Global Open Banking Market 2024-2031

Global Open Banking Market 2024-2031

Global Open Banking Market Size, Share & Trends Analysis Report by Services (Banking & Capital Markets, Payments, Digital Currencies, and Value Added Services), by Deployment Mode (Cloud, and On-Premise), and by Distribution Channel (Bank Channels, App Markets, Distributors, and Aggregators) Forecast Period (2024-2031)

Open banking market is anticipated to grow at a CAGR of 29.4% during the forecast period (2024-2031). Open Banking is a framework in which banks and other financial institutions securely share customer financial data with authorized third-party providers using application programming interfaces (APIs). This essentially allows customers to control how their financial information is accessed and used by approved third-party applications and services.

Market Dynamics

Favorable Government Regulations

Governments around the world are recognizing the potential of open banking to promote financial inclusion, competition, and innovation in the financial sector. Regulatory frameworks like PSD2 (Payment Services Directive 2) in Europe and Open Banking standards in Australia have established guidelines for secure data sharing, giving consumers more control over their financial information.

In May 2024, India and Ghana are collaborating to link their payment systems, the Unified Payments Interface (UPI) and Ghana Interbank Payment and Settlement Systems (GHIPSS), to facilitate instant, low-cost fund transfers. The two countries are also discussing a Memorandum of Understanding (MoU) on digital transformation solutions, a local currency settlement system, and the African Continental Free Trade Agreement (AfCFTA). India's UPI has already reached Singapore, the UAE, and Nigeria. The bilateral trade between India and Ghana has increased to $2.9 billion in 2022-23, mainly due to gold imports. Such collaborations are further likely to drive the growth of the global market.

Increased Adoption of Fintech Services

The rise of FinTech (financial technology) companies is a major driver of an open banking market. These companies leverage open banking APIs to develop new and innovative financial products and services. This fosters a more dynamic and competitive financial landscape, ultimately benefiting consumers.

In April 2024 Visa launched its open banking offering in the US through its acquired vendor Tink. The product allows users to connect their accounts and grants trusted parties access to their financial data. Users can perform various financial tasks, including confirming bank account data, conducting real-time balance checks, and retrieving transaction information from multiple banks. Visa aims to revolutionize the US financial landscape with data access agreements with leading banks and FinTech companies.

Market Segmentation

Based on service, the market is segmented into banking & capital markets, payments, digital currencies, and value-added services.

Based on deployment mode, the market is bifurcated into cloud, and on-premises.

Based on distribution channels, the market is segmented into bank channels, app markets, distributors, and aggregators.

Service is projected to Emerge as the Largest Segment

The primary factor supporting the segment's growth includes the growing demand for personalized financial tools in open banking. Features such as faster, secure payment processing, innovative services in banking and capital markets, and potential integration with digital currencies are further aiding the demand for the service segment.

Regional Outlook

The global open banking market is further segmented based on geography including North America (the US, and Canada), Europe (UK, Italy, Spain, Germany, France, and the Rest of Europe), Asia-Pacific (India, China, Japan, South Korea, and Rest of Asia-Pacific), and the Rest of the World (the Middle East & Africa, and Latin America).

North America Holds Major Market Share

Among all the regions, North America holds a significant share owing to its robust FinTech ecosystem, early adoption of new technologies, large and tech-savvy population, evolving regulatory landscape, and presence of major players. The US and Canada are known for their early adoption of new technologies, creating a fertile ground for open banking solutions. The market is also fueled by a large and tech-savvy population.

The major companies serving the global open banking market include Plaid Inc., Finastra, Tink AB, True Layer, and Bud, among others. The market players are increasingly focusing on business expansion and product development by applying strategies such as collaborations, mergers and acquisitions, and partnerships among others to stay competitive in the market. For instance, in September 2023, Saxo Bank announced its partnership with Mastercard to integrate open banking payments into Saxo Bank’s investment platforms. Saxo Bank customers can seamlessly transfer money into their investment accounts without having to log in to a separate bank account to transfer funds into their investment accounts.