Open Banking Market

Market Synopsis:

Global Open Banking market valued at USD 12.39 Billion in 2022 and is projected to reach a value of USD 68.75 Billion by 2030 at a CAGR of 23.88% over the forecast period.

Open Banking is designed to make it easier for people to switch banks and move money around without having to go through lengthy processes. It is hoped that this will encourage competition between different banks and help them to innovate and offer better products and services. Banks have started offering their customers access to financial services through mobile apps and websites. These apps allow users to perform basic transactions like checking account balances, transferring money between accounts, paying bills, etc. In addition to these basic functions, some banks are now allowing their customers to use their apps to make payments to merchants online. They can do this by linking their bank accounts to payment gateways that enable them to accept credit card payments.

There are several reasons why banks are moving towards Open Banking. One reason is that they want to compete with fintech companies like PayPal and Square. Another reason is that they want their customers to feel comfortable using their service. A third reason is that they want people to trust them more. While the adoption rate of Open Banking is still low, it is expected to increase in the coming years.

The Open Banking market is expected to gain momentum in the forecast period due to the increasing adoption of Open Banking solutions across various industries including financial services, healthcare, retail, manufacturing, insurance, education, and the public sector. Increasing consumer awareness about Open Banking solutions has led to the rise in demand for Open Banking platforms. Moreover, the rising number of digital payments and mobile wallets are driving the growth of the Open Banking market. However, the high cost associated with the implementation of Open Banking solutions and lack of regulatory clarity and security concerns is some of the factors restraining the growth of this market.

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Market Segmentation:

The global Open Banking market is segmented into financial services, distribution channel, and region. By financial services, the target market is bifurcated as banking & capital markets, payments, digital currencies, and value added services. By distribution channel, the market is bifurcated into bank channel, app market, distributors, and aggregators.

The Payment Segment will be Dominating the Open Banking Market During the Forecast Period

The payments category is expected to develop at the greatest rate during the forecast period, owing to the increased usage of online platforms for making payments via debit cards, credit cards, online payments, and other methods. Other contributing factors to the market's growth include the increased accessibility of the internet around the world.

With the development of new payment methods, expanded e-commerce, improved internet connectivity, and the implementation of new technologies, the digital payment service is significantly expanding. Online systems such as phone pay, Paytm, and Google Pay employ payment gateway APIs to facilitate monthly invoicing, and these APIs are frequently used in Open Banking. For example, Google Pay, a digital wallet network based in the United States, reached 1 Billion transactions in August 2021. In July 2021, PhonePe, a digital payments network, achieved a new record by completing 1.5 Billion transactions through its unified payments interface (UPI). As a result, the increased usage of online platforms for payment processing is projected to move the Open Banking sector forward in the next years.

App Segment Holds the Largest Market Share in Terms of Revenue

The app market has been gaining traction over the last few years attributed to the escalation in the adoption of smartphones and the upsurge in awareness about the usage of banking applications. In 2018, the number of customers using digital banking applications increased by 20%, while the number of people who used mobile banking apps grew by 30%. By 2020, the number of users of digital banking apps is projected to increase by 50% compared to 2017. The top three reasons for switching from traditional banking to digital banking include convenience, ease of use, and security. In addition, the adoption rate of digital banking apps is higher among millennials than any other age group. Millennials are also more likely to switch between different types of banking apps.

The North America Region Dominates the Open Banking Market

North America is projected to account for the largest share of 42.5% of the global Open Banking market owing to the high penetration of mobile payment systems and rising acceptance of online payments among consumers. In 2017, the UK government announced that banks would have to open their accounts to third-party app developers. This was followed by other countries like Australia, Canada, Singapore, and Hong Kong. As of now, the US is the only country where this is not legal. Furthermore, strong advancement in the banking sector is another important factor influencing this market's expansion in this region.

Asia Pacific is projected to witness the highest CAGR in the next coming years. This can be attributed to the increased focus on the digitalization of financial services and growing awareness of the benefits of Open Banking. Another driver propelling the market growth is the increase in the number of banks investing in open application programming interface (API) management platforms.

Competitive Landscape-

Some of the major key players in the Open Banking Market are RLDatix (Canada), Riskonnect Inc. (Georgia), Verge Health (US), Clarity Group Inc. (US), The Patient Safety Company (Netherlands), RiskQual Technologies (US), Quantros Inc. (US), Conduent Inc. (US), Prista Corporation (US), Smartgate Solutions Ltd. (UK)..

Segmentation of Open Banking Market: