Open Banking Market Size, Share Global Analysis Report, 2024 – 2032

Industry Insights

[214+ Pages Report] According to Facts & Factors, the global open banking market size was valued at USD 26.05 billion in 2023 and is predicted to surpass USD 233.60 billion by the end of 2032. The open banking industry is expected to grow by a CAGR of 27.60% between 2024 and 2032.

Market Overview

Open banking refers to the financial services that help third-party vendors access customer banking data through API. There are a lot of advantages to using an open banking system, such as helping financial organizations reach underserved and unbanked populations.

Also, open banking collaborates with fintech companies to come up with more innovative solutions for customers. Open banking systems help organizations offer more personalized products and services, which further attracts customers. Also, these banking systems help organizations align with the regulatory framework across the globe. Open banking systems have various solutions and tools to detect and prevent fraud activities, thereby offering more secure data sharing, data management, authorization, and many others.

Key Insights

• As per the analysis shared by our research analyst, the global open banking market size is estimated to grow annually at a CAGR of around 27.60% over the forecast period (2024-2032).
• In terms of revenue, the global open banking market size was valued at around USD 26.05 billion in 2023 and is projected to reach USD 233.60 billion by 2032.
• Increasing demand for digital financial services is driving the growth of the global open banking market.
• Based on the applications, the banking and capital market segment is growing at a high rate and is projected to dominate the global market.
• Based on deployment types, the on-premise segment is anticipated to grow with the highest CAGR in the global market.
• Based on the distribution channels, the app market segment is projected to swipe the largest market share.
• Based on offerings, the solution segment is expected to dominate the global market.
• Based on region, North America is expected to dominate the global market during the forecast period.

Growth Drivers

• Increasing demand for digital financial services is driving the growth of the global market.

Consumers are looking forward to personalizing their banking experience, which is a major reason for the high growth rate of the global open banking market. Open banking helps financial organizations offer highly personalized products like investment services or loans to drive higher engagement rates. Also, the growing demand for convenience, like real-time access to fast payments, is further widening the scope of the industry. Users prefer fintech apps for various financial services.

However, the ongoing fintech innovations in products and services like loan lending, digital wallets, and many others are further strengthening the demand for open banking in the market. The emergence of digital-only banks like Revolut, Monzo, and many others is revolutionizing the market by leveraging an open banking framework. Advancements in AI and machine learning are likely to benefit open banking API in data services, risk management, or automated financial advice.

Therefore, all these factors are likely to fuel the growth of the market during the forecast period. For instance, Saxo Bank said it would partner with Mastercard in 2023 to add open banking payments to its investment platforms. Saxo Bank customers can easily transfer money into their investment accounts.

Restraints

• Data privacy and security concerns are likely to hinder the growth of the global market.

Open banking framework needs the sharing of customer data between third-party providers and financial organizations, which is likely to hinder the growth of the open banking industry. The rising incidences of cyber-attacks and data breaches are another major factor likely to negatively impact the growth of the industry. Lack of awareness and education gaps are other major factors likely to affect the market's growth.

Opportunities

• Rising adoption of mobile banking is likely to foster growth opportunities in the global market.

The growing use of smartphones and high-speed internet is significantly accelerating the digital payment and mobile banking services in the market. However, open banking is playing an important role in offering financial services by safely integrating bank data into mobile apps.

Also, there is a growing usage of contactless payments, which further utilizes open banking principles. Open banking helps integrate these payment services with mobile apps. Consumers pose a requirement for real-time financial insights into their accounts, which is another major factor positively impacting the growth of the global open banking market. Consumers are also looking forward to digital banking to manage their finances effectively.

For instance, PCI Pal said to launch Pay By Bank in 2022 for contact centers. It is an open banking solution to help merchants reduce their overall transaction costs and eliminate the chances of fraud.

Challenges

• Regulatory compliance is a big challenge in the global market.

There are different regulations all across the globe regarding the sharing and storage of personal data. Therefore, the open banking industry is witnessing huge challenges regarding regulatory compliance. Financial institutions also witness integration and interoperability issues because of outdated systems. Additionally, old legacy systems are not well-compatible with modern open banking frameworks.

Segmentation Analysis

The global open banking market can be segmented into applications, deployment types, distribution channels, offerings, and regions.

On the basis of applications, the market can be segmented into digital currencies, payments, banking & capital markets, value-added services, and others. The banking and capital market segment accounts for the largest share of the open banking industry during the forecast period.

Open banking helps banks personalize their services, like providing real-time spending insights or customizing investment advice. Such strategies help banks improve customer engagement rates and also lead the competitive market. The capital market and banking institutions use open banking to enhance customer experiences by adopting services like integrating digital wallets or improving transaction speeds.

On the basis of deployment modes, the market can be segmented on-premise and cloud. The on-premise segment is likely to witness significant developments in the coming years. On-premise solutions help these institutions have complete control over data and infrastructure. The rising concerns regarding increasing cyber-attacks are further encouraging these institutions to adopt on-premise solutions.

Also, many regions have tight regulatory infrastructure regarding data storage and sharing, which further makes on-premise solutions more in demand in the market. The on-premise solution helps institutions get software specifically designed for their operational requirements and legacy systems.

Many organizations are still operating with traditional legacy systems that cannot work well with cloud-based solutions, thereby making these on-premise platforms more appealing. Advancements in on-premise service security, like advanced encryption methods, fraud detection systems, and firewall protection, are further expected to foster growth in the segment.

On the basis of distribution channels, the market can be segmented into the app market, bank channels, distributors, and others. The app market is the fastest-growing segment in the global open banking market. The ongoing innovations in the field of fintech are boosting the growth of the segment. These innovations are helping developers come up with new apps offering unique services ranging from real-time payment to personal finance management.

Consumers are looking forward to digital solutions these days, which, in turn, is another major factor positively impacting the growth of the segment. Open banking apps help people with more personalized, convenient, and accessible financial services.

On the basis of offerings, the market can be segmented into services and solutions. The solution segment is likely to dominate the open banking industry during the forecast period. There is an increased demand for open API in the market, which is a major reason for the high growth of the segment. API is required to facilitate smooth integration between the banks and third-party applications. The market is witnessing an increasing number of fintech apps, which increases the need for API management platforms and solutions.

However, with the growing use of open banking in the market, security solutions are increasingly becoming important to monitor encryption, authentication, and fraud detection aspects to protect the data of both consumers and financial institutions. Also, these solutions help organizations align with open banking regulations like PSD 2. Moreover, the ongoing digital transformation initiatives are another major factor supporting the growth of the segment in the coming years.

Report Scope

Regional Analysis

• North America to dominate the global market.

North America will account for the largest share of the global open banking market during the forecast period. People in North America are increasingly adopting digital-first financial services, which is a primary reason for the high growth rate of the region. Also, people are looking forward to real-time payment solutions and mobile banking apps, which are supporting the growth of the market.

The region is witnessing a significant shift towards open banking strategies and innovative services. The U.S. is emerging as the largest market in the region because of the growing partnership and collaboration with banks and fintech companies for open banking solutions. Also, these partnerships are proving to be more beneficial for customers as they offer more streamlined operations and better experiences.

Asia Pacific is also evolving rapidly in the open banking industry because of the growing demand from consumers for digital financial services. However, the government is playing a crucial role in the growth of the APAC market.

For instance, the government of Australia came up with the Consumer Data Right initiative to encourage open banking solutions. India also came up with a Unified Payment Interface to foster the habit of using open banking solutions in the country. APAC is also witnessing growth in the fintech ecosystem, which is expected to create new business models using open banking API.

However, the growing usage of smartphones and high-speed internet in countries like India, China, and other Southeast Asian regions is expected to revolutionize the market. For instance, BNY Mellon said it would launch Bankify in 2023. It is an open banking payment solution that is expected to help organizations get payments from consumer's bank accounts.

Competitive Analysis

The key players in the global open banking market include:

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

For instance, Payer Financial Services AB came up with B2B open banking payments in Sweden in 2023. The company assists businesses in completing reconciliation and settlement, thereby offering merchants transparency of payment status in real-time.

The global open banking market is segmented as follows:

By Applications Segment Analysis

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

By Deployment Types Segment Analysis

• On-Premise
• Cloud

By Distribution Channels Segment Analysis

• App Market
• Bank Channels
• Distributors
• Others

By Offerings Segment Analysis

• Services
• Solutions

By Regional Segment Analysis

• North America
  • The U.S.
  • Canada
  • Mexico
• Europe
  • France
  • The UK
  • Spain
  • Germany
  • Italy
  • Rest of Europe
• Asia Pacific
  • China
  • Japan
  • India
  • Australia
  • Southeast Asia
  • Rest of Asia Pacific
• The Middle East & Africa
  • Saudi Arabia
  • UAE
  • Egypt
  • Kuwait
  • South Africa
  • Rest of the Middle East & Africa
• Latin America
  • Brazil
  • Argentina
  • Rest of Latin America