How is Open Banking Powering the Future of Global Finance?

The way people are banking is changing at an unprecedented scale—thanks to open banking. Today, open banking has leaped beyond the foundational framework, revolutionizing how individuals and businesses interact with financial services around the world. For instance,

In India, open banking is propelled by the robust infrastructure of the India Stack, which includes the Unified Payments Interface (UPI) and an account aggregation framework. This ecosystem enables secure data sharing to enhance financial inclusion for the underbanked populations.

In MENA, the UAE and Saudi Arabia are leading the way in open banking with strong regulatory frameworks. The UAE's Open Finance regulation enables seamless data sharing for personalized services, while Saudi Arabia's SAMA regulations enhance operational efficiency and customer experiences, driving digital transformation and financial inclusion.

In Southeast Asia, Singapore is taking a market-led approach to open banking, while Indonesia focuses on regulatory support for digital transformation. The Philippines is transitioning towards open finance, expanding beyond traditional banking to include investments and other financial services through APIs, enhancing consumer experience and financial accessibility.

In Africa, open banking is gaining momentum, with Nigeria leading the way. The launch of its open banking regime in March 2023 promotes data sharing between banks and fintechs. Meanwhile, Ghana is exploring opportunities through initiatives like regulatory sandboxes, despite the absence of a formal framework.

All in all, open banking is set for substantial growth worldwide, projected to reach USD 38.86 billion in 2025, highlighting its potential to reshape financial services across diverse markets.

At M2P, we are closely monitoring these developments and have identified key trends poised to transform the open banking industry. We believe the future of open banking lies in:

• Growth of Embedded Finance: Open banking is acting as a catalyst for embedded finance, enabling consumers to access banking services seamlessly within their everyday applications, enhancing convenience.
• Technological Integration: Advanced technologies like AI and ML are revolutionizing open banking by enabling personalized financial services, improving fraud detection, and enhancing customer experiences through automation.
• Regulatory Developments: Governments are implementing more stringent regulatory frameworks, like Europe’s PSD3, to boost the functionality and security of open banking services, promoting greater adoption.
• Global Standardization: Efforts toward standardizing open banking regulations across countries will facilitate interoperability, making it easier for consumers and businesses to access diverse financial services.

With that said, open banking is no longer just a buzzword, it’s the foundation of a smarter, safer, and more inclusive financial future.

Sources

1. YourStory
2. Fintech Global
3. KSA Open Banking Program
4. Fintech Singapore.
5. Central Bank of Nigeria.
6. ICLG

Open Banking Adoption to Surge in the Near Future

Source:https://www.thebusinessresearchcompany.com/report/open-banking-global-market-report#:~:text=Open%20Banking%20Market%20Size%202024,(CAGR)%20of%2025.7%25

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