Open Banking Solutions Market

Open Banking Solutions Market - Analysis, Industry Size & Forecast

The Open Banking Solutions Market size was valued at USD 5.5 billion in 2023 and is expected to grow at a CAGR of 16.0% from 2023 to 2028. The revenue forecast for 2028 is projected to reach $11.7 billion. The base year for estimation is 2022, and the historical data spans from 2023 to 2028.

The impact of the recession (before, during, and after the recession) on the market is covered throughout the report. Banks and financial institutions are embracing digital transformation initiatives, adopting open banking to enhance customer experience and drive operational efficiency. Open banking enables international trade and transactions, addressing the requirements of both businesses and individuals (individual users) in the diverse and growing economies of the region.

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Recession Impact on the Global Open Banking Solutions Market

A recession can significantly impact the Open banking solutions market across organizations, industry verticals, and regions. Businesses may delay investments in these technologies as they prioritize cost-cutting over innovation. Startups in the field may struggle to secure funding as investors become more risk-averse. The demand for open banking solutions may increase during a recession as businesses seek more efficient financial management tools. However, the overall market growth might slow down due to reduced investment and consumer spending. Fintech companies offering open banking solutions may face challenges acquiring funding and retaining customers. Still, their services could be increasingly sought after by businesses looking to optimize their financial operations in challenging economic times. Government stimulus and investments in technology development can also help mitigate the recession's impact. In the end, the extent of the effect varies by region, industry, and the severity of the economic downturn.

Open Banking Solutions Market Dynamics

Drivers: There is a growing need to meet the compliance requirements of new data laws and regulations

Several Financial institutions must make significant changes to their business processes to meet new data privacy and regulation policies, such as the Second Payment Services Directive (PSD2) and open banking APIs. PSD2 enables banks to explore new business opportunities and transform digitally. Furthermore, PSD2 regulation enables third parties to access customer information to provide secured payment services. These regulations allow financial institutions to offer their customers innovative and competitive products and services in an open and secure environment. The regulations also provide a frictionless customer experience.

Restraints: Lack of digital literacy in emerging countries

Digital literacy is still lacking in many emerging nations, making it difficult for online and mobile payments to be widely accepted. This adversely affects the market expansion of Open Banking platforms and solutions. A wide range of abilities, including reading and comprehending technical information, are included in digital literacy. These abilities enable people to operate and utilize digital devices. Because most African nations have poor digital literacy rates, people cannot fully use the promise of digital technologies. Because there aren't many digital transactions, technology companies are likewise reluctant to make investments. Therefore, it is anticipated that the market for open banking solutions will grow more slowly in emerging nations due to low levels of digital literacy.

Opportunities: State-of-the-art innovation and improved personalization

Open banking unveils vast amounts (s) of financial data that can be leveraged to drive innovation and personalize financial services. By accessing real-time data from multiple sources, including bank accounts, credit cards, investments, financial institutions, and TPPs, they can develop innovative solutions tailored to individual consumer needs. These solutions may/can include personalized budgeting tools, automated savings plans, and customized investment recommendations. By harnessing open banking APIs, companies can offer more relevant and targeted financial products and services, enhancing the overall customer experience and increasing engagement and loyalty.

Challenges: Technical glitch leading to losses

Due to their reliance on digital platforms, banks are vulnerable to significant losses in the event of system failure or coding errors. Millions of dollars could be lost by a bank due to a single technological problem that shuts it down for the day. It can also create panic for bank customers who cannot make payments or conduct transactions when the site is down. A significant chunk of consumers now use a mobile banking app. So, it is vital not just for banks to have their online platforms running smoothly but also for their mobile apps. A loss of funds or data due to a crash can be very threatening for bank customers.

Open Banking Solutions Market Ecosystem

Based on the offering segment, Solutions will hold a larger market share in the Open banking solutions market during the forecast period.

Open Banking solutions include innovative tools and technologies designed to revolutionize the financial services industry by enabling secure data sharing, fostering collaboration between financial institutions, third-party providers, and consumers, and driving digital transformation. Payment initiation solutions allow businesses and consumers to initiate payments directly from their bank accounts, bypassing traditional payment methods and facilitating faster, more convenient transactions. Account information solutions aggregate and analyze comprehensive financial data from multiple sources, providing businesses with valuable insights for personalized marketing, risk assessment, and product development. API management solutions play a crucial role in facilitating seamless integration between different systems and enabling the development of innovative applications and services on top of existing platforms through open APIs. Identity verification and authentication solutions ensure secure access to financial data and services, leveraging advanced technologies to combat identity theft and fraud.

Based on solutions, the API management segment will record the highest CAGR in the Open banking solutions market during the forecast period.

API management solutions facilitate seamless integration, innovation, and collaboration across the financial ecosystem. As the gatekeeper between disparate systems and applications, API management solutions orchestrate data and transactions with precision and efficiency. These solutions provide developers, financial institutions, and third-party providers with standardized interfaces and protocols for accessing and exchanging financial data securely and transparently. API management solutions ensure compliance with regulatory requirements and protect sensitive information from unauthorized access or misuse by offering robust security measures, rate limiting, and access controls. Moreover, API management solutions foster innovation by enabling the rapid development and deployment of new financial products and services through open APIs, driving forward a future where interoperability and connectivity redefine the economic landscape.

Europe will hold the largest Open banking solutions market share during the forecast period.

The adoption of open banking solutions in the European region has gained considerable momentum, positioning the region at the forefront of the field/market. According to experts, Europe is expected to have the highest adoption rate of Open Banking solutions and associated services compared to other regions. This is due to the rising interest of European households in innovative, advanced technologies and the increasing investment of European companies in advanced technologies such as data integration, data visualization, middleware, API management, and blockchain, incorporated into/run by Open Banking solutions vendors and service providers.

Despite a continually evolving regulatory environment, Europe has witnessed significant economic growth in recent years. This growth can be attributed to the increasing expectations of businesses in the region to improve efficiency, save time, and reduce operating costs. As a result, several major US-based Open banking solutions market companies have expanded their operations in Europe, built up a solid clientele base, and established an overseas presence. Regional technology providers collaborate with global Open banking solutions market providers to stay competitive, retain existing customers, and attract new ones.

Key market players

The Open banking solutions market is dominated both by established companies as well as startups such as Plaid (US), Envestnet (US), MX Technologies (US), Finicity (US), Tink (Sweden), Worldline (France), Trustly (Sweden), Axway Software (US), Volt.io (UK), Temenos (Switzerland). These vendors have a large customer base, a strong geographic footprint, and organized distribution channels. They incorporate organic and inorganic growth strategies, including product launches, deals, and business expansions, boosting revenue generation.

The study includes an in-depth competitive analysis of these critical Open banking solutions market players with their company profiles, recent developments, and key market strategies.

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Scope of the Report

This research report categorizes the Open banking solutions market to forecast revenue and analyze trends in each of the following submarkets:

Based on Offering:

• Solutions
  • Payment initiation
  • Account information
  • Identity verification & authentication
  • API management
  • Other Solutions
• Services
  • Professional services
  • Managed services

Based on Application:

• Payment
• Banking
• Digital Lending
• Wealth Management
• Other Applications

Based on Deployment model:

• On-premises
• Cloud

Based on Digital channel:

• Web portals
• Mobile apps

Based on End users:

• Third-party providers (TPPs)
• Account providers

Based on Region:

• North America
  • US
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Italy
  • Rest of Europe
• Asia Pacific
  • China
  • Japan
  • India
  • Rest of Asia Pacific
• Middle East & Africa
  • GCC
  • South Africa
  • Rest of the Middle East & Africa
• Latin America
  • Brazil
  • Mexico
  • Rest of Latin America

Recent Developments

• In February 2024, MX Technologies partnered with Trustly, intending to integrate MX's data enhancement services into Trustly's Open Banking product suite, thereby enriching the payment experiences of 8,300+ international merchants and their consumers who utilize Trustly's 'Pay with Bank' method. Using its proficiency in open finance APIs, Trustly will assist businesses in maximizing the potential of their financial data. Merchants can delve deeper into consumer behaviors by refining and categorizing transaction data, obtaining more accurate insights. This service empowers merchants to deliver personalized marketing promotions and loyalty programs, enriching the consumer journey and nurturing stronger bonds between merchants and their clientele.
• In January 2024, Risk Signals was launched by Tink, which conducts real-time risk checks during the payment process. Risk Signals provides a quick assessment of transactions in seconds while the payer progresses through the payment process, resulting in less disruption to the user experience. Risk Signals formulates a suite of demonstrated risk checks for each bank and market based on Tink's pan-European bank connectivity. Risk Signals' key features are live balances for real-time verification of a user's ability to pay, transaction history to assess fraud risk, and velocity checks to mark suspicious transaction activities.
• In October 2023, Plaid entered into a deal with Fiserv to enable secure and reliable data sharing through APIs while addressing growing consumer demand to access their financial information according to their suitable time, location, and manner. With this deal, consumers who bank with nearly 3,000 bank and credit union clients hosted by Fiserv will now have secure, credential-less API-based connectivity to more than 8,000 applications and services on the Plaid network via Fiserv's AllData Connect, allowing consumers to share their financial information with the third-party financial apps and services of their choice.
• In October 2023, Envestnet launched its embedded investment solution to provide a digitalized process for banks, credit unions, and financial advisors that will offer investing solutions within their (the banks, credit union entities) own apps and websites to customers within their existing banking experience. The service, consisting of diversified portfolios invested in exchange-traded funds (ETFs) and optional thematic stocks, enables financial institutions to retain deposits within their ecosystem and serve smaller account sizes digitally.
• In June 2023, Financial institutions and fintech firms can now exchange vital fraud intelligence across Plaid thanks to the launch of Beacon by Plaid, a cooperative anti-fraud network.

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