Open Banking initiatives are driving market disruptors in financial services, with Banking-as-a-Service (BaaS) and Embedded Finance. They're an enabler for the delivery of these fintech digital services transformation concepts.
While the basic concepts are not totally new, their rise to prominence was fuelled by the European Union's Second Payment Services Directive (PSD2) and other key initiatives in recent years.
This transition has helped shape interaction patterns between traditional and emerging actors in the payments marketplace. As such, Open Banking will be a game-changer for business model innovation in the face of customer demands for improved financial products and services.
Open Banking Market Development
According to the latest worldwide market study by Juniper Research, the value of global payment transactions facilitated by Open Banking will exceed $116 billion in 2026 -- that's up from just under $4 billion in 2021.
The new market study also found that Europe will account for over 75 percent of Open Banking payments users globally in 2026 -- demonstrating the head start that PSD2 has given this market.
This transition has helped shape interaction patterns between traditional and emerging actors in the payments marketplace. As such, Open Banking will be a game-changer for business model innovation in the face of customer demands for improved financial products and services.
Open Banking Market Development
According to the latest worldwide market study by Juniper Research, the value of global payment transactions facilitated by Open Banking will exceed $116 billion in 2026 -- that's up from just under $4 billion in 2021.
This extraordinary growth rate of over 2,800 percent over the next five years will be driven by increasing user awareness of Open Banking features, supported by greater deployment within Europe, as fintech vendors build on PSD2 APIs to deliver expanding services.
The research identified Open Banking-facilitated payments, where payments are made directly from bank accounts, as a growing threat to the dominance of cards within eCommerce.
The research identified Open Banking-facilitated payments, where payments are made directly from bank accounts, as a growing threat to the dominance of cards within eCommerce.
While card payments are well established, leveraging permission for others to access bank accounts can reduce fraud risks due to strict Know Your Customer (KYC) rules. Juniper analysts recommend payment providers partner with Open Banking API providers now to reduce risks of disintermediation.
The new market study also found that Europe will account for over 75 percent of Open Banking payments users globally in 2026 -- demonstrating the head start that PSD2 has given this market.
However, the report recommends that API vendors look beyond regulatory minimum requirements to develop advanced use cases such as aggregation of additional products, including loans, credit cards, and mortgages as awareness builds.
"While PSD2 is a great starting point, it is not the end goal for Open Banking – supportive regulation must be a platform for much greater innovation. The race is on for vendors to build the most compelling capabilities for the future of Open Finance," said Damla Sat, industry analyst with Juniper Research.
"While PSD2 is a great starting point, it is not the end goal for Open Banking – supportive regulation must be a platform for much greater innovation. The race is on for vendors to build the most compelling capabilities for the future of Open Finance," said Damla Sat, industry analyst with Juniper Research.
Outlook for Open Banking Applications Growth
The research study found that recent governmental support within the U.S. market will stimulate the growth of Open Banking, and the market will require payments players to develop new capabilities quickly to capitalize.
The research study found that recent governmental support within the U.S. market will stimulate the growth of Open Banking, and the market will require payments players to develop new capabilities quickly to capitalize.
As such, Juniper analysts anticipate that acquisitions and partnerships will intensify, so vendors can meet these evolving requirements more rapidly, rather than developing their own solutions over time.
That said, I'm encouraged that governments are now supporting Open Banking innovations. The global financial services marketplace needs new fintech pioneers to create open APIs that enable third-party developers to build applications and services around a financial institution.
This evolution enables greater financial transparency options for account holders ranging from open data to private data. This will give those account holders full control of their financial data to make it easier for them to switch banks and other traditional lenders.