The rise of “Open Banking” has enabled banking customers to choose to share their previously inaccessible, locked down data with all sorts of third parties — from budgeting apps to mobile wallets, to peer to peer payment providers. This revolution has been a welcome boon for banks, customers, and financial services innovators alike. The ability to securely share access and permissions to accounts has fueled the rise and growth of an entire new industry — FinTech — as retail and institutional customers finally have the power of choice. The result has been the creation of an ever-growing ecosystem of new players constructing applications, modernizing infrastructure, and accelerating the pace of change.
Open Banking, the catchall name for the movement in which banks offer API access to customer financial data, is spurring not just an evolution of capabilities, but massive growth in the volume of data being generated by participants. This exponential growth in data is exposing a crucial need in business — for fast and secure access to core bank data, at scale.
The rush to solve this challenge has created significant opportunities for application developers to design better, more personalized solutions in every area of money management.
The growth of Open Banking
The current level of Open Banking adoption is only the tip of the iceberg. According to Accenture, as much as $416 billion in revenue will be at stake as the available data becomes more prominent. Agile market players, including FinTechs, neobanks, big tech, traditional financial providers, and other non-traditional players, are all preparing to compete for a slice of the pie. Additionally, the driver of adoption has not been uniform across major financial markets. For example, in Europe, Open Banking has been enforced by regulators via the adoption of PSD2. In China, digitally-savvy consumers have driven adoption, embracing better optionality and user experiences. In the US, financial institutions have proactively developed their directive without foundational infrastructure or specific regulations.
Despite the seemingly asynchronous pace of adoption, consumers already see many of the advantages of Open Banking. Simply put, it enables them to make better financial decisions, have clearer visibility of entire portfolios, new solutions, content, and it allows them to take action through unified channels. Those are just a few reasons as to why the future of Open Banking is bright.
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