Open Banking payments to exceed $330bn by 2027, study shows

By Puja Sharma

A new study from Juniper Research has found that global Open Banking payments transaction values will exceed $330bn globally by 2027; up from $57 billion in 2023.

The report, Open Banking: Opportunities, Competitor Leaderboard & Market Forecasts 2023-2027, predicts that the development of new use cases, such as bill payments via Open Banking, will drive adoption, given its simplicity of use versus alternatives, such as card payments. More than 6.5 million consumers and SMEs in the UK already use open banking-enabled products and services, contributing to UK leadership in the FinTech sector, with UK citizens and businesses benefiting from increased competition, choice, and innovation.

Last year HMRC stated that their adoption of OB had saved the public purse over £500k in bank fees1 with more than £10.5bn tax collected to date through open banking payments, demonstrating the efficiencies this new capability can deliver. In January 2023 the CMA announced that the six largest banking providers had implemented all the requirements of the OB Roadmap2. To boost success, the Government and regulators set up the Joint Regulatory Oversight Committee (“the Committee”) to take forward the development of open banking beyond the CMA Order.

The co-chairs of the Committee, the FCA, and the PSR convened a Strategic Working Group (SWG) to collect empirical evidence and collate views from industry and other stakeholders to input the future development of open banking in the United Kingdom.

The SWG created an Open Banking strategic sprint process to address questions set by the Committee under three priority areas: Payments Strategy Sprint: Unlocking the potential of open banking payments Data Strategy Sprint: Promoting further data sharing in an open banking framework Ecosystem Strategy Sprint: Ensuring a sustainable open banking ecosystem. The process elicited a broad base of evidence and opinions about the future of open banking and ways to best deliver that future.

The first round of strategy sprints identified five main gaps between the current state and what many respondents suggested was a more optimal future state for the UK OB ecosystem. The second round of sprints focused on identifying a range of possible solutions, both short-term and long-term, that could bridge these gaps to unlock the potential of open banking payments, further data sharing data-sharing and build a more sustainable open banking ecosystem.

Educating Consumers Is Key to Open Banking Success

The research anticipates that efforts to educate consumers about the security and benefits of OB will catalyse market growth; helping alleviate common consumer fears and misconceptions regarding the potential misuse of financial data to which third parties are granted access.

Research author Jordan Rookes said, “Open Banking must overcome consumers’ security fears surrounding the sharing of financial data if it is to fulfil its 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.”

New Use Cases to Drive Open Banking Growth

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 it 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.