Open Banking Market Size

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.

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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.