Open Banking Market Size - By Banking Services (Banking & Capital Market, Payments, Digital Currencies, Value-added Services), By Distribution Channel (Bank Channel, App Market, Distributors, Aggregators), Deployment Model & Forecast, 2023 - 2032

Open Banking Market Size - By Banking Services (Banking & Capital Market, Payments, Digital Currencies, Value-added Services), By Distribution Channel (Bank Channel, App Market, Distributors, Aggregators), Deployment Model & Forecast, 2023 - 2032

Open Banking  Market Size

Open Banking Market size was valued at USD 20.2 billion in 2022 and is projected to register at a CAGR of 20.5% between 2023 and 2032. The rising demand for digital banking is propelling the market growth. Advanced technologies enable innovation, enhance operational efficiency, improve the customer experience, expand market reach, empower data-driven decision-making, enable collaboration, and drive industry transformation. Embracing and leveraging these advancements are essential for companies to stay competitive and achieve sustainable growth in the rapidly evolving business landscape.

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Open banking refers to a system that allows third-party financial service providers to access customer banking data, with the customer's consent, through Application Programming Interfaces (APIs) provided by traditional banks. This approach enables enhanced collaboration, innovation, and competition in the financial services industry. Open banking involves partnerships among traditional banks, fintech startups, technology providers, and regulatory bodies. Traditional banks act as data custodians, while fintech firms leverage the data to develop innovative solutions.
 

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The increasing reliance on digital identities raises concerns about privacy and data security. With the increasing amount of personal information being stored and shared digitally, there is a need for robust security measures to protect against data breaches and identity thefts. Privacy regulations and the potential misuse of personal data can hinder the adoption of open banking. The absence of standardized protocols and frameworks in open banking can create interoperability challenges. Different industries, organizations, and regions have varying requirements & systems, making it difficult to establish seamless & universally accepted digital identity processes. The lack of standardization can slow down the adoption of open banking and limit its effectiveness.

COVID-19 Impact

The COVID-19 pandemic accelerated the demand for open banking as individuals & businesses sought digital solutions, personalized financial management tools, remote services, and innovative offerings. The pandemic accelerated digital transformation in various industries including banking and finance. Traditional banks were compelled to fast-track their digital strategies and embrace open banking to enhance their online services and offer innovative solutions to customers. The increased reliance on contactless transactions and the need for convenient & accessible financial services propelled the demand for open banking, shaping the future of the financial industry.

Open Banking Market Trends

Data-driven insights refer to the utilization of customer financial data to derive valuable insights and provide personalized financial services. Open banking, coupled with data-driven insights, enables personalized customer engagement. By understanding customer preferences and financial needs, financial service providers can deliver targeted offers, notifications, and alerts, enhancing the overall customer experience & engagement. Data-driven insights in the market enable the development of personalized financial management tools, targeted product recommendations, risk assessment, fraud detection, enhanced customer engagement, regulatory compliance, and continuous improvement.

Expanding the ecosystem is an emerging trend in the open banking market. The open banking ecosystem is witnessing the entry of various participants beyond traditional banks. Fintech startups, technology companies, payment service providers, and even non-financial organizations are actively participating in the ecosystem. This expansion is driven by the increasing number of participants, collaborations & partnerships, diversification of services, global expansion, integration of open banking with emerging technologies, and regulatory support. As the ecosystem continues to evolve, customers can benefit from a broader range of novel & personalized financial services, while the financial industry experiences increased competition, collaboration, and innovation.

Open Banking Market Analysis

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The banking & capital market segment held over 30% of the open banking market share in 2022. Factors including compliance with regulatory mandates, infrastructure & customer base, enhanced customer experiences, innovation & collaboration, access to capital & investment opportunities, market expansion, and trust & security are augmenting the banking & capital market segment growth. This segment brings credibility, expertise, and a wide range of financial services to the open banking ecosystem, contributing to its overall development.

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The bank channel segment accounted for 25% of the open banking market share in 2022, owing to established customer relationships, trust & credibility, customer education & awareness, integration of open APIs, cross-selling & upselling opportunities, regulatory compliance, and the provision of value-added services. Banks involved in the open banking ecosystem bring their expertise, customer base, and infrastructure to support the adoption of open banking services.

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North America open banking market with a share of over 30% in 2022. North America boasts a robust fintech ecosystem with numerous startups and technology companies focusing on financial innovation. These fintech as a service providing firms leverage open banking to develop new products & services such as digital wallets, personal finance apps, and investment platforms.

The presence of a thriving fintech sector supports the growth of open banking in the region. Regulatory initiatives in North America, such as the Consumer Data Right (CDR) in Canada and the potential implementation of open banking regulations in the U.S., are boosting the market size. These regulatory efforts aim to promote competition, innovation, and consumer data rights, creating a favorable environment for open banking adoption.

Open Banking Market Share

Major companies operating in the open banking market are

• Finicity (Mastercard)
• Plaid
• Tink
• Yodlee (Envestnet)
• MuleSoft (Salesforce)
• Virtusa Corp.
• Tibco Software
• F5, Inc
• TCS
• Worldline S.A.
• Capgemini
• Oracle
•  Accenture.

These companies are focused on strategic partnerships, new product launches, and commercialization efforts for market expansion. They are also heavily investing in research to introduce innovations and garner the maximum market revenue.

Open Banking Industry News

• In July 2023, Fintonic launched OpenInsights to promote open banking data analytics. It specializes in designing advanced open banking services and data analytics for companies & financial entities.

This open banking market research report includes in-depth coverage of the industry with estimates & forecast in terms of revenue (USD Million) from 2018 to 2032, for the following segments

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Market, By Banking Services

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

Market, By Deployment Model

• On-premises
• Cloud
• Hybrid

Market, By Distribution Channel

• Bank channel
• App market
• Distributors
• Aggregators

The above information has been provided for the following regions and countries

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

Frequently Asked Questions (FAQ)

How big is the open banking market?

The market size of open banking was reached USD 20.2 billion in 2022 and will register over 20.5% CAGR from 2023 to 2032, driven by the influx of advanced technologies to enhance operational efficiency, improve the customer experience, and expand market reach.

How is the demand for open banking driven by bank channels?

The bank channel distribution model segment held over 25% of the market share in 2022, owing to the presence of established customer relationships, customer education and awareness, regulatory compliance, and the provision of value-added services.

How big is the North America open banking industry?

North America recorded more than 30% of the market share in 2022, led by the presence of robust fintech ecosystem with numerous startups and technology companies that focus on financial innovation.

Which are the major open banking companies?

Finicity (Mastercard), Plaid, Tink, Yodlee (Envestnet), MuleSoft (Salesforce), Virtusa Corp., Tibco Software, F5, Inc., TCS, Worldline S.A., Capgemini, Oracle, and Accenture are some of the key players operating in the market.