This report provides an overview of the Open banking system market, including its size, growth rate, and competitive landscape. It includes revenue forecasts at the country, regional, and global levels, as well as analysis of the latest industry trends and developments. This study also segments the market by deployment type, services, and distribution channel.
Regulation and compliance are significant hurdles in the development of the open banking system
While open banking is beneficial to consumers, it poses challenges for financial institutions. The open banking model calls for financial institutions to make their consumer financial data available to third-party service providers. These third-party service providers would have write access to consumer financial data, which would allow them to initiate payments or create accounts. This model has many drawbacks, such as more complex security requirements and a need for additional safeguards. It would also delay the implementation of an open banking system.
The success of the open banking system is dependent on consumer trust. Consumers must feel that the system is safe and secure, and that their information is protected from unauthorized access. This requires clear attribution of liability and the payment of compensation when something goes wrong. This is a crucial part of the open banking system, because it ensures certainty for market participants. Ideally, liability should flow with the data, and rest with the party that acted negligently.
Regulatory and compliance concerns must also be addressed. While some stakeholders argue that there should be no regulating body for the open banking system, other groups say that a bi-lateral contract is necessary. Moreover, open banking is only possible if consumers have a clear window into the process and express their consent. The process should be carefully thought out, and consumers must be given a chance to make the right decision. Otherwise, the system risks becoming a click-through exercise.
Banking & capital markets segment dominating the market in 2021
The global open banking system market is segmented based on region, financial services and distribution channel. The financial services segment is expected to grow at the fastest CAGR during the forecast period. Increasing penetration of the internet in different regions is also expected to fuel the market growth.
The report covers the various aspects of the market, including its size and growth, the competitive landscape, and the segmentations. It also compares the market to other markets. It begins with a market analysis section that provides a definition of the market and estimates market size ($b). The next section focuses on market segmentation.
As the banking industry continues to evolve, there are more opportunities to take advantage of new technologies. This includes the emergence of Fintechs, retail banks and other financial institutions, and more. These trends will make the market more competitive and allow new players to enter the market.
Digital payment services are also expected to contribute to the growth of the open banking system. As a result, payment gateway APIs are increasingly being used by online platforms. In August 2021, Google Pay and PhonePe processed 1.5 billion transactions through their unified payments interface. These trends are expected to propel the growth of open banking systems over the next few years.
The banking industry has played an important role in providing financial services, but the underlying business models were not consistent across countries and time. Some governments in the US and Japan imposed restrictions on what banks could and couldn’t do. Other countries in central Europe were more liberal, allowing the banks to operate their own businesses.
Demand for contactless payments
Demand for contactless payments has surged, despite the risks associated with contactless payments. With the Covid-19 pandemic, governments and businesses are trying to make it safer for consumers to make purchases and use digital banking methods. A study by the National Retail Federation and Forrester shows that Americans are increasingly relying on contactless methods of payment, and it is likely that this trend will continue in the future.
The US banking sector has also seen substantial growth in contactless payments, and Visa has projected that 300 million contactless cards will be in circulation by 2020. In developing countries, such as India and China, consumers are increasingly adopting these technologies, and merchants are increasingly integrating these technologies into their business operations. In addition, the increasing adoption of smartphones is expected to create lucrative opportunities in this market.
Consumers who use contactless payments are likely to spend less cash than those who do not. Their change in payment behavior is expected to be much bigger than their changes in cash expenditure. In particular, contactless cards are likely to replace low cash value payments, which have little impact on the consumer budget. As a result, the benefits of contactless payments may be far greater than their risks. It is important to note that this research is not a comprehensive review of the industry.
In the US, a recent study by MasterCard found that nearly half of consumers consider contactless payment to be a safety measure. According to the study, 65 percent of consumers are more likely to use contactless methods if a pandemic outbreak happens. However, 16 percent said they would revert to old payment methods once the vaccine is widely available.