The EU’s Payments Service Directive 2 (PSD2), which came into effect in January 2018, created significant change both domestically and abroad. Today, most countries worldwide have implemented open banking services, arguably encouraged and popularised by the EU’s 2018 regulation.

In this infographic, we take a look at some of the key ongoing trends of this sector. Complete the form below to download it in HD:

What is open banking?

Open banking essentially refers to the practice of third-party financial services providers being given access to consumers’ financial data. This is done so that they can provide banks with new services through open APIs. Of course, permission from the bank’s account holder is still required. The idea is that by accessing this financial data, third parties can help banks provide their customers with innovative tools and solutions to improve their experience. These third-party companies are typically tech or financial services startups.

What are the benefits?

Open banking can provide end-users with a plethora of services to improve their banking experience. They can provide more convenience: easier payment methods, easier management of multiple bank accounts, etc. Personalisation is also an opportunity: tailored services based on your age, lifestyle, goals, etc. Improved decision-making and financial management is also a possible benefit: apps to help better manage their spending, increase savings, invest responsibly, etc.

What trends are we noticing today?

While the PSD2 is an EU-based regulation, many other countries have developed similar policies (e.g. the CFPB principles in the USA). Adoption rates have been growing for both consumers and financial institutions.

Juniper Research estimates 24.7 million individuals worldwide were using open banking services in 2020. By 2024, they expect this number will grow to 132 million. In 2020, in the UK alone, there were 4 million open banking payments. The country is a leader in this space thanks to high adoption rates and available solutions. Some of the most promising open banking startups are from the UK, such as Yapily and TrueLayer.

For banks, adoption rates and recognition of open banking’s advantages is promising. According to Accenture, 90% of bankers believe open banking will boost their organic growth by 10%. Banks are starting to recognise the value third-party companies can bring. Indeed, 89% of surveyed global financial institutions identify collaboration as a driver for success in their business.

What’s the impact of Covid-19?

The Covid-19 pandemic sped up digitisation processes in many industries, including banking. The rapid increase in demand for remote tools to manage one’s finances helped boost the growth of open banking worldwide. In the UK, surveys show 50% of SMEs have begun using open banking services since the beginning of the pandemic. 90% of these state the choice was a direct result of the pandemic.

What are the remaining challenges?

While open banking has shown some promising signs of growth, challenges remain. An ING International survey found that only 30% of European consumers feel comfortable with companies sharing their data, even with consent. Overall, research is showing disparities between what consumers say they want and what they’re willing to do for it. An Ipsos survey showed 75% of individuals would like to access data on how they spend their money, but only 40% were comfortable providing information to make that happen.

Personal data sharing is still a significant hurdle to delivering technological advances and innovation in many sectors. The future and growth of open banking will largely depend on consumers’ willingness to share their data and banks’ willingness to partake in this new form of digital collaboration with third parties.