Open Banking Market Size, Share, Growth & Industry Analysis, By Service (Banking & Capital Markets, Payments, Digital Currencies, Value Added Services), By Deployment (Cloud, On-premise), By Distribution Channel (Bank Channels, App Markets, Distributors, Aggregators) and Regional Analysis, 2023-2030

Open Banking Market Size

The global Open Banking Market size was valued at USD 22.45 billion in 2022 and is projected to reach USD 146.89 billion by 2030, growing at a CAGR of 26.68% from 2023 to 2030. The open banking sector is witnessing substantial expansion, fueled by regulatory efforts, technological progress, and enhanced partnerships between traditional banks and fintech firms. In the scope of work, the report includes products offered by companies such as Banco Bilbao Vizcaya Argentaria, S.A., Credit Agricole, DemystData, Ltd., Qwist, Finastra, FormFree Holdings Corporation, Jack Henry & Associates, Inc., Mambu, MineralTree, Inc., NCR Corporation and others.

• The implementation of regulatory frameworks such as PSD2 necessitates banks to securely share customer data with third-party providers via APIs, thereby encouraging innovation and fostering healthy competition.

In addition, key trends in the financial industry include the emergence of third-party providers that offer a wide range of financial services. Additionally, there is a growing emphasis on data security and privacy, along with a notable global expansion of open banking principles.

Furthermore, traditional banks are adapting to these changes by developing APIs and establishing partnerships, while fintech startups drive innovation with their novel products. However, there are some challenges that need to be addressed, such as ensuring security, managing data privacy concerns, and achieving standardization and interoperability.

Despite these obstacles, the future of open banking looks promising, driven by ongoing regulatory developments, technological advancements, and the growing interconnectedness of the financial ecosystem. The open banking market is growing rapidly despite the challenges. This growth can be attributed to the continuous progress in regulations, advancements in technology, and the increasing interdependence of the financial system.

Analyst’s Review 

The global open banking market is expected to grow rapidly in the forthcoming years, as open banking, which involves the sharing of financial information between banks and third-party providers, has gained momentum in recent years due to the increasing demand for personalized banking services and the rise of digitalization in the financial sector. In addition, this trend is mainly driven by factors such as regulatory initiatives, technological advancements, and the growing adoption of application programming interfaces (APIs) by financial institutions. These factors have paved the way for increased competition and innovation in the banking industry.

Furthermore, the implementation of open banking allows customers to access a wide range of financial products and services from multiple providers, ultimately giving them more control over their financial data. Additionally, the use of APIs enables seamless integration between different banking systems, improving efficiency and convenience for both customers and financial institutions. As a result, the global open banking market is expected to grow significantly over the forecast period.

Market Definition

Open banking is a financial model that revolves around secure and standardized data sharing between financial institutions and third-party service providers. It operates through application programming interfaces  (APIs) that enable the seamless exchange of financial information. In addition, the primary objectives of open banking include promoting competition, fostering innovation, and providing customers with greater control over their financial data.

Furthermore, in this ecosystem, third-party providers, often fintech companies, leverage APIs to securely access customer data, enabling them to offer innovative financial services that appeal to a broad customer base. Moreover, regulatory initiatives, such as PSD2 in Europe, play a pivotal role in shaping and encouraging open banking practices, ensuring a balance between competition and consumer protection. Thus, the key outcomes of open banking include increased competition among financial service providers, which, in turn, fosters the development of a wide range of financial products.

Market Dynamics

Advancements in technology, such as API development, security measures, and data analytics, drive the technical infrastructure required for open banking, thereby propelling the growth of the market. In addition, fintech innovations benefit from these technological advancements as they enable seamless integration with banking systems through APIs, ensuring secure and reliable communication between different financial institutions. Furthermore, the implementation of robust security measures ensures the protection of sensitive customer data, thereby instilling trust in users and encouraging the adoption of open banking services.

The utilization of data analytics allows fintech companies to analyze vast amounts of financial data, providing valuable insights for personalized financial services and enhancing the overall customer experience. Therefore, by harnessing the power of data analytics, fintech companies can tailor their offerings to meet the specific needs and preferences of each individual customer. This not only leads to more accurate financial advice and recommendations but also empowers customers to make informed decisions about their money.

Additionally, the integration of artificial intelligence and machine learning algorithms further augments the capabilities of fintech platforms, enabling them to continuously learn and improve their services over time. Ultimately, these advancements contribute to a more efficient and user-friendly financial ecosystem, revolutionizing the way individuals manage their finances.

However, the absence of standardized protocols and practices for open banking can result in interoperability issues that may hamper the growth of the open banking market. Without standardized protocols and practices, various banks may implement open banking differently, which can create challenges in seamless communication and data exchange among them. This lack of interoperability can lead to inefficiencies and hinder the growth of the open banking market.

Segmentation Analysis

The global open banking market is segmented based on service, deployment, distribution channel, and geography.

By Service

Based on service, the open banking market is bifurcated into banking & capital markets, payments, digital currencies, and value added services. The banking & capital markets segment dominated the market in 2022 due to various factors such as the long-standing reputation of banks and trust among customers, making them the preferred choice for financial services. Additionally, banks possess the necessary infrastructure and resources to implement open banking initiatives effectively.

Furthermore, they provide a wide range of financial products and services that can be integrated into open banking platforms, providing customers with a comprehensive and seamless banking experience. Furthermore, banks possess extensive customer data, that can be utilized to offer personalized and targeted services through open banking. Overall, the dominance of the segment is a result of its established presence, technological capabilities, and customer-centric approach.

By Deployment

Based on deployment, the open banking market is bifurcated into cloud, and on premise. The on premise segment held the largest market share in 2022, as it offered customers easy accessibility. On-site open banking presents a novel way to cater to their needs, contributing to the segment's significant market share. In addition, another factor supporting the growth of the segment is the sharing of APIs by banking and financial corporations, allowing third parties and banks to propose innovative se­rvices. Moreover, an open banking application platform welcomes users to engage with their financial information in unconventional ways.

Open Banking Market Regional Analysis

Based on region, the global open banking market is classified into North America, Europe, Asia Pacific, MEA, and Latin America.

Europe held the largest market share in 2022, propelled by its early and proactive regulatory initiatives, particularly the introduction of PSD2. In addition, the supportive regulatory environment has encouraged a robust fintech ecosystem, fostering collaboration between traditional banks and innovative fintech startups, thereby contributing to the growth of the regional open banking market. Furthermore, the higher acceptance of digital banking among European consumers, coupled with the region's focus on data privacy and security, has propelled the growth of the open banking services market in the region.

Asia-Pacific is projected to depict the fastest growth over the forecast timeline due to the large and diverse consumer base, coupled with a high degree of mobile adoption, which presents a significant opportunity for open banking services market growth. In addition, fintech innovation and strategic collaborations between traditional financial institutions and agile startups contribute to the rapid expansion of open banking solutions in the region.

Furthermore, the growth of e-commerce and digital payments aligns with the principles of open banking, providing seamless and secure payment experiences. Moreover, the region's focus on financial inclusion, along with its tech-savvy population and cross-border opportunities, positions it as a major contributor to the evolving open banking landscape.

Competitive Landscape

The global open banking market study will provide valuable insights with an emphasis on the fragmented nature of the industry. Prominent players are focusing on several key business strategies, such as partnerships, mergers & acquisitions, product innovations, and joint ventures to expand their product portfolio and increase their market shares across different regions. Expansion and investments are the major strategic initiatives adopted by companies in this sector. Industry players are investing heavily in R&D activities, building new manufacturing facilities, and supply chain optimization. 

List of Key Companies in Open Banking Market

• Banco Bilbao Vizcaya Argentaria, S.A.
• Credit Agricole
• DemystData, Ltd.
• Qwist
• Finastra
• FormFree Holdings Corporation
• Jack Henry & Associates, Inc.
• Mambu
• MineralTree, Inc.
• NCR Corporation

Key Industry Developments 

February 2021 (Acquisition): Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) was acquired by PNC Financial Services Group, Inc. in a deal valued at $11.6bn. This acquisition is expected to accelerate the growth trajectory and drive long-term shareholder value.

The Global Open Banking Market is Segmented as:

By Service

• Banking & Capital Markets
• Payments
• Digital Currencies
• Value Added Services

By Deployment

• Cloud
• On-premise

By Distribution Channel

• Bank Channels
• App Markets
• Distributors
• Aggregators

By Region

• North America
  • U.S.
  • Canada
  • Mexico
• Europe
  • France
  • UK
  • Spain
  • Germany
  • Italy
  • Russia
  • Rest of Europe
• Asia Pacific
  • China
  • Japan
  • India
  • South Korea
  • Rest of Asia Pacific
• Middle East & Africa
  • GCC
  • North Africa
  • South Africa
  • Rest of Middle East & Africa
• Latin America
  • Brazil
  • Argentina
  • Rest of Latin America