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Open API Banking Market 2025

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EXECUTIVE SUMMARY

    APIs have the potential to bring about an open banking revolution

      Key findings

        Critical success factors

          DEFINING THE OPEN BANKING LANDSCAPE

            Open banking will be the most important banking trend over the next few years

              The free exchange of data will increase competition and benefit consumers

                Consumers will benefit from access to enhanced services

                  Easier product comparisons

                    Safer use of account aggregation tools

                      Wider access to credit

                        Provision of enhanced PFM services

                          Consumers are put off account aggregation by security concerns

                            There is a reluctance to give external aggregators access to account information

                              Concerns about account aggregation are high among those who are the most favorable towards the concept

                                The use of APIs will address most consumer concerns

                                  Several initiatives are pushing providers towards open banking

                                    PSD is at the forefront of European efforts

                                      The UK is pushing ahead with the creation of an OBS

                                        The OBP in Germany has developed its own open API standard

                                          US moves towards open banking are more limited

                                            ALTERNATIVE OPEN BANKING STRATEGIES FOR BANKS

                                              Bank as a marketplace

                                                Open API Banking: Defining the Potential and Opportunities

                                                  Page VFIA, Published September

                                                    Crédit Agricole’s CA Store offers customers a choice of in-house and external apps

                                                      Starling Bank will create a Marketplace Platform

                                                        N’s Financial Hub enables full integration of services from other fintechs

                                                          Assessment of the bank-as-a-marketplace strategy

                                                            Bank as a facilitator

                                                              BBVA aims to replicate the success of AWS with its API_Market

                                                                Capital One has launched the US’s first fully open banking platform

                                                                  Monzo is encouraging developers to create bespoke apps based on its API

                                                                    Assessment of the bank-as-a-facilitator strategy

                                                                      Bank as a service

                                                                        Fidor Bank offers a complete software-as-a-service solution for startups and non-banks

                                                                          solarisBank operates exclusively as a banking service for fintechs

                                                                            Silicon Valley Bank and Sutor Bank also offer banking as a service

                                                                              Assessment of the bank-as-a-service strategy

                                                                                OPPORTUNITIES AND THREATS FROM OPEN APIS

                                                                                  Opportunities

                                                                                    Banks can become aggregators for consumers with multiple relationships

                                                                                      Banks can boost customer acquisition and reduce attrition by becoming one-stop shops

                                                                                        Crowdsourcing of new products will let banks meet the needs of a fragmented market

                                                                                          Smaller banks can offer their customers access to a wider range of products

                                                                                            Integration of products from incubator and accelerator programs will be easier

                                                                                              Banks will be able to access external data sets for added consumer insight

                                                                                                Banks can open up new revenue streams by selling access to their own data

                                                                                                  New revenue streams will arise from selling access to a bank’s core systems

                                                                                                    Banks can make it harder for particular fintech providers to become too dominant

                                                                                                      Threats

                                                                                                        Open API Banking: Defining the Potential and Opportunities

                                                                                                          Page VFIA, Published September

                                                                                                            Treating open banking as just a compliance issue will lead to competitive disadvantage

                                                                                                              Banks may become disintermediated and commoditized

                                                                                                                Loss of data control could result in damage to security, trust, and reputation

                                                                                                                  APPENDIX

                                                                                                                    Abbreviations and acronyms

                                                                                                                      Definitions

                                                                                                                        API

                                                                                                                          Open banking

                                                                                                                            Methodology

                                                                                                                              Interviews with industry executives

                                                                                                                                Verdict Financial's RBI Survey

                                                                                                                                  Secondary research

                                                                                                                                    Bibliography

                                                                                                                                      Further reading

                                                                                                                                        About Verdict Financial

                                                                                                                                          Disclaimer

                                                                                                                                            List of Tables

                                                                                                                                              Table 1: Timetable for OBS implementation in the UK

                                                                                                                                                List of Figures

                                                                                                                                                  Figure 1: A selection of the data available through TfL’s unified API

                                                                                                                                                    Figure 2: Open banking will facilitate the development of third-party products and services

                                                                                                                                                      Figure 3: Consumers value the usefulness of account aggregation but worry about its safety

                                                                                                                                                        Figure 4: Information security is of the most concern to consumers who have the strongest opinions about account aggregation

                                                                                                                                                          Figure 5: There is strong resistance among account aggregation enthusiasts to using third-party services

                                                                                                                                                            Figure 6: Several banks have already implemented open API strategies

                                                                                                                                                              Figure 7: Crédit Agricole currently offers 47 separate apps in its store

                                                                                                                                                                Figure 8: N26 will offer access to a growing range of third-party products via its Financial Hub

                                                                                                                                                                  Figure 9: BBVA has enabled access to four specific APIs via its developer portal

                                                                                                                                                                    Figure 10: Capital One’s DevExchange is intended to boost the creation of external services

                                                                                                                                                                      Figure 11: Fidor Bank provides clients with access to its core systems via open APIs

                                                                                                                                                                        Figure 12: SolarisBank offers a full range of banking services to its clients

                                                                                                                                                                        Open API Banking: Defining the Potential and Opportunities; Strategies for a world of open banking

                                                                                                                                                                         

                                                                                                                                                                        Summary

                                                                                                                                                                         

                                                                                                                                                                        Regulatory and technological developments are pushing banks in Europe and the UK to open up access to their systems and data via the use of application programming interfaces (APIs). If banks embrace the concept, they will be able to become one-stop shops for the best products on the market, crowdsource the development of new services, and generate revenue by selling access to their data and capabilities.

                                                                                                                                                                         

                                                                                                                                                                        Key Findings

                                                                                                                                                                        •             Regulatory initiatives such as PSD2 in Europe and the Open Banking Standard in the UK are forcing banks to open up their systems to third parties, and this will hasten the rollout of open APIs.

                                                                                                                                                                        •             Starling Bank and N26 are among those using the bank as a marketplace approach. Here, banks transform themselves into portals, using their open APIs to allow third-party services to be accessed from within their own platforms.

                                                                                                                                                                        •             Fidor Bank is an exemplar of the bank as a service strategy. Startups and other entities that want to offer banking services to their customers can connect to Fidor Bank’s capabilities via its APIs and build their own services and user interface on top.

                                                                                                                                                                         

                                                                                                                                                                         

                                                                                                                                                                        Synopsis

                                                                                                                                                                         

                                                                                                                                                                        Researcher “Open API Banking: Defining the Potential and Opportunities” explores the impact of open banking initiatives and assesses the various strategies that banks can employ. This report is based on findings from our Retail Banking Insight Survey, together with interviews with industry figures and secondary research.

                                                                                                                                                                         

                                                                                                                                                                        The report offers insight into:

                                                                                                                                                                        •             The current state of open banking and open API initiatives in the UK, Europe, and further afield.

                                                                                                                                                                        •             The advantages and disadvantages associated with the main open API strategies banks can use.

                                                                                                                                                                        •             Advice and recommendations for how to effectively deploy an open API strategy.

                                                                                                                                                                         

                                                                                                                                                                        Reasons to Buy

                                                                                                                                                                        •             Learn more about the distinct open API strategies a bank can deploy, together with the specific advantages and disadvantages associated with each approach.

                                                                                                                                                                        •             Gain an understanding of the opportunities – and the threats – that open APIs will create for banks.

                                                                                                                                                                        •             Discover more about how specific banks around the world are already using APIs, their rationale for doing so, and their experiences to date.

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