Benefits of open banking for consumers and businesses 

Open banking is smoothly ceasing to be an unexplored innovation, gaining more and more supporters among businesses and users alike. This groundbreaking approach to financial data sharing promises to create an ecosystem of enhanced accessibility and efficiency. We can see a glimpse of it by analysing the advantages already available to users.

Open banking adoption around the world

The adoption of open banking is on a remarkable rise, with key markets like the UK, EU and Australia leading the way. In 2023, the value of open banking transactions worldwide reached $57 billion. This figure is expected to reach 330 billion by 2027.

The pace of adoption, however, varies across regions and is influenced by regulatory environments, technological infrastructure, and market readiness. One of the reasons for the rapid development of technology in Europe, for example, is the EU’s PSD2 (Payment Services Directive 2). It promoted the adoption and standardisation of open banking practices by mandating the sharing of financial data (with consumer consent) and ensuring its security and confidentiality.

As a result, there are 556 third-party providers (TTPs) in Europe today. This success story highlights the potential of open banking to transform financial services. Collaboration between banks and fintech has resulted in innovative solutions that meet the diverse needs of both consumers and businesses.

Learn more about open banking regulations worldwide in our article.

Benefits of open banking for consumers

This rapid development wouldn’t have been possible if open banking didn’t carry with it a host of advantages. Let’s take a look at what’s in it for users:

• Consolidated financial overview: Now, consumers not only decide who can access their data but can also view all their financial accounts and transactions in one place. This gives them a comprehensive overview of their financial dynamic and enables better financial management and planning.
• Enhanced budgeting and spending tracking: Open banking aggregates data from multiple accounts to provide detailed insights into spending habits and budgetary trends. It helps consumers make informed financial decisions and stick to their budgets.
• Personalised financial products: Consumers benefit from personalised financial product recommendations, such as loans, savings accounts, and credit cards, tailored to their unique financial history and needs, ensuring they get the best possible terms and rates.
• Instant online transactions: Users no longer need to enter their details on websites to pay for goods. Thanks to open banking, payments are possible directly from bank accounts. This increases security and guarantees almost instant crediting of funds with confirmation received by both parties.

Benefits of open banking for business

Open banking brings with it a lot of possibilities that are highly beneficial for merchants. It leverages secure, technology-driven sharing of financial data to empower businesses with tools for improved financial management and customer engagement. Here are the main advantages of open banking for your business:

• Improved conversion rates: Open banking technology allows for optimising the payment process, which leads to improved user experience and lower checkout abandonment rates. This results in higher conversion rates, which benefit businesses through increased sales and customer retention.
• Higher acceptance rates: Transactions facilitated through open banking are characterised by high success rates. This minimises payment failures, providing a smoother customer experience and more reliable business revenue streams.
• Lower transaction fees: Another notable advantage of open banking is reduced transaction fees compared to traditional payment methods such as credit and debit cards. Businesses can leverage open banking to enjoy substantial cost savings, boosting their financial performance.
• Faster settlement: Open banking accelerates the settlement process, allowing businesses to receive funds more quickly. It speeds up cash flow and facilitates smoother financial transactions, giving companies the opportunity to manage their finances more efficiently.
• No chargeback risks: Open banking eliminates chargebacks, making businesses more confident in their earnings. It increases financial stability and provides a safer environment for businesses to operate in.

All the perks of open banking with Payop’s Pay-by-Bank

With Payop’s Pay-by-Bank solution, driven by open banking technology, you and your payers can enjoy all the benefits of innovations. Our payment method allows your customers to pay directly from their online banking. This saves them a lot of time and mitigates the need to enter their sensitive data on your website. As a result, you achieve lower cart abandonment rates, boost your revenue and win customers’ trust.

Connect our managers to learn about integration options: [email protected].