Open Banking Market - By Financial Services (Banking & Capital Markets, Payments, Digital Currencies, Value-added Services), By Deployment Model (On-premises, Cloud, Hybrid), By Distribution Channel & Forecast, 2024 - 2032

Open Banking Market Size

Open Banking Market was valued at USD 23.5 billion in 2023 and is estimated to register a CAGR of over 22% between 2024 & 2032. The growth of digital banking and the increased usage of online platforms for payment transactions are major drivers in the market.
 

More people using digital banking platforms create a larger customer base for open banking solutions. Digital banking users often seek a wider range of financial services than their primary bank offers. Open banking caters to this demand by allowing Third Party Providers (TPPs) to develop innovative tools and applications that can integrate with the existing digital banking platforms.
 

According to National Payments Corporation of India (NPCI), Google Pay recorded over 1.4 billion transactions in January 2024. This highlights the increasing consumer preference for digital payment methods and the critical role of open banking Application Programming Interfaces (APIs) in facilitating these transactions. Meanwhile, PhonePe processed an impressive 2.3 billion transactions in the same month, reinforcing its dominant position in the market. In June 2024, Reliance Jio, a major telecom operator in India, launched the beta version of their JioFinance app. This app offers digital banking services such as Unified Payment Interface (UPI) payments, digital account opening, and mutual fund loans. JioFinance integrates with the user's existing Jio Payments Bank account, offering a centralized finance management platform.
 

There is a growing consumer demand for personalized financial services, and open banking is well-positioned to address this demand. Companies are leveraging customer data to offer personalized financial management tools, thus enhancing customer engagement and satisfaction. Open banking allows TPPs to leverage customer data with consent to develop personalized financial tools and applications. Personalized tools empower users to make informed financial decisions based on their unique circumstances. Streamlined tools can save time and effort while managing finances. 
 

Based on insights in a report released by Capgemini and Efma in January 2024, it has been a significant increase in European consumers seeking personalized financial advice & services. In addition, over 70% of respondents expressed interest in banks using their financial data to offer tailored services, such as customized loan offers and savings plans. Personalized budgeting and savings tools can help users achieve financial goals faster & manage debt more effectively.
 

Open banking involves sharing sensitive financial information through APIs with TPPs, which increases the potential for data breaches and cyberattacks. Managing consumer consent for data sharing and ensuring privacy regulations compliance are complex tasks. Mishandling data/improper consent management can lead to significant privacy violations and legal repercussions. Consumers may be reluctant to share their financial data, due to lack of trust in TPPs and data security concerns or. Further, many consumers are still unaware of open banking and its benefits, thereby potentially hindering its mass adoption.
 

Open Banking Market Trends

The convergence of big data analytics, Artificial Intelligence (AI), and APIs plays a crucial role in propelling the open banking industry forward. Open banking generates vast amounts of customer financial data. Big data analytics empowers banks and TPPs to analyze this data and extract valuable insights into customer behavior, spending habits, and financial needs. AI algorithms can analyze vast datasets from open banking more efficiently than traditional methods, identifying complex patterns and trends that might be overlooked by humans. APIs facilitate seamless transactions and integration across different financial platforms. They provide a secure & standardized way for banks and TPPs to share customer data with consent, thus fostering collaboration & innovation within the open banking ecosystem.
 

In January 2024, Accenture highlighted the transformative impact of AI on the banking sector, predicting significant increase in productivity and revenue due to AI adoption, which complements the growth of open banking through enhanced data capabilities & customer interactions. AI-powered automation can handle repetitive tasks such as loan processing, fraud detection, and customer service inquiries. It allows human employees to focus on more complex tasks and client relationships.
 

Governments worldwide are increasingly supporting open banking through regulations and initiatives aimed at enhancing financial transparency & competition. Governments enact regulations that mandate banks to share data with authorized TPPs. This legal framework provides clarity & security for banks & TPPs to operate within the open banking ecosystem. The Payment Services Directive 2 (PSD2) is a European Union (EU) regulation that requires banks to grant access to customer account information to TPPs with explicit customer consent.
 

In October 2023, the Consumer Financial Protection Bureau (CFPB) in the U.S. proposed the Personal Financial Data Rights rule. This rule aims to enhance competition by giving consumers control over their financial data and mandating that financial institutions share data with authorized third parties at no cost to consumers. By establishing a legal framework, promoting competition, and protecting consumers, governments help create an environment where open banking can thrive and ultimately benefit the consumers, financial institutions, and the broader economy.
 

Open Banking Market Analysis

Based on financial services, the market is divided into banking & capital markets, payments, digital currencies, and value-added services. In 2023, the banking & capital markets accounted for a market share of over 40%. The integration of open banking into the banking and capital markets is reshaping the financial landscape by enhancing data accessibility, streamlining operations, and fostering innovations. The open banking market in the banking sector is driven by the adoption of API-based platforms, allowing for greater data sharing and transparency. By leveraging APIs, banks can offer more personalized & efficient services, improving areas such as loan processing, wealth management, and risk assessment.
 

The adoption of open banking standards in capital markets operations offers greater transparency and efficiency. This is particularly relevant for processes such as customer onboarding, Know Your Customer (KYC) procedures, and transaction processing, which can experience up to 40% reduction in time & costs using open banking APIs. In March 2024, Plaid Partnered with Bank of America to expand its financial management tools. The collaboration allows Bank of America customers to connect their accounts with a wider range of financial management tools through Plaid's open banking platform. This demonstrates the ongoing integration of open banking with the existing banking services for enhanced personal financial management.
 

Based on deployment model, the market is categorized into on-premise, cloud, and hybrid. The cloud is expected to hold over USD 82.1 billion by 2032. Cloud deployment models enable financial institutions to efficiently manage large volumes of data, integrate with third-party applications, and innovate rapidly in response to changing market demands. Cloud platforms allow banks and TPPs to easily adjust their infrastructure based on the changing data volumes and user traffic. In addition, cloud solutions eliminate the need for upfront investments in hardware and software infrastructure.
 

Further, cloud-based open banking platforms facilitate easier collaborations between banks and TPPs. They provide a centralized platform for data sharing and application development, streamlining the overall process. In May 2024, Mambu, a leading cloud-native core banking platform provider, announced a partnership with Yapily, an open banking platform. This collaboration aims to simplify open banking integration for Mambu's banking customers, leveraging the scalability and ease-of-use of cloud solutions. The cloud infrastructure adapts to changing data volumes and user needs. It enables rapid development & deployment of open banking solutions.
 

In 2023, North America had a significant share in the open banking market accounting for over 31% share. The U.S. and Canada are home to numerous fintech companies which are driving the adoption of open banking. Innovations in mobile banking apps, digital wallets, and financial management tools are prevalent in this region. In addition, regulatory bodies in the region are beginning to embrace open banking. The Consumer Financial Protection Bureau (CFPB) website offers resources and consumer insights related to open banking in the U.S., focusing on consumer protection in financial services. Financial institutions are increasingly collaborating with fintech companies to offer enhanced services. In March 2024, Finicity, a Mastercard company, announced collaborations with several North American banks to develop new open banking solutions. The collaboration aims to create secure and user-friendly financial services that leverage open banking data. It focuses on developing tools for better financial management and decision-making.
 

In European countries such as the UK, Germany, France, and Spain, the open banking market is driven by strong regulatory frameworks such as the PSD2, widespread fintech adoption, and consumer demand for innovative financial services. The PSD2 has been instrumental in promoting open banking in Europe. It requires banks to open their payment services and customer data to third-party providers, fostering a competitive & innovative financial ecosystem. In June 2023, the European Commission proposed a comprehensive Open Finance Regulation, which aims to extend open banking principles to other financial sectors such as insurance, pensions, and investments. This regulation is designed to promote data sharing across financial services, enhance competition, and improve consumer access to financial products.
 

In APAC countries, including India, Japan, China, Indonesia, and Australia, open banking growth is driven by a combination of regulatory initiatives, technological advancements, and increasing consumer adoption of digital financial services. Consumers in APAC are keen on using innovative financial products that offer convenience and personalization. Advanced API integrations and the proliferation of fintech startups have also been pivotal in driving the market growth. In September 2023, the Indian government announced plans to expand the scope of UPI to include more financial services. It enables seamless real-time payments and financial data sharing, boosting the open banking ecosystem in the country.
 

Open Banking Market Share

Yodlee and Plaid dominate the market with over 5% market share. Yodlee is a prominent player in the open banking and financial data aggregation market. It provides data aggregation, financial wellness solutions, and analytics services to a diverse range of clients, including financial institutions, fintech companies, & developers. Yodlee's sophisticated APIs and financial cloud solutions facilitate seamless integration with client systems, allowing for real-time insights and enhanced financial decision-making.
 

Plaid is a leading fintech company specializing in financial data aggregation and open banking solutions. It has quickly become a key enabler of digital financial services by providing connectivity infrastructure that links consumer bank accounts to thousands of fintech applications. Plaid's platform facilitates secure access to bank account information, transaction histories, and financial analytics, allowing developers to create a wide range of financial products, from budgeting tools & lending platforms to payment processors.
 

Open Banking Market Companies

Major players operating in the open banking industry are:

• Accenture
• Capgemini
• Virtusa Corp.
• F5, Inc.
• MuleSoft (Salesforce)
• Yodlee (Envestnet)
• Plaid
• Tink
• Finicity (Mastercard)
• TrueLayer
• Token.io
   

Open Banking Industry News

• In April 2024, the UK Open Banking Implementation Entity (OBIE) reported that over 6 million consumers and small businesses are now using open banking services, marking a significant milestone. The adoption is driven by increased awareness, improved financial services, and the entry of new open banking products in the market.
   
• In February 2024, the Canadian Department of Finance launched a pilot program for open banking to test and refine the framework for safe and efficient data sharing. The pilot involves major Canadian banks and selected fintech firms, focusing on consumer protection and innovations. It aims to gather insights for the full implementation of open banking regulations by 2025.
   

The open banking market research report includes in-depth coverage of the industry with estimates & forecast in terms of revenue (USD billion) from 2021 to 2032, for the following segments:

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Market, By Financial Services

• Banking & capital markets
• Payments
• Digital currencies
• Value-added services

Market, By Deployment Model

• On-premise
• Cloud
• Hybrid SME

Market, Distribution Channel

• Bank channel
• App market
• Distributors
• Aggregators

The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Italy
  • Spain
  • Netherlands
  • Rest of Europe
• Asia Pacific
  • China
  • India
  • Japan
  • South Korea
  • ANZ
  • Southeast Asia
  • Rest of Asia Pacific 
• Latin America
  • Brazil
  • Mexico
  • Argentina
  • Rest of Latin America 
• MEA
  • UAE
  • South Africa
  • Saudi Arabia
  • Rest of MEA