Many analysts see open banking and open finance becoming game changers for banks and credit unions to gain revenue as they find ways to ultra-personalize broad customer relationships and widen their offerings.
Open banking, and its powerful offshoot open finance, loom as inevitable and fundamental change agents to the banking industry, while the pace and courses taken will vary according to the market. In Europe, for example, open banking was imposed by government, while it is developing as a result of market forces, mostly, in the U.S.
The long-term significance of this movement continues to unfold.
“Open finance marks a turning point for collaboration in financial services,” states Jacob Morgan, Principal Analyst at Forrester, in a blog. “It brings the ability to reduce friction through automation, to combine real-time insight across multiple sections, and guide customers to contextualized, personalized results.”
Putting some numbers on the open trend, in 2021 there were 26.6 million open banking payments, an increase of 500% in just 12 months, according to Helen Child, founder of Open Banking Excellence, a community of open banking practitioners.
“There is no logical reason why we cannot add a zero here and grow this to 260 million…The addressable market created by open banking will be worth $416 billion in the next three years,” Child writes in the foreword to a report on the state of open banking and open finance.