

• Open Banking Market is on an upward trajectory of substantial expansion, with a predicted worth in the range of USD 203.8 billion in 2033. This increase is anticipated to be fueled by a robust average CAGR in the range of 23.3% between 2024 and 2033.
• In 2023, the Banking & Capital Markets segment led the Open Banking Market with over a 44% share. This segment’s growth is attributed to the adoption of open banking standards in traditional banking operations, leading to greater transparency and efficiency.
• In 2023, Europe led the Open Banking Market with a 38% share, driven by progressive regulatory environments like PSD2. North America follows closely, with Asia-Pacific showing promising growth potential.
• 11.4 million payments were processed through Open Banking in July 2023, marking a 9.3% increase compared to the previous month. This highlights the escalating utilization of Open Banking services for transactions.
• The active payment user base in July 2023 surged to 4.2 million, demonstrating a 10.5% increase from June 2023 and a 68.2% surge from July 2022. This reflects the growing consumer acceptance and reliance on Open Banking platforms.
• Europe is on the brink of witnessing nearly 64 million Open Banking users in 2024, indicating a more than 400% growth within four years. Such a rapid expansion underscores the region’s leading position in adopting this transformative financial technology.
• The global Open Banking user base is anticipated to reach 132.2 million by 2024, growing at an approximate rate of 50% annually. This signifies the widespread adoption and integration of Open Banking services worldwide.
• A substantial 71% of financial institutions view Open Banking positively, with 77% acknowledging its potential to radically alter the financial services landscape.
• An impressive 84% of financial services companies are making investments in Open Banking products and services, demonstrating the industry’s commitment to embracing this innovation.
• In Europe, 77% of banks plan to invest in Open Banking initiatives for their commercial customers, highlighting the strategic importance of Open Banking in enhancing business banking services.
• Adoption of Open Banking in the European Union is anticipated to increase by 25% in 2023, propelled by the revised Payment Services Directive (PSD2) regulations, indicating a regulatory push towards Open Banking adoption.
• 72% of financial institutions consider Open Banking a strategic priority, recognizing its potential to significantly enhance customer experience and foster innovation.
• The utilization of Open Banking APIs can reduce the time and costs associated with customer onboarding and KYC processes by up to 40%, emphasizing the operational efficiencies enabled by Open Banking.
• The UK market expects a growth rate of 30% in 2024 for Open Banking-enabled products and services, reflecting the industry’s focus on expanding offerings and improving service accessibility.
• 67% of financial institutions believe that Open Banking will be a key driver of digital transformation in the banking sector by 2024, underscoring its role in advancing technological adoption in finance.
• The World Economic Forum forecasts that Open Banking could unlock new business models and drive economic growth within the context of the Fourth Industrial Revolution, with an estimated impact of ~$7 trillion by 2025.
• Key Players: Top players in the open banking market include Tink, Societe Generale, Nordigen Solutions, and others. Recent developments highlight partnerships and acquisitions, signaling the industry’s dynamism.

Services Insights

In 2023, the Open Banking Market witnessed the Banking & Capital Markets Segment leading the way, securing a dominant position with over a 44% share. This segment’s strong foothold is primarily due to the growing adoption of open banking standards in traditional banking and capital market operations. These standards are revolutionizing how financial data is shared and managed, offering greater transparency and efficiency in financial services. This shift is particularly significant in areas like loan processing, wealth management, and customer risk assessments.

The Payments segment is another crucial part of the Open Banking Market. This segment benefits from the ease of integrating various payment systems, facilitating smoother and more secure transaction processes. Open banking is transforming payment services by enabling faster, more convenient, and user-friendly payment experiences, both for individual consumers and businesses.

Digital Currencies have also found an important place in the open banking ecosystem. With the rise of cryptocurrencies and digital wallets, open banking platforms are increasingly incorporating these digital currencies, offering a more diverse range of transaction options. This segment is crucial in bridging the gap between traditional banking services and the evolving digital currency landscape.

Value Added Services within open banking are rapidly gaining traction. This segment includes services like financial planning, budgeting tools, and personalized financial advice, all made possible through the seamless sharing of financial data. These services are tailored to enhance customer experience and offer customized financial solutions, contributing significantly to the market’s growth.

Deployment Outlook

In 2023, the On-premise segment held a dominant position in the Open Banking Market, capturing more than a 56% share. This segment’s strength is largely due to its perceived security and control, which are highly valued in the financial sector. On-premise deployment allows banks and financial institutions to maintain direct oversight of their data and systems, which is crucial for sensitive financial operations. This traditional model of data storage and management is preferred by many institutions for its stability and reliability, especially in handling large volumes of sensitive financial data.

In contrast, the Cloud segment of the Open Banking Market is rapidly gaining momentum. The deployment model is scalable as well as flexibility and cost-effectiveness, which makes it a desirable alternative for a variety of companies that provide financial services. Cloud-based models are especially useful for smaller banks and fintech firms that need rapid deployment and agility without the cost of physical infrastructure. Additionally, advancements in cloud security and regulatory compliance are gradually overcoming initial hesitations about data security, leading to increased adoption.

Overall, both on-premise and cloud deployments play critical roles in the Open Banking Market, catering to different needs and preferences of financial institutions. While on-premise solutions offer control and security, cloud services provide scalability and cost efficiency, together enabling a diverse and dynamic open banking ecosystem.

Distribution Channel Analysis

In 2023, the App Markets segment led the Open Banking Market, capturing over a 37% share. This dominance is largely attributed to the widespread use of smartphones and the increasing popularity of financial apps. App Markets have become pivotal in providing users with easy access to a variety of financial services, from money management to investment platforms, all integrated within their mobile devices. The convenience and user-friendly interfaces of these apps have significantly driven their adoption, appealing to a tech-savvy and convenience-oriented customer base.

Bank Channels, another key distribution channel in the Open Banking Market, also play a significant role. These channels are traditional yet essential, offering customers a direct way to access open banking services through their existing banking institutions. Many customers prefer using bank channels for open banking services due to the trust and reliability associated with established financial institutions.

Distributors in the Open Banking Market are critical in bridging the gap between open banking service providers and end-users. They play a key role in expanding the reach of open banking services, especially in areas with less direct access to banking institutions or advanced technology.

Aggregators have emerged as an important distribution channel within the open banking ecosystem. They consolidate information and services from various financial institutions, offering customers a unified platform to access a wide range of financial services. This convenience of having multiple services in one place enhances customer experience and drives the adoption of open banking services.

Note: Actual Numbers Might Vary In Final Report

Driving Factors

• Consumer Demand for Transparency and Control: Customers increasingly seek transparency and control over their financial data, driving banks to adopt open banking standards.
• Technological Advancements: Rapid advancements in technology, including APIs and cloud computing, are enabling more efficient and secure data sharing in the financial sector.
• Regulatory Push: Governments and financial regulators are promoting open banking to foster competition and innovation in the banking sector.
• Fintech Collaboration: Collaborations between traditional banks and fintech companies are expanding the capabilities and reach of open banking services.

Restraining Factors

• Security Concerns: Concerns about data security and privacy are a major restraint, as open banking involves sharing sensitive financial information.
• Legacy Systems: Many banks operate on outdated systems, making the integration with open banking platforms challenging and costly.
• Customer Skepticism: Some customers are hesitant to adopt open banking services due to a lack of understanding and trust in new financial technologies.
• Complex Regulatory Environment: Navigating the complex and varying regulations across different regions can be a significant barrier for open banking implementation.

Growth Opportunities

• Emerging Markets: There’s significant growth potential in emerging markets where banking is less established, and digital services are rapidly expanding.
• Personalized Financial Services: Open banking enables the development of personalized financial products and services, catering to individual customer needs.
• Cross-Industry Integration: Integrating open banking with other sectors like e-commerce and telecommunications offers new service possibilities.
• Advancements in AI and ML: Leveraging AI and machine learning can enhance data analysis and offer more sophisticated financial services through open banking platforms.

Challenges

• Interoperability Issues: Ensuring interoperability between different banking systems and platforms is a key challenge.
• Balancing Innovation with Regulation: Striking the right balance between fostering innovation and maintaining regulatory compliance is complex.
• Building Customer Trust: Gaining customer trust in open banking services, especially in terms of data security, is a significant challenge.
• Rapidly Evolving Technology: Keeping up with the fast pace of technological changes and ensuring systems are up-to-date is challenging for financial institutions.

Key Market Trends in Open Banking

• Increased Use of APIs: The growing use of APIs is a major trend, facilitating easier integration and collaboration between financial services providers.
• Rise in Mobile Banking: The shift towards mobile banking is accelerating the adoption of open banking, as customers seek more convenient ways to manage their finances.
• Blockchain Integration: Incorporating blockchain technology for enhanced security and transparency is becoming a trend in open banking.
• Data Analytics and Insights: The use of data analytics is gaining traction in open banking, offering deeper insights into customer behavior and preferences.

Key Market Segments

Services

• Banking & Capital Markets
• Payments
• Digital Currencies
• Value Added Services

Deployment

• Cloud
• On-premise

Distribution Channel

• Bank Channels
• App Markets
• Distributors
• Aggregators

Regional Analysis

In 2023, Europe led the Open Banking Market, commanding a dominant 38% share. This region’s leadership is largely due to its progressive regulatory environment, particularly the Revised Payment Services Directive (PSD2), which has been a catalyst for open banking adoption. The demand for Open Banking in Europe was valued at USD 9.5 billion in 2023 and is anticipated to grow significantly in the forecast period.

European banks and financial institutions have been quick to embrace open banking, leveraging it to enhance customer experiences and innovate financial services. The high digital literacy rate among European consumers also contributes to this significant market share.

North America follows closely, with a substantial presence in the open banking landscape. The growth of the market in the region is fueled by the rapid growth of financial technology, as well as an emphasis on improving the banking experience of consumers. Within the United States and Canada, there’s an increasing trend of collaboration between fintech firms as well as traditional banks, which is advancing the advancement and development in open bank services.

The Asia-Pacific (APAC) region is a sign of promising growth prospects in the open market for banking. Countries like Australia, Japan, and Singapore are leading the charge, with regulatory bodies actively promoting open banking frameworks. The region’s large and tech-savvy population, coupled with increasing smartphone penetration, is expected to drive significant growth in open banking adoption.

Latin America, though in the nascent stages of open banking, is witnessing gradual growth. Countries such as Brazil and Mexico are at the forefront, with regulatory changes paving the way for open banking. This growth is fueled by the need to improve financial inclusion and modernize the banking infrastructure in the region.

The Middle East and Africa are emerging markets in the open banking sector. The adoption in these regions is primarily driven by a desire to boost financial innovation and inclusion, especially in areas with significant unbanked populations. Initiatives by governments and financial authorities in these regions are laying the groundwork for the future growth of open banking.

Note: Actual Numbers Might Vary In Final Report

Key Regions and Countries Covered in this Report:

• North America
  • The US
  • Canada
• Europe
  • Germany
  • France
  • The UK
  • Spain
  • Italy
  • Russia
  • Netherland
  • Rest of Europe
• APAC
  • China
  • Japan
  • South Korea
  • India
  • New Zealand
  • Singapore
  • Thailand
  • Vietnam
  • Rest of Asia Pacific
• Latin America
  • Brazil
  • Mexico
  • Rest of Latin America
• Middle East & Africa
  • South Africa
  • Saudi Arabia
  • UAE
  • Rest of MEA

Key Players Analysis

Key Players Analysis involves identifying and evaluating the most important players or businesses who play a major role in a certain market or industry. This analysis aids in understanding the market dynamics, and strategies used by the key players to get an edge. By studying the strengths and weaknesses, as well as the opportunities and threats from these competitors, companies can make informed choices and devise successful strategies to compete on the market.

Top 10 Biggest Key Players

• Tink
• Societe Generale
• Nordigen Solutions
• Deposit Solutions
• Yapily Ltd.
• Jack Henry & Associates Inc.
• Credit Agricole
• Finestra
• BBVA SA
• Revolut Ltd.
• Other Key Players

Recent Developments

• State Bank of Mauritius partnered with PayNearby in November 2023 to offer open banking solutions for account opening, banking transactions, final product sales, and AEPS.
• In October 2023, Mastercard acquired Finicity, a leading open banking data and payment platform, for US$825 million. This move signifies Mastercard’s commitment to open banking and its potential to revolutionize the financial services landscape.
• OpenInsights, introduced by Fintonic in July 2023, aims to advance the field of open banking data analytics. The platform specializes in crafting sophisticated open banking services and conducting data analytics tailored for companies and financial entities.

Report Scope