The global open banking market is projected to reach $43.15 billion by 2026, up from $7.3 billion in 2018, according to a recent report from Allied Market Research, growing six-fold in eight years.
Open Banking is a technology-powered practice that provides third-party financial service providers open access to consumer banking, transaction, and other financial data from banks and non-bank financial institutions through the use of Application Programming Interfaces (APIs). It is also known as ‘open bank data’.
The report comes as financial regulators, experts and officials gather at the 2nd Open Banking Forum to be held in Dubai from December 6 to 7.
API in essence, enables third-party developers to build applications and services around financial institutions. It facilitates greater financial transparency and helps financial institutions to innovate and create new and tailored services for its customers.
With changing regulatory mandates, open banking has been gaining significant momentum across the globe.
The two-day forum will touch on the changes in the global financial services market that is expected to grow at 9.9 percent from $20.49 trillion in 2020 to $22.51 trillion in 2021 and $28.52 trillion in 2025, according to Research and Markets, a global research advisory.
The banking sector represents more than a quarter of the size of the global economy.
The Covid-19 pandemic has accelerated the digitisation across all aspects of business and public life and banks were forced to adopt touchless payment transactions due to the nature of the crisis posed by the Coronavirus.
Open Banking, powered by APIs are rapidly changing the banking and payment industry globally, so much so, that banking services are becoming touchless and seamless while the customer interaction is becoming more effective without human interaction.
Nizam Deen, Founder and Chief Executive Officer of CS Events, said: "Open Banking is not only changing the payment landscape but the overall customer experience in the financial sector which needs to be examined, debated by experts to give a clearer picture on the future of banking."
"The future of banking will be reshaped by Open Banking – the back-end architecture that will improve customer experience in a digital banking environment. However, we are bringing out the best possible outcome in the banking industry by highlighting the developments," he added.
The number of open banking users worldwide is expected to grow at an average annual rate of nearly 50% between 2020 and 2024, with the European market being the largest.
Europe accounted for 12.2 million open banking users in 2020. This figure is expected to reach 63.8 million by 2024. As of 2020, 24.7 million individuals worldwide used open banking services, a number that is forecast to reach 132.2 million by 2024.
"Open banking is a driving force of innovation in today’s global banking industry. It allows the networking of accounts and data across institutions for use by consumers, financial institutions, and third-party service providers. It is becoming a major source of innovation that is poised to reshape the banking industry," he added.-TradeArabia News Service