Europe Open Banking Market and Trends 2023

Europe Open Banking Market and Trends 2023

Open banking shows gradual increase throughout Europe, with a high share of UK’s population estimated to make use of Open banking services by 2023: new yStats.com report.

Within Europe, UK and Germany are the frontrunners in the open banking market

The shift of consumers and businesses globally towards digital and virtual means of payment has prompted regulators worldwide to implement the concept of open banking. With open banking gaining in popularity globally, Europe is no exception to this trend. Thus, within Europe, the UK, followed by Germany and Sweden are the most advanced markets when it comes to the open banking ecosystem development. Open banking in the UK was established in 2017 and has been growing since, with a high percentage of the country's population forecasted to use open banking by September 2023, according to a new report from yStats.com. Furthermore, the service benefits more than half of the country's small businesses as it provides another innovative payment option other than credit and debit cards, with small businesses using account information services provided by open banking more than retail consumers. Additionally, the value of successful payments via open banking has seen gradual growth, reaching a value in the millions as of March 2022. After the UK, Germany is also advancing when it comes to open banking reforms. The implementation of regulations such as PSD2 has led to the growth of open banking in Germany, and as of June 2022, the country had the second-highest number of third-party providers within the European Economic Area region. Furthermore, more than two-thirds of home-regulated third-party providers in Germany provide both Account Information Service and Payment Initiation Service, while this share is lower for the European Economic Area region.

Although Europe is a mature open banking market, the growth trajectory differs across countries in Europe

The rise in digital readiness and consumer awareness of the concept of open banking has encouraged regulators globally to implement the open banking initiative rapidly. Thus, the market size of open banking is forecasted to witness a robust double-digit CAGR between 2019 and 2026, as stated in the new yStats.com report. In 2021, Europe was the top-performing region, having the highest number of open banking products and platforms as compared to other regions. The UK, Germany, and Sweden were the most developed countries in terms of maturity of open banking in 2022. Nevertheless, other countries such as France, Lithuania, and the Netherlands are making improvements to their API standards, focusing on consumer awareness, regulatory framework and monitoring and enforcement of open banking. Despite this, not all countries in Europe witness the same growth pattern in terms of open banking, Finland, for instance, secured a low score in the open banking maturity league as of 2022, mainly because the nation lags in standardizing APIs and improving bank uptimes. Nevertheless, the country is an attractive fintech destination and is a part of the P27 initiative which is a real-time payment system in the Nordic area. Similarly, Latvia and Iceland also performed poorly in the open banking maturity league. In Iceland, the central bank needs to offer minimum standards and expectations on how open banking implementation should take place. Although Iceland lags in terms of developing an open banking infrastructure like its European counterparts, the growing fintech ecosystem is likely to push the growth of open banking in the country, as revealed by the new yStats.com report.