Open banking must overcome consumer fears about the sharing of financial data if it is to fulfil its strong growth potential, says studies.
In February, a Juniper Research study found that global open banking payments transaction values will exceed US$330 billion globally by 2027; up from $57 billion in 2023. The report predicts that the development of new use cases, such as bill payments via open banking, will drive adoption, given that open banking becomes as simple to use as card payments.
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Open banking is the practice of enabling secure interoperability in the banking industry by allowing third-party payment service and other financial service providers to access banking transactions and other data from banks and financial institutions.
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However, the third party access gives rise to alleviate common consumer fears and misconceptions regarding the potential misuse of financial data. If open banking wants to flourish, it’s imperative that consumers are educated in the same.
Open banking vendors must educate consumers and provide greater transparency surrounding data privacy and security by highlighting the procedures in place to protect financial data to ease security concerns and encourage greater adoption of open banking services when marketing their solutions.
Research author Jordan Rookes
Research author Jordan Rookes explains, “Open banking must overcome consumers’ security fears surrounding the sharing of financial data if it is to fulfil its strong growth potential. Accordingly, open banking vendors must educate consumers, and provide greater transparency surrounding data privacy and security by highlighting the procedures in place to protect financial data to ease security concerns and encourage greater adoption of open banking services when marketing their solutions.”
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The research also predicts the development of new use cases will be instrumental to ensuring that open banking fulfils its potential. One of the most promising new use cases is the ability to use open banking payments to pay tax bills, as introduced in the UK. As bill payments using open banking expand outside of the UK, they are expected to account for more than $59 billion globally in transaction values by 2027.
Vendors in the open banking space must continue to invest in new high-potential open banking use cases, such as full integration within eCommerce marketplaces. This will help both further develop the open banking market and attract a more sizeable user base, becoming more competitive in an increasingly saturated digital payments market.
