The new report from Hamburg-based market intelligence firm yStats.com, “Global Open Banking Market and Trends 2021” offers a comprehensive overview of the new developments in the Open Banking market worldwide and provides insights into future industry developments. Among other findings, the publication reveals that despite the resistance of consumers in some countries to share their data, global digitalization and regulatory requirements are likely to support acceleration of Open Banking in the near future.
Open Banking is likely to see a surge in the number of users in the near future
Countries across the globe differ dramatically in terms of the Open Banking development level, with many markets still either only considering it or even completely resisting the system. However, those markets which have chosen to open their banking systems either followed the regulatory approach as in Europe or were prompted by the market as is occurring in parts of Asia. Overall, according to recent estimations cited in the new yStats.com publication, the number of Open Banking users globally is going to accelerate by 2024, increasing more than 5 times from the 2020’s figure. With that, the Open Banking pioneer region, Europe, led by the United Kingdom, was set to keep its leadership position. Europe is followed by the Asia-Pacific region, however, the gap in adoption between the two is substantial and was not expected to close even by 2024. With the surging number of users, the value of Open Banking transactions was forecasted to grow slower than the user adoption rate, rising by around 25% annually through 2027.
In Europe, the leading Open Banking region, there is still a certain level of heterogeneity in Open Banking implementation
The regulatory-driven European Open Banking landscape leads all other nations in consumer acceptance and transaction value. The ecosystem is based on the PSD2 legislation, which was developed by the European Commission in 2019. The region’s Open Banking ecosystem has a clear leader – the United Kingdom. The country started the process of Application Programming Interface development and acceptance even before the PSD2 came fully into force and as of March 2021 had over 200 Third-Party Providers (TPPS) participating in the system. Meanwhile, the second most developed Open Banking country is Germany, however, by the number of TPPs the market is still far behind the UK. Moreover, consumers in Europe, and in Germany especially, are somewhat resistant when it comes to data sharing, which is a major barrier for the development of Open Banking. Apart from these leading markets, other countries such as the Nordics, the Netherlands, Estonia, Lithuania and Poland are also making efforts to catch up. Meanwhile, even in a such highly developed ecosystem, there is still a certain level of heterogeneity, as several European nations do not see Open Banking as a priority, at least in the near future, as detailed in the new yStats.com market report.
Many other regions are making efforts to catch up with Europe in terms of Open Banking development
Some other global regions, following Europe, have also already reached a certain level in Open Banking implementation. Many of them took the EU approach and now highly rely on the regulatory guidelines; examples include Australia, Mexico, Brazil, and South Africa. Meanwhile, others were mainly driven by markets and consumer willingness to exchange data, such as in China, USA, Canada and other, according to data cited in the yStats.com publication. In general, Open Banking ecosystems across the globe are forecasted to increase in adoption in the upcoming years as more consumers globally connect to experience the benefits of the Open Banking and legislatures and financial institutions adapt rules and practices to facilitate the expansion.