Open Banking Adoption: The Global Shift to Digital Finance

Open banking is changing the way people and businesses pay. It lets companies securely access financial data, leading to better services, faster payments, and more competition. Banks, governments, and fintech firms are pushing this change, but some regions are adopting it faster than others.

This article explores the rise of open banking around the world, the benefits, challenges, and what the future holds.

What Is Open Banking?

Open banking allows licensed third-party service providers to access banking data with customer consent. It enables seamless transactions, personalised financial products, and greater transparency. This system relies on APIs (Application Programming Interfaces) to securely share information between banks and fintech firms.

Open banking mainly has two use cases: open banking payments (pay-by-bank) and open banking data.

Why Open Banking Is Growing

Several factors are driving the growth of open banking:

● Regulatory Support: Many governments mandate open banking to encourage competition and protect consumers.
● Changing Consumer Expectations: People want more control over their finances and better digital experiences.
● Fintech Innovation: Startups and banks are creating new financial tools using open banking infrastructure.
● Secure and Fast Payments: Real-time payments and data-driven insights are improving financial management for businesses and individuals.

Open Banking Around the World: Regional Insights

Europe: Leading the Way

Europe was one of the first regions to embrace open banking. Regulations like PSD2 (Revised Payment Services Directive) require banks to share data with licensed third parties. This has led to the development of digital wallets, budgeting apps, and faster online payments.

The UK, in particular, has seen significant adoption, with many fintech firms offering innovative financial products. Banks are collaborating with third-party providers to enhance customer services.

In 2018, the UK saw only 320,000 pay-by-bank transactions. By 2024, that figure skyrocketed to 224 million. The UK is now ahead of the rest of Europe, with 13% of digitally active consumers and 18% of small businesses using open banking.

North America: A Growing Market

The US and Canada are moving toward open banking, but at a slower pace.

● United States: The US is moving forward with open banking. On October 22, 2024, the Consumer Financial Protection Bureau (CFPB) approved new rules to create a nationwide open banking system. This marks a major step toward a federal framework for open banking in the US.
● Canada: Canada’s government is also moving towards open banking, calling it “consumer-driven banking.” In June 2024, the government passed the Consumer-Driven Banking Act, setting the groundwork for its scope and technical standards.

Asia-Pacific: Rapid Expansion

Open banking is accelerating in Asia-Pacific, with countries like Australia, Singapore, and India leading the charge.

● Australia: The Consumer Data Right (CDR) allows individuals to share banking data with third parties securely. As of 2025, all Australian banks participate. The CDR began with the banking sector in 2020.
● Singapore: A fintech-friendly environment encourages banks to work with digital service providers. Singapore has been actively promoting open banking through initiatives like the API Exchange (APIX) platform, which facilitates collaboration between financial institutions and fintech companies.
● India: The Unified Payments Interface (UPI) has revolutionised payments, making open banking a natural progression. UPI, launched by the National Payments Corporation of India (NPCI) in 2016, has become a key player in digital payments. In January 2024 alone, it processed 12.2 billion transactions worth ₹18.41 lakh crore. While UPI has paved the way for open banking in India, the country’s approach differs from the regulatory-driven models seen elsewhere.

Latin America: A Developing Landscape

● Brazil: Brazil is at the forefront of open banking in Latin America. Now known as Open Finance Brazil, the initiative has made significant strides since its launch in February 2021, successfully completing all four implementation phases. As of 2024, it is expanding beyond banking, integrating sectors like open insurance to create a more interconnected financial ecosystem.
● Mexico: Mexico’s journey toward open banking has been slower than expected. Although regulations were introduced in 2020, progress has been gradual. As of 2024, adoption remains in its early stages, with the country still navigating technological and regulatory hurdles.
Africa: Emerging Trends
● Nigeria: Nigeria took its first steps toward open banking when the Central Bank of Nigeria (CBN) issued a regulatory framework in March 2021. However, progress has been slower than expected, with open banking largely remaining a concept rather than a fully implemented system. Looking ahead, the CBN has outlined 2025 as a priority year for rolling out its open banking framework.
● South Africa: South Africa is taking a regulatory-driven approach to open banking, with the Financial Sector Conduct Authority (FSCA) working toward a phased mandatory regulatory model for Open Finance. While a final position paper was initially expected in April 2024, it has now been delayed to 2025.
Middle East: Emerging Trends
● United Arab Emirates (UAE): The UAE is at the forefront of open banking in the Middle East. The UAE Central Bank has established an Open Finance Regulation, creating a framework that covers both open banking and open insurance. This initiative is part of the broader Financial Infrastructure Transformation Programme, which is already 85% complete as of February 2025.
● Saudi Arabia: Saudi Arabia has adopted a phased approach to open banking, initially focusing on Account Information Services (AIS). The Saudi Central Bank (SAMA) introduced an open banking framework in November 2022, with implementation beginning in early 2023. The country is using open banking to enhance SME lending and financial literacy.

Benefits of Open Banking Adoption

For Consumers:

● Better Financial Control: Access to personalized insights and recommendations.
● Faster Payments: Instant transactions reduce delays and improve cash flow.
● Enhanced Security: Secure authentication methods protect financial data.

For Businesses:

● Improved Payment Processing: Open banking enables cost-effective, real-time payments.
● Greater Customer Insights: Businesses can use data to offer tailored products.
● Streamlined Financial Management: Automated systems reduce administrative burdens.

For Banks and Fintechs:

● More Collaboration: Banks and fintech companies can create better services together.
● New Revenue Streams: Open banking allows financial institutions to monetize data securely.
● Increased Competition: More players in the market drive innovation and efficiency.

Future of Open Banking

As open banking continues to evolve globally, several key trends are shaping its future. Consumers and businesses are already benefiting from more personalised financial products and faster, more efficient payments. According to Juniper Research, open banking transactions are set to grow from $57 billion in 2023 to $330 billion by 2027 – a 479% increase.

The next decade promises major advancements, from higher consumer adoption to AI-driven financial innovation. Open banking has the potential to transform financial services, but its success depends on strong collaboration between banks, fintechs, regulators, and other industry players.