Global Open Banking Users To Double By 2021, As Consumers Seek Financial Insights: StudyMay 25 2020
"The opportunity is ripe for the new banks. Why? Because open banking will make it easier for consumers to switch due to the sharing of consumer data, creating a more seamless transition to a new institution." - Ben Crow
The total number of Open Banking users (consumers who share data via Open Banking APIs to aggregate their bank accounts and access new services), will double between 2019 and 2021; reaching 40 million in 2021 from 18 million in 2019, according to a new study from Juniper Research.
The research found that the ongoing coronavirus pandemic is increasing the need for consumers to aggregate accounts and gain insight into their financial health; boosting momentum in Open Banking adoption.
This extraordinary growth is being driven by Europe, where the regulator-led approach to Open Banking has created a standardised market, with low barriers to entry. This contrasts with markets like the US, where a lack of central regulatory intervention is limiting growth potential.
The new research, Open Banking: Opportunities, Challenges & Market Forecasts 2020-2024, identified that Open Banking can be both a threat and an opportunity for traditional banks. While Open Banking exposes user information and access to potential competitors, this threat is equal to all players in the market.
As such, the research recommends that established banks create innovative Open Banking services that provide user benefits, and attract customers from less innovative competitors.
Research author Nick Maynard said, “Banks must embrace Open Banking as a chance to capitalise on their ongoing digital transformation journeys and introduce innovative services enabled by Open APIs, or risk losing out to more digitally-agile competition”.
The research identified that payments will be critical to the emerging Open Banking ecosystem; accounting for over $9 billion in transaction value in 2024. However, payments within this ecosystem are at an early stage.
The study highlights that ecommerce is dominated by card networks, but there is potential for this role to be eroded over time by ‘direct from account’ payments. The research recommends that card networks should offer Open Banking-enabled payment services to offset the risk of future disruption.
Which-50. (2020, May 20). Global open banking users to double by 2021, as consumers seek financial insights: Study. Retrieved from https://which-50.com/global-open-banking-users-to-double-by-2021-as-consumers-seek-financial-insights-study/