Research finds users of Open Banking services to double in the next 24 months
Source: Juniper Research
A new study from Juniper Research has found that the total number of Open Banking users (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. 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.
Open Banking: Threat or Opportunity for Banks?
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 explains: “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”.
Open Banking Payments at an early stage, but have Potential
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.
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