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Global Open Banking Market size is predicted to reach $109 billion by 2030, growing at a CAGR of 25.7% during the forecast period 2023-2030 according to the latest market research report published by IndustryARC. The primary factors influencing the market growth are the Growing importance of APIs, collaboration between banks and fin-techs, Increased focus on data privacy and security, emergence of new business models, finds IndustryARC in its recent report, titled “Open Banking Market Size, Share & Trends Analysis Report By Financial Services (Banking and Capital markets, Payments, Digital Currencies, Value Added Services), By Distribution Channel (Bank Channel, App Markets, Distributors, Aggregators), By Deployment (Cloud-based, On-Premises) By Geography – Global Opportunity Analysis & Industry Forecast, 2023-2030″.
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Asia Pacific to Register Highest Growth:
The Asia Pacific region is expected to witness significant demand for the implementation and expansion of online payments, and it is predicted to expand quicker throughout the projection period due to the region’s high digital adoption rate and awareness of the benefits of open banking in countries such as India, China, and Japan. In the forecast period, Asia Pacific is expected to have the greatest CAGR. This is due to a greater emphasis on digitization of financial services and a rising understanding of the benefits of Open Banking. Another factor driving market expansion is the growing number of banks investing in open application programming interface (API) management systems.
Open Banking Market 2023-2030: Segmentation
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By Financial Services
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? Banking and Capital Markets ? Payments ? Digital Currencies ? Value Added Services |
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By Distribution Channel |
? Bank Channel ? App Markets ? Distributors ? Aggregators |
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By Deployment |
? Cloud-based ? On Premises |
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By Region |
? Asia-Pacific ? South America ? Europe ? North America ? Rest of the World |
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Open Banking Market Report – Key Takeaways:
By making them widely accessible to clients, open banking API offers a unique potential to enhance consumer expectations. The banking and financial organizations offer their own application programming interfaces (APIs), which allow third parties and banks to establish new services, leading to expected financial income growth. In addition, an open banking application platform encourages customers to connect with their financial data in creative ways. Banks are also achieving the promise of open banking by increasing products that create a great client experience and engagement. As a result, open banking demands creative ways for increasing user participation driving to the open banking industry growth.
Customers may utilize third-party applications to examine all of their financial information in one location with open banking. This allows them to keep track of their finances more easily and avoids the need to log in to different accounts. Customers can utilize third-party applications to make payments straight from their bank account, allowing for quicker and cheaper payments. This is especially handy for foreign transactions, which may be costly and time-consuming when done traditionally.
Currently, Europe has the largest share in Open Banking market. With the European Union’s Payment Services Directive 2 regulation requiring banks to open up their APIs (Application Programming Interfaces) to third-party providers, allowing them to access customer data and initiate transactions on their behalf, the region has been at the forefront of the Open Banking movement. As a result, a robust ecosystem of FinTech businesses and other third-party providers offering innovative products and services based on Open Banking has emerged. Overall, the European Open Banking industry is likely to develop substantially in the future years, owing to factors such as rising acceptance of digital financial services, continuous FinTech innovation, and the ongoing change of regulatory frameworks.
Customers’ financial data is exchanged between banks and third-party suppliers via Open Banking, raising worries about data privacy and security. There is a danger that sensitive information may be revealed or exploited, causing consumers to suffer and undermining faith in the Open Banking ecosystem. Connecting diverse systems and technologies between banks and third-party suppliers can be difficult, particularly with legacy systems that were not built to interface with external APIs. Technological integration issues may hinder Open Banking adoption and restrict the amount of services provided.
Different banks and financial institutions may use varying API standards, making it challenging for fintech companies and third-party providers to integrate seamlessly with multiple financial institutions. A lack of standardization can slow down the development of open banking applications and services. This is limiting market expansion.
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Key Opportunity Analysis:
Increased use of innovative applications and services
Banks and open banking-related third-party providers developed applications that allow clients to receive consolidated account information from several financial service providers. Furthermore, using these applications and services assists in the administration of customer data and finances. Additionally, these programs advise consumers on how to manage their wealth properly. Customers gain from open banking and other financial businesses’ digital offerings. According to a Survey conducted by MasterCard in 2023, 34% of European adults use an app or a bank’s mobile website to conduct financial transactions. Furthermore, open banking is expected to be accepted by 64% of people in the next years. Thus, open banking is expected to create a new and enhanced channel of communication between banks and their customers.
Potential benefits of open banking
Open banking benefits everyone in the financial services industry, including consumers, businesses, Fintech firms, banks, and financial institutions. Through the deployment of open banking across the sector, a consumer in financial services gains access to superior banking services as well as innovative and tailored financial solutions. A client might benefit from having a variety of alternatives or service providers to pick from for their financial requirements. Open banking encourages banks to give more personalized and relevant product offerings to consumers by gaining a better understanding of their demographics, needs, and other trustworthy financial information such as KYC papers. These tailored services assist customers in making decisions and increase the overall value of the financial service/product.
The app market is projected to drive market expansion.
The app market is expected to dominate the open banking sector as consumers become more aware of online transactions and the widespread availability of smartphones. Furthermore, the availability of numerous transaction applications, such as PayPal, Google Pay, Zelle, and many others, which have made purchasing and selling simpler fintech services with just one click, is likely to propel the market. The app segment has seen significant development as a result of its broad network, which supplies a variety of items. Banks cooperating with third-party providers to allow clients to get certain services on a commission basis offers pure service providers an advantage in this area.
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The Report also covers the following Areas:
Open Banking Market 2023-2030: Key Highlights
Covid and Ukrainian Crisis Impact:
The COVID-19 pandemic has had a substantial impact on market growth over the projected period. The pandemic increased demand for contactless payments, resulting in a growth of the global market for open banking. Many fintech companies cooperated with market players to build cutting-edge digital solutions, resulting in market development. For example, in June 2022, Mastercard enabled startups to establish and extend their user base through its Start Path Open Banking program, allowing them to leverage resources, tools, and knowledge.
The Russia-Ukraine conflict produced regulatory changes in the region’s banking industry, impeding the growth and adoption of open banking services. Open banking is based on the interchange of financial data between banks and third-party suppliers, which creates concerns about data security and privacy. As a result of the discussion, tougher data privacy regulations were enacted, affecting financial data sharing and, as a result, the emergence of the open banking sector.
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The Open Banking Market is fragmented with several global and regional companies operating with expansive manufacturing capabilities and extensive distribution networks. The key companies profiled are listed below:
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