This coming January marks five years since the formal launch of open banking and PSD2 in Europe. To mark this, I’m delighted to announce Forrester’s inaugural European open banking forecast. The news is positive: We forecast a doubling in the adoption of open banking services across countries and use cases from 2022 to 2027.
We combine adoption data from a host of sources with Forrester’s own data on adoption and consumer preferences, along with insight and information from several open banking solution providers including Codat, Fabrick, Minna Technologies, Sopra Banking Software, Tink, Token, and Yapily.
Over several months, my forecast team colleague Brandon Verblow and I have taken a thorough look at the trends, drivers, and accelerators that influence consumer interest and adoption of open banking by use case, as well as the growth of open banking payments, across France, Germany, Italy, the Netherlands, Spain, Sweden, and the UK.
Headlines Equate Open Banking With “Failure” And Slow Adoption: We Disagree
Industry pundits often remark on slow growth and a lack of tangible consumer adoption when it comes to open banking. We have the figures. We don’t agree.
Consumer adoption of the services facilitated by open banking has been growing steadily in Europe. A hypothesis Brandon and I examined compared open banking uptake with the historical adoption rates of mobile banking and mobile payments. The results were surprising. Far from “lagging,” open banking adoption is directly on trend compared with mobile payment and mobile banking uptake at a similar point from launch.
Growth Will Be Widespread But Will Vary By Country And Use Case
In the UK, the combined adoption of account information services and payment initiation services will rise from 15% of online adults in 2022 to 44% in 2027 — a compound annual growth rate of 23%. The UK will have the largest number of open banking users in 2027, while Sweden will have the highest penetration rate. Open banking payments will also increase rapidly over the next five years, albeit from a very low base. The UK will see a rise from 71 million in 2022 to 1.6 billion open banking payments by 2027.
Consumer Interest In Open Banking Services Is At An All-Time High
Banks and third-party providers are still in the early stages of developing services that will tap the full potential of open banking, but already, use cases are broad and consumer preferences are solidifying. Open banking solutions already offer airline and car dealership payments, utility firm wallets, business carbon trackers, consumer benefits checkers, and funding of wealth management accounts. Governments are also using it for consumer and business tax collection. We expect this trend to accelerate over the next five years as open finance becomes more of a reality in Europe, strong customer authentication settles down, and PSD3 potentially offers more standardization.
Immediate Future Growth Slows But Then Accelerates From 2024
We expect the gap between consumer interest and adoption to narrow through 2027 as the open banking ecosystem resolves some key challenges. The open banking value proposition is more difficult to communicate to consumers, and adoption depends on coordination among multiple parties. From 2022 to 2024, the pace of open banking adoption will slow slightly, due in part to the greater complexity of open banking solutions and deployments, before accelerating again through 2024–’27. For example, consumer access to payment initiation will increase far more rapidly as larger merchants and enterprises begin to offer open banking payments.
To maximize future growth prospects, banks and third parties must continue to evolve their open banking offerings to solve more substantial real-world problems for consumers and businesses. Forrester can help you with that.
Forrester clients can download the forecast here: European Open Banking Forecast, 2022 To 2027