Open Banking Market Size, Share & Trends Analysis Report By Services (Banking & Capital Markets, Payments, Digital Currencies, Value Added Services), By Deployment, By Distribution Channel, By Region, And Segment Forecasts, 2023 - 2030

Report Overview

The global open banking market size was valued at USD 20.07 billion in 2022 and is expected to grow at a Compound Annual Growth Rate (CAGR) of 27.2% from 2023 to 2030. The open banking market is expanding as a result of the spike in the use of online payment platforms. The changing payment ecosystem, growing utilization of e-commerce platforms, improving broadband connectivity, and the rising acceptance of Application Programming Interfaces (APIs), are fueling the market’s growth. Online services such as Zelle, PayPal, and Venmo employ payment gateway APIs to manage recurring billing, and these APIs are frequently used in open banking payments. As a result, the open banking market is expected to propel over the forecast period.

In addition, the technological advancements and the consequent increase in the use of big data analytics and Artificial Intelligence (AI) are expected to increase the implementation of open banking systems. Big data analytics are utilized in the open banking sector to tailor the services and enhance the user experience that is anticipated to attract more customers. Moreover, open banking benefits from the financial services industry's whole value chain, including customers, enterprises, Fintech firms, banks, and financial institutions. Through the adoption of open banking across the sector, a customer in the financial services obtains access to superior banking services and cutting-edge and individualized financial products because they have a variety of options or service providers to pick from for their financial needs.

Over the forecast period, initiatives to raise public awareness of open banking are anticipated to fuel market expansion globally. For instance, Open Banking Europe (OBE) extended its Memorandum of Understanding with the European Telecommunications Standards Institute (ETSI) in December 2021. The extension is meant for another three years; it was originally signed in 2018. This alliance is focused on raising awareness and encouraging collaborations around legislation, relevant standards, and best practices among OBE and ETSI community members.

Moreover, the increasing investment in digital banking is expected to offer lucrative growth opportunities for the global open banking market. For instance, to promote the development of digital banking and open finance, the Arab National Bank (ANB), a financial institution in Saudi Arabia, integrated the open hybrid cloud platforms of Red Hat in December 2021. ANB wants to establish, manage, and broaden ties with ecosystem partners in a more secure and effective manner. ANB planned to achieve this by using a microservices integration layer and APIs for creating Banking-as-a-Service (BaaS) products and cloud-native applications on its Red Hat platform.

However, the rising incidences of cyber-attacks and online frauds are expected to restrain the growth of the market over the forecast period. On the other hand, a considerable increase in alliances of banks and service providers with fintech operators is anticipated to eliminate such challenges by adopting technologies such as AI and machine learning to detect suspicious activities effectively and also to enhance the offered services. For instance, in November 2020, Finicity, an open banking provider, was acquired by Mastercard for USD 825 Million. Mastercard is utilizing the data sharing and machine learning technology of Finicity to enhance performance and reduce overdraft risk with faster processing.

COVID-19 Impact Analysis

The outbreak of the COVID-19 pandemic is expected to play a decisive role in driving the growth of the market over the forecast period. The pandemic increased the demand for contactless payments; as a result, the global market for open banking expanded. Numerous fintech companies teamed forces with prominent players in the market to provide cutting-edge digital solutions, thereby triggering market expansion. For instance, in June 2022, Mastercard enabled startups to grow and increase their consumer base through its Start Path Open Banking program allowing them to utilize resources, tools, and expertise.

Services Insights

The banking & capital markets segment dominated the market in 2022 and accounted for a share of more than 45.0% of the global revenue. The growing demand for managing finances effectively among millennials is expected to drive the segment’s growth. Shifting the focus of people from traditional investment methods to advanced investment solutions is expected to create lucrative opportunities for the segment. The increasing adoption of advanced AI-enabled platforms that can suggest investment options as per the customer’s need through the integration of algorithms and analytics is expected to propel the segment growth.

The payments segment is anticipated to register the fastest growth over the forecast period. The attributes of the growth are increased internet penetration across the world and a surge in the utilization of various platforms for online payments. Such developments occurred as an opportunity for banks to gain a competitive edge and strengthen the market position by collaborating or partnering with such platform providers. As a result, creating a positive outlook for the segment’s growth.

Deployment Insights

In 2022, the on-premise segment dominated the open banking market and registered a share of above 52.0% of the global revenue. By enabling easy accessibility for customers, the on-premise Open Banking offer a unique method to better serve their needs. Another factor responsible for the segment growth is that the banking and financial companies offer their own APIs, which enable third parties and banks to offer cutting-edge services. Additionally, a platform for open banking applications invites users to interact with their financial data in unconventional ways.

The cloud segment is expected to witness the fastest growth over the forecast period. The bank's ability to collect an unprecedented amount of consumer data, analyze it, and provide customized services where they are needed is made possible by cloud deployment services. In addition, cloud technology provides the highest standards of security. Moreover, the cloud enables scalability, flexibility, and real-time processing, which is expected to create new opportunities for segment growth.

Distribution Channel Insights

The app markets segment dominated the market in 2022 and accounted for a share of 36.0% of the global revenue. The dominance can be attributable to the proliferation of smartphones globally. The growing adoption of mobile applications for various purposes such as buying and selling products and services is expected to drive the segment’s growth. Moreover, rising awareness regarding the utilization of banking services through mobile banking also bodes well for the segment’s growth.

The distributors segment is anticipated to witness the fastest growth over the forecast period. The growth is ascribed to the fact that in a distributor model, banks function as a pure service providers or a provider of a product by processing what is eventually sold by a third-party provider. The customer interface is owned in this instance by the third-party provider, which is expected to offer unique opportunities for the segment’s growth. Banks can profit from this by providing funds to third parties under a commission-based business model, allowing customers to obtain services from third parties that a bank would then resell.

Regional Insights

Europe dominated the open banking market in 2022 and accounted for a share of over 37.0% of the global revenue. The regional market growth can be ascribed to the increasing requirement for improving online payment security in the region. Another aspect promoting market expansion in this region is the government's directives for banks to compel the opening of APIs. The presence of several prominent players in the region is further expected to fuel the regional market growth.

Asia Pacific is anticipated to grow at the highest CAGR over the forecast period. The growth of the regional market can be attributed to the growing awareness in countries such as China, India, and Japan, about the benefits offered by open banking systems. The rapid developments in digital payments services in the Asia Pacific are also expected to contribute to the growth of the regional market. For instance, in August 2021, an online payment platform Google Pay successfully completed 1 billion transactions in India.

Key Companies & Market Share Insights

The market for open banking can be regarded as being extremely competitive and characterized by the existence of numerous notable industry players. To improve their offers, industry leaders are exploring a variety of methods, including new product releases and geographic growth, among others. For instance, in June 2021, the MEA region's first use case of open banking payments in a telecommunication application was provided by Tarabut Gateway, the prominent open banking platform in MEA, in cooperation with Zain Bahrain. This is the first time a local telecom operator has used open banking to facilitate its payments through an innovative alignment.

Market players are collaborating to enhance their product offerings. For instance, in June 2022, Trustly, a global Open Banking provider, partnered with Gr4vy, a payment platform based on the cloud. The collaboration is aimed at providing merchants operating on Gr4vy with an inexpensive solution to accept payments. Some of the prominent players in the open banking market are:

• Bannco Bilbao Vizcaya Argentaria, S.A.

• Crédit Agricole

• DemystData, Ltd.

• Finleap connect

• Finastra

• FormFree Holdings Corporation

• Jack Henry & Associates, Inc.

• Mambu

• MineralTree, Inc.

• NCR Corporation

Open Banking Market Report Scope

Global Open Banking Market Segmentation

The report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2017 to 2030. For the purpose of this study, Grand View Research has segmented the open banking market based on services, deployment, distribution channel, and region.

• Services Outlook (Revenue, USD Million, 2017 - 2030)

  • Banking & Capital Markets

  • Payments

  • Digital Currencies

  • Value Added Services

• Deployment Outlook (Revenue, USD Million, 2017 - 2030)

  • Cloud

  • On-premise

• Distribution Channel Outlook (Revenue, USD Million, 2017 - 2030)

  • Bank Channels

  • App Markets

  • Distributors

  • Aggregators

• Regional Outlook (Revenue, USD Million, 2017 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • Germany

    • U.K.

  • Asia Pacific

    • China

    • India

    • Japan

  • Latin America

    • Brazil

  • Middle East & Africa