Skip to main content

How Open Banking will Enable Disruptive New Services

Banking relationships are important to financial service providers. Traditionally, a banking relationship could reasonably be expected to last a customer's lifetime. However, the introduction of online and mobile banking has fundamentally altered expectations, disrupting the legacy banking business model.

Measures to increase competition and make switching accounts easier have eroded friction, while the commoditization of services in the U.S. market has led to reductions in profit margins. Moreover, following the introduction of open technologies, APIs have begun to be a disruptive force in banking.

APIs enable different systems to share data and initiate transactions, which can simplify the creation of new financial service offerings. This has helped to facilitate the Open Banking phenomenon.

Open Banking Market Development

According to the latest worldwide market study by Juniper Research, the total number of Open Banking users -- who share data via Open Banking APIs to access new services -- will double between 2019 and 2021; reaching 40 million in 2021, that's up from 18 million in 2019.

The market study found that the ongoing COVID-19 pandemic is increasing the need for customers to aggregate accounts and gain insight into their financial health, thereby 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 standardized market, with low barriers to entry. This contrasts with markets like the U.S., where a lack of central regulatory intervention is limiting the growth potential.


Juniper analysts identified that Open Banking can be both a threat and an opportunity for traditional financial service institutions. While Open Banking exposes user information and access to potential competitors, this threat is equal to all service providers in the market.

As such, Juniper recommends that the savvy established banks create innovative Open Banking services that provide user benefits and attract customers from their less innovative competitors.

"Banks must embrace Open Banking as a chance to capitalize on their ongoing digital transformation journeys and introduce innovative services enabled by Open APIs, or risk losing out to more digitally-agile competition," said Nick Maynard, lead analyst at Juniper Research.

Outlook for Open Banking Applications Growth

Juniper analysts have identified that digital payments will be critical to the emerging Open Banking ecosystem -- accounting for over $9 billion in transaction value by 2024. However, payments within this ecosystem are at an early stage.

The study uncovered that eCommerce is dominated by payment card networks, but there is potential for this role to be eroded over time by 'direct from account' payments. According to the Juniper assessment, card networks should offer Open Banking-enabled payment services to offset the risk of future disruption.

That said, it's unclear if traditional financial service organizations can be agile and keep up with the more nimble new fintech providers that have no legacy systems or business models to transform. Only time will tell, so we'll have to wait and see how this emerging market continues to evolve.

Popular posts from this blog

Global Digital Business and IT Consulting Outlook

Across the globe, CEOs and their leadership teams continue to seek information and guidance about planned Digital Transformation initiatives and the most effective enterprise organization change management practices. Worldwide IT and Business Services revenue will grow from $1.13 trillion in 2022 to $1.2 trillion in 2023 -- that's a 5.7 percent year-over-year growth, according to the latest market study by International Data Corporation (IDC). The mid-term to long-term outlook for the market has also increased -- the five-year CAGR is forecast at 5.2 percent, compared to the previous 4.9 percent. Digital Sevices & Consulting Market Development IDC has raised the growth projection despite a weak economic outlook, because of vendor performances across 2022, growth indicators from adjacent markets, increased government funding, and inflation impacts. The actual 2022 market growth was 6.7 percent (in constant currency), which was 87 basis points higher than forecast last year, alth

Mobile Device Market Still Awaiting Recovery

The mobile devices market has experienced three years of unpredictable demand. The global pandemic, geopolitical pressures, supply chain issues, and macroeconomic headwinds have hindered the sector's consistent growth potential. This extremely challenging environment has dramatically affected both demand and supply chains. It has led to subsequent inflationary pressures, leading to a worsening global cost of living crisis suppressing growth and confidence in the sector. In tandem, mobile device industry stakeholders have become more cautious triggering market uncertainties. Mobile Device Market Development Operating under such a backdrop, the development of mobile device ecosystems and vendor landscapes have been impacted severely. Many of these market pressures persisted throughout 2022 and now into 2023, borne chiefly by the smartphone market. According to the latest worldwide market study by ABI Research, worldwide smartphone shipments in 2022 declined 9.6 percent Year-over-Year

Digital Talent Demand Exceeds Supply in Asia-Pac

Even the savviest CEO's desire for a digital transformation advantage has to face the global market reality -- there simply isn't enough skilled and experienced talent available to meet demand. According to the latest market study by IDC, around 60-80 percent of Asia-Pacific (AP) organizations find it "difficult" or "extremely difficult" to fill many IT roles -- including cybersecurity, software development, and data insight professionals. Major consequences of the skills shortage are increased workload on remaining digital business and IT employees, increased security risks, and loss of "hard-to-replace" critical transformation knowledge. Digital Business Talent Market Development Although big tech companies' layoffs are making headlines, they are not representative of the overall global marketplace. Ongoing difficulty to fill key practitioner vacancies is still among the top issues faced by leaders across industries. "Skills are difficul