Global Open Banking Market Grows at a Staggering CAGR of 24.2%

Introduction

Open banking is a service where bank account data is shared with third-party providers over a secure open Application Programming Interface (API). These APIs permit the communication of financial information between parties in a secure manner. In addition, banks and third-party companies use this financial information to develop the products and services they offer to customers. Data interchange also enables the developing of more sophisticated and individualized applications that enhance the financial services consumer experience. Open banking is a structured information exchange between customers and financial service providers.

Market Dynamics

Increase in Adoption of New Applications and Services Drives the Global Market

Banks and third-party service providers related to open banking have developed applications that aid users in receiving consolidated account information from various financial service providers. Using these applications and services also enables the management of client information and funds. These series also provide recommendations for improved financial management. Consumers benefit from open banking and other financial sectors' digital offerings. According to a 2019 survey conducted by Forrester Research, 34% of European adults use a banking app or mobile website. In the following years, 64 percent of adults will utilize open banking. In addition, it is envisaged that open banking would provide banks with a brand-new, cutting-edge means of connecting with clients. The expansion of new apps and services enables consumers to choose a superior experience and drives the market's overall expansion.

Increasing Collaborations Between Banks and Fintech Firms Creates Tremendous Opportunities

The open banking industry encourages collaboration and has enabled cross-border initiatives. Citibank, for instance, announced six strategic partnerships with leading businesses in Hong Kong in May 2018 that facilitate quick and convenient banking services, thereby accelerating the development of open APIs in the city to accommodate their consumers' digital lifestyles and further facilitating the ease of customer operations. In addition, SBM Bank, a private lending institution established in India, has recently partnered with PayNearby to deliver numerous Open Banking products for their customers. SMB Bank and PayNearby have signed a memorandum of understanding (MOU) to develop an "Open Banking network" and offer their consumers a wider range of financial services. Under this project, SBM Bank intends to offer several banking services via the PayNearby network. In the open banking market, these collaborations to consolidate services, enhance client engagement, and promote tailored service offerings are anticipated to create new opportunities.

Regional Analysis

Europe is the most significant global open banking market shareholder and is anticipated to exhibit a CAGR of 23.8% during the forecast period. The necessity to strengthen the security of online payments is a factor leading to the expansion of open banking systems in Europe. The government's orders requiring banks to open APIs further drive market expansion in this region. There is a regional shift toward open banking, as evidenced by numerous regulatory efforts. For example, the European Union issued a Second Payment Services Directive (PSD2). This rule requires banks to offer third-party providers (TPPs) customer data via open APIs. In addition, Europe is anticipated to account for the second-largest proportion of the global open banking market in 2018. In addition, credit card customers are forced to use various banking applications. Open banking platform enables the management of several cards and banks and provides bank customers with a single interface or dashboard for checking account information quickly. Hence, the user-friendliness of open banking services is anticipated to boost market expansion in the region.

Key Highlights

• The global open banking market was valued at USD 17,358.12 million in 2022. It is estimated to reach USD 122,066.93 million by 2031, growing at a CAGR of 24.2% during the forecast period (2023–2031).
• Based on financial services, the global open banking market is divided into banking and capital market, payments, digital currencies, and others. The banking and capital market segment is responsible for the largest market share and is anticipated to grow at a CAGR of 23.3% over the forecast period.
• Based on distribution channels, the global open banking market is segmented into bank channels, app markets, distributors, and aggregators. The app market segment owns the highest market share and is expected to exhibit a CAGR of 24.3% during the forecast period.
• Europe is the most significant global open banking market shareholder and is anticipated to exhibit a CAGR of 23.8% during the forecast period.

Competitive Players

1. Accern Corporation
2. Figo GmbH
3. Finastra
4. FormFree
5. Credit Agricole DemystData
6. Mambu GmbH
7. MineralTree Inc.
8. Jack Henry & Associates Inc.
9. and NCR Corporation

Recent Developments

Recent Developments

• March 2023- Open banking platform Tarabut Gateway collaborated with Bahrain-licensed cryptocurrency exchange Rain to enable clients to fund their cryptocurrency wallets more quickly and affordably. The agreement would allow customers to fund their accounts directly from their bank accounts without leaving Rain's platform.

• March 2023- Ukrainian Processing Center (UPC) and Tietoevry Banking, a prominent software and services company, established a cooperation to create open banking services in Ukraine. The partnership will help UPC become the leader in open banking platforms by providing Ukrainian financial institutions with a modern and standardized approach to accessing value-added services via the open API marketplace.

Segmentation

1. By Financial Services
   
   1. Banking and Capital Markets
   2. Payments
   3. Digital Currencies
   4. Others
2. By Distribution Channel
   1. Bank Channel
   2. App Market
   3. Distributors
   4. Aggregators