Open banking accounts for 15% of all fintechs worldwide. There are predictions the global market will be worth $43.15 billion by 2026 – compare this to the total oil industry, which is expected to reach $53.90b over the same time period; Open Banking is huge business and customer opportunity. The vision for Open Banking is to fuel the evolution of open finance and eventually open data. Empowering individuals and businesses with a clearer view of the personal information should support more seamless, personalised experiences and improved decision making.
So far, Open banking innovation has focussed on two key areas: user experience (account information services – AIS) and payments (payment initiation services – PIS). But the advancement of Open banking hasn’t been ubiquitous globally. Underpinning this has been whether a region has the payments infrastructure to support open banking PIS. In countries where faster payment rails are available the speed of innovation has been driven either by the push of regulatory force, or the pull of consumer demand. Emerging markets are demonstrating innovation and value at speed, as consumers are actively searching for fast, safe, digital solutions. Whereas markets like the US, where card payments are mature, and the banking landscape and infrastructure is complex making regulation difficult, are struggling to create market cohesion.
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Regardless of the differences by region, one thing is clear, open banking is globally recognised as a cornerstone in the evolution of data from commodity to fundamental to experience. Open banking should power seamless, insightful and integrated experiences that engage and retain customers across their financial lives. There is no region that has reached this vision yet, but the approaches and advancements globally set for interesting few years in payments, financial management, and data sharing innovation. Open banking relies on innovation of both infrastructure and experience. For banks, digital experience might not be a traditional strength, but the creation of safe, secure and scalable infrastructure is. Being able to find smart partners that can support the creation of digital experiences will be critical to banks leading the open banking revolution. Check out our market insight report to see how different countries are tackling open banking and the role banks are playing in driving innovation.