The Europe open banking market size was valued at $6,145.90 million in 2020, and is projected to reach $48,306.89 million by 2030, growing at a CAGR of 23.18% from 2021 to 2030.
Open banking is a financial solution that allows consumers' data to be safely shared or freely published with third-party service providers using application programming interfaces (APIs). APIs are a safe way for online banking systems to communicate with third-party service providers. An open API provides protection for bank customers' confidential data that is utilized by third-party service providers. These bank APIs can be used with third-party technology to perform specialized operations involving financial data. For personal financial management, the open banking technology is employed, which allows customers to see snapshots of their financial history. It is further utilized for an affordability check, which makes loan applications easier by giving lenders one-time access to a user's bank information.
The development of the open banking sector in Europe is being aided by an increase in use of internet platforms for making payments in European countries. With the introduction of new payment methods, more e-commerce use, enhanced internet connectivity, and the launch of new products & technologies, the digital payment system is witnessing rapid penetration across the region. However, increase in data breaches and cyber-attacks in the banking industry is restraining growth of the market. On the contrary, the improved decision-making for customers due to open banking is expected to boost the market growth in coming years. Customers can now pick from a variety of banking institutions and third-party suppliers to get the best deal. Moreover, technological advancements in the banking industry are anticipated to provide potential opportunities for the expansion of the Europe open banking market growth.
The report focuses on growth prospects, restraints, and trends of the Europe open banking market analysis. The study provides Porter’s five forces analysis to understand the impact of various factors such as bargaining power of suppliers, competitive intensity of competitors, threat of new entrants, threat of substitutes, and bargaining power of buyers on the Europe open banking market outlook.
By distribution channel, the app market segment occupied the largest share in the Europe open banking market size. Consumers can authorize third-party access without revealing bank login details through open banking API, which is a major benefit offered by the applications using open banking APIs. However, the distributors segment is expected to grow at the fastest rate during the forecast period. As distributors, banks develop their own products to be distributed through third parties. Banks provide client access to financial products offered by other companies, in addition to their products and services. This is the most attractive model, and banks can leverage a comprehensive product portfolio.
The Europe open banking market share is studied on the basis of financial service, distribution channel, and country. By financial service, the market is categorized into bank & capital market, payments, digital currencies, and value-added services. As per distribution channel, it is segregated into bank channels, app market, distributors, and aggregators. Country wise, the market is analyzed across the UK, Germany, France, Italy, Spain, Sweden, Netherlands, and rest of Europe.
The key players operating in the Europe open banking market include Banco Bilbao Vizcaya Argentaria, S.A., Deposit Solutions, Finastra, Klarna Inc., Nordigen Solutions, Plaid Inc., Revolut Ltd., Tink (Visa Inc.), TrueLayer, Yapily Ltd. These players have adopted various strategies to increase their market penetration and strengthen their position in the Europe open banking industry.
COVID-19 impact analysis
The COVID-19 pandemic has a significant impact on the Europe open banking industry, owing to increase in usage and adoption of online & digitalized payment methods among consumers. Open banking is experiencing massive growth as consumers are getting familiar with various banking options in the market. Moreover, banks and FinTech firms in Europe are providing their customers with options of payments to speed up their transaction process and enhance digitalized payments in the market. This, in turn, has become one of the major growth factors for the growth of the Europe open banking market during the global health crisis.
By Financial Service
Banking & Capital Markets segment accounted for the highest market share in 2020.
Top impacting factors
Potential benefits of open banking
Open banking is beneficial across the value chain of financial services industry, including consumers, businesses, Fintech companies, banks, and financial institutions. Customer in financial services receives access to enhanced banking services, along with innovative and personalized financial products through the implementation of open banking across the industry. Moreover, customers can reap benefit of choice as they have multiple options or service providers to choose from for their financial needs. Open banking pushes banks to provide more customized and relevant product offerings to customers by understanding their demographics, requirements, and other credible financial information such as KYC documents. These customized offerings help customers in the decision-making process and enhance the overall value of the financial service/product.
In addition, open banking serves an easy way for bank to extend their services. The open banking platforms are beneficial to banks to understand their customers as well as competitors. Furthermore,, it helps banks to enhance their services and product offerings, and further deliver better customer service and engagements. It facilitates easy operations that help customers to access the required information in a consolidated form. Moreover, it enhances centralization model for banking services. Through this, banks achieve full control over various services which are offered to the customers such as advice, loans, transfers, and financing. Thus, multiple benefits associated with open banking notably contribute toward the growth of the Europe open banking market size.
By Distribution Channel
App market segment accounted for the highest market share in 2020.
Increase in adoption of new applications and services across Europe
Open-banking related third-party providers and banks developed applications that help customers to attain consolidated details of their accounts from various financial service providers. Furthermore, the use of these applications and services allows the management of customer data and money. In addition, these series offer advice to customers for improved management of their wealth. Customers are offered enhanced services with digital capabilities from open banking and other banking sectors. According to the Forrester Research report 2019, a total of 34% of Europeans adults use an application or bank’s mobile website for banking activities. Furthermore, 64% of the adults are expected to adopt open banking in the coming years. In addition, open banking is expected to create a new and advanced channel for banks to connect with customers. This is also anticipated to provide opportunity to the third-party services for development of better applications and services. This offers financial institution to launch applications and other innovative services to improve overall open banking experience. The increase in the adoption of new applications and services help customers to opt for better experience and drive the growth of Europe open banking market size.
Favorable government regulations in Europe
In January 2019, Payment Services Directive 2 (PSD2), a European regulation on electronic payment services was established. The objective of the regulation was to increase security of payments and promote development of mobile, secure, and innovative payment services. Furthermore, the UK Competition and Markets Authority created an independent body open banking implementation entity (OBIE), in which the country’s major banks participated with an aim of defining an active implementation standard for open banking. As a result, this led to the expansion of open banking market in Europe. Thus, favorable government regulation across Europe is anticipated to drive the growth of the Europe open banking market during the forecast period.
Italy would exhibit the highest CAGR of 29.7% during 2021-2030
Key Benefits For Stakeholders
- This report provides a quantitative analysis of the market segments, current trends, estimations, and dynamics of the Europe open banking market forecast from 2020 to 2030 to identify the prevailing Europe open banking market opportunity.
- The market research is offered along with information related to key drivers, restraints, and opportunities.
- The Porter's five forces analysis highlights the potency of buyers and suppliers to enable stakeholders make profit-oriented business decisions and strengthen their supplier-buyer network.
- In-depth analysis of the Europe open banking market segmentation assists to determine the prevailing market opportunities.
- Major countries in Europe are mapped according to their revenue contribution to the global market.
- Market player positioning facilitates benchmarking and provides a clear understanding of the present position of the market players.
- The report includes the analysis of the regional as well as global Europe open banking market trends, key players, market segments, application areas, and market growth strategies
Europe Open Banking Market Report Highlights
By Financial Services
By Distribution Channel
By KEY MARKET PLAYERS
With open banking, banks are moving to agile technologies, building strong partner networks, and creating robust mobile platforms, which cater to consumer needs, thus enabling direct financial transactions between customers and businesses and making cross-platform payments a reality. Moreover, the introduction of new types of digital currencies by various nations' central governments would result in a spike in demand for open banking systems that can be utilized to use digital currencies. Furthermore, a number of significant companies from across the world are partnering to build improved open banking platforms, which is a crucial factor driving the industry growth.
The COVID-19 outbreak significantly impacted the Europe open banking market, and accelerated the usage & adoption of online payments, transfers, and other banking processes. Moreover, during this global health crisis, the adoption of open banking platform increased among large & small retailers. This promoted the growth of open banking platform across the Europe during the pandemic.
The Europe open banking market is fragmented with the presence of regional vendors such as Banco Bilbao Vizcaya Argentaria, S.A., Deposit Solutions, Finastra, Klarna Inc., Nordigen Solutions, Plaid Inc., Revolut Ltd., Tink (Visa Inc.), TrueLayer, Yapily Ltd. Major players operating in this market have witnessed significant adoption of strategies that include business expansion and partnership to reduce supply and demand gap. With increase in awareness & demand for Europe open banking across the globe, major players are collaborating their product portfolio to provide differentiated and innovative products.